ASSET PURCHASE AGREEMENT
among
Raytheon Company
and
Raytheon Australia Pty Ltd.
and
L-3 Communications Corporation
January 11, 2002
ARTICLE I ASSET PURCHASE.....................................................2
1.1 Purchase and Sale of Assets; Assumption of Liabilities......................2
1.2 Purchase Price and Related Matters.........................................10
1.3 The Closing................................................................14
1.4 Post-Closing Adjustment....................................................18
1.5 Consents to Assignment.....................................................24
1.6 Further Assurances.........................................................26
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS.........................26
2.1 Organization, Qualification and Corporate Power............................27
2.2 Authorization of Transaction...............................................28
2.3 Noncontravention...........................................................28
2.4 Financial Statements.......................................................30
2.5 Absence of Certain Changes.................................................31
2.6 Undisclosed Liabilities....................................................33
2.7 Tax Matters................................................................33
2.8 Tangible Personal Property.................................................35
2.9 Owned Real Property........................................................36
2.10 Leased Real Property.......................................................36
2.11 Intellectual Property......................................................37
2.12 Contracts..................................................................39
2.13 Government Contracts.......................................................41
2.14 Entire Business............................................................43
2.15 Litigation.................................................................44
2.16 Employment and Labor Matters...............................................44
2.17 Employee Benefits..........................................................45
2.18 Environmental Matters......................................................48
2.19 Legal Compliance...........................................................51
2.20 Permits....................................................................51
2.21 Title to Assets............................................................52
2.22 Government-Furnished Equipment.............................................52
2.23 Accounts Receivable........................................................52
2.24 Brokers Fees...............................................................52
2.25 Affiliate Relationships....................................................53
2.26 Liability for Cost and Pricing Data........................................53
i
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER...........................53
3.1 Organization...............................................................54
3.2 Authorization of Transaction...............................................54
3.3 Noncontravention...........................................................54
3.4 Litigation.................................................................56
3.5 Financing..................................................................56
3.6 Due Diligence by the Buyer.................................................56
ARTICLE IV PRE-CLOSING COVENANTS.............................................57
4.1 Closing Efforts; Xxxx-Xxxxx-Xxxxxx Act.....................................57
4.2 Replacement of Guarantees and Letters of Credit............................59
4.3 Operation of Business......................................................60
4.4 Access.....................................................................64
4.5 Purchase of Equipment......................................................66
4.6 Exclusivity................................................................66
4.7 Schedules..................................................................66
4.8 Title Insurance............................................................67
4.9 Cooperation in Financing...................................................68
4.10 Tax Certificates...........................................................69
ARTICLE V CONDITIONS PRECEDENT TO CLOSING...................................69
5.1 Conditions to Obligations of Buyer.........................................69
5.2 Conditions to Obligations of Sellers.......................................72
ARTICLE VI TERMINATION.......................................................74
6.1 Termination of Agreement...................................................74
6.2 Effect of Termination......................................................76
ARTICLE VII INDEMNIFICATION...................................................76
7.1 Indemnification by Raytheon................................................76
7.2 Indemnification by the Buyer...............................................77
7.3 Defense or Control of Third Party Actions and Environmental Claims.........78
7.4 Claims for Indemnification.................................................83
7.5 Survival...................................................................85
7.6 Limitations................................................................86
7.7 Treatment of Indemnification Payments......................................92
ii
ARTICLE VIII TAX MATTERS.......................................................92
8.1 Responsibility for Taxes and Filing of Tax Returns.........................92
8.2 Allocation of Taxes........................................................94
8.3 Refunds and Credits........................................................94
8.4 Allowable Taxes............................................................95
8.5 Cooperation on Tax Matters; Tax Audits.....................................96
8.6 Scope of Article VIII......................................................98
ARTICLE IX EMPLOYEE MATTERS..................................................98
9.1 Pre-Closing Conduct; Other Liabilities.....................................98
9.2 Offer of Employment; Continuation of Employment...........................100
9.3 Savings Plan..............................................................101
9.4 Defined Benefit Plans.....................................................101
9.5 Compensation; Employee Benefits; Severance Plans..........................102
9.6 Welfare Plans.............................................................104
9.7 Accrued Paid Time Off.....................................................104
9.8 WARN Act..................................................................105
9.9 COBRA.....................................................................106
ARTICLE X OTHER POST-CLOSING COVENANTS.....................................106
10.1 Access to Information; Record Retention; Cooperation......................106
10.2 Covenant Not to Compete...................................................110
10.3 Novation of Government Contracts..........................................113
10.4 Seller Guarantees.........................................................115
10.5 Outstanding Bid Proposals.................................................115
10.6 Use of Raytheon Name in Transferred Technology............................117
10.7 Collection of Accounts Receivable.........................................118
10.8 Payment of Assumed Liabilities............................................118
10.9 Access to Facility........................................................118
10.10 Boeing Business Jet Operations............................................119
10.11 Insurance.................................................................121
10.12 Non-Solicitation..........................................................122
10.13 Record Keeping............................................................122
10.14 Compliance with Agreement.................................................122
10.15 Proprietary Information; Marketing and Sales Restriction..................123
10.16 Confidentiality Obligations of the Sellers................................123
10.17 Environmental Response Activities.........................................123
iii
ARTICLE XI MISCELLANEOUS....................................................124
11.1 Press Releases and Announcements..........................................124
11.2 No Third Party Beneficiaries..............................................124
11.3 Entire Agreement..........................................................124
11.4 Succession and Assignment.................................................125
11.5 Notices...................................................................125
11.6 Amendments and Waivers....................................................126
11.7 Severability..............................................................127
11.8 Expenses..................................................................127
11.9 Specific Performance......................................................127
11.10 Governing Law.............................................................128
11.11 Submission to Jurisdiction................................................128
11.12 Construction..............................................................128
11.13 Counterparts and Facsimile Signature......................................129
Disclosure Schedule
Schedule 1.1(a)(iv) Owned Real Property
Schedule 1.1(a)(v) Real Estate Leases
Schedule 1.1(a)(vii) Patents and Patent Applications
Schedule 1.1(a)(xv) Insurance Policy
Schedule 1.1(b)(ii) BBJ Aircraft and Contracts
Schedule 1.1(b)(iii) Excluded Assets
Schedule 1.1(d)(iv) Excluded Agreements
Schedule 1.4 Target Net Tangible Book Value
Schedule 2.4 Financial Statements
Schedule 2.5(e) Capital Expenditure Budget
Schedule 2.12 Designated Contracts
iv
Schedule 2.14 Omitted Assets
Schedule 2.15 Litigation
Schedule 2.16 AIS Employees
Schedule 2.17 AIS Benefit Plans
Schedule 2.20 Permits
Schedule 2.22 Government-Furnished Equipment
Schedule 3.3(c) Buyer Consent
Schedule 4.2 Seller Guarantees
Schedule 4.3 Operation of Business
Schedule 5.1(f) Required Consents
Schedule 9.1 Retained Employees
Schedule 9.2(b) BBJ Employees
Schedule 10.5 Bid Proposals
Schedule 10.10(b) Consigned Assets
Schedule 10.12 Key Employees
Exhibits
--------
Exhibit A Xxxx of Sale
Exhibit B Patent Assignment
Exhibit C Special Warranty Deed
Exhibit D Assignment and Assumption of Leases
v
Exhibit E Assumption Agreement
Exhibit F Supply Agreement (Raytheon as Supplier)
Exhibit G Supply Agreement (Raytheon as Customer)
Exhibit H Supply Agreement (Raytheon Technical Services Company as Supplier)
Exhibit I Supply Agreement (Raytheon Technical Services Company as Customer)
Exhibit J Supply Agreement (Thales-Raytheon Systems Co., LLC as Supplier)
Exhibit K Supply Agreement (Raytheon Systems Canada, Ltd. as Supplier)
Exhibit L Supply Agreement (Raytheon Aircraft Company as Customer)
Exhibit M Subcontract Agreement (with Raytheon Systems Limited)
Exhibit N-1 Lease Agreement
Exhibit N-2 Sublease Agreement
Exhibit N-3 Equipment License Agreement
Exhibit O Intellectual Property Agreement
Exhibit P Cooling Technology Marketing Agreement
Exhibit Q Transition Services Agreement
Exhibit R Business Jet Services Agreement
vi
TABLE OF DEFINED TERMS
DEFINED TERM SECTION
------------ -------
777 Aircraft 10.10(a)
777 Contracts 10.10(a)
AAA 7.4(c)
AAA Rules 7.4(c)
Actual Cost 10.10(a)
Acquired Assets 1.1(a)
Adjusted Purchase Price 1.2(a)
Affiliate 1.1(b)(iv)
Agreed Amount 7.4 (b)
AIS Benefit Plan 2.17(a)
AIS Business Introduction
AIS Employee 9.1
AIS Material Adverse Effect 2.1
AIS Properties 2.18(a)(vii)
Allocation Schedule 1.2(b)(ii)
Allowable Tax 8.4(a)
Ancillary Agreements 1.3(b)
Arbitration Award 7.4(d)
Arbitrator 7.4(c)
Assigned Contracts 1.1(a)(vi)
Assumed Liabilities 1.1(c)
Balance Sheet Date 1.1(c)(i)
BBJ Employees 9.2(b)
Bid Proposal 10.5(a)
Boeing Business Jet Division 1.1(b)(ii)
Bombardier Litigation 1.1(b)(ix)
Business Day 1.3(a)
Buyer Preliminary Statement
Buyer Certificate 5.2(d)
Buyer Defined Contribution Plans 9.3
Buyer Material Adverse Effect 3.3(b)
Buyer Non-Union Plans 9.4
Buyer Pension Plans 9.4
Buyer Plans 9.5
CERCLA 2.18(a)(i)
vii
DEFINED TERM SECTION
------------ -------
Chrysler Agreement 10.14
Claim Notice 7.4(a)
Claimed Amount 7.4(a)
Closing 1.3(a)
Closing Date 1.3(a)
Closing Net Tangible Book Value 1.4(b)
Closing Statement 1.4(b)
COBRA 9.9
Code 2.17(b)
Collective Bargaining Agreement 2.16(b)
Confidentiality Agreement 4.4(a)
Consigned Assets 10.10(b)
Controlling Party 7.3(a)
Damages 7.1
Designated Contracts 2.12(b)
Designated Intellectual Property 2.11(a)
Dispute 7.4(c)
Employee Benefit Plans 2.17(a)
Encumbrance 2.8
Environment 2.18(a)(ii)
Environmental Claim 7.3(b)
Environmental Law 2.18(a)(iv)
Environmental Matters 2.18(a)(v)
Environmental Response Activities 7.3(b)
ERISA 2.17(a)
ERISA Affiliate 2.17(e)
Excluded Assets 1.1(b)
Excluded Liabilities 1.1(d)
Final Closing Statement 1.4(d)(v)
GAAP 1.1(c)(i)
Government Bid 2.13(a)
Government Contract 2.13(a)
Governmental Filings 4.1(a)
Governmental Entity 1.1(a)(viii)
Xxxx-Xxxxx-Xxxxxx Act 2.3
Indebtedness 2.5(c)
Indemnified Party 7.3(a)
Indemnifying Party 7.3(a)
viii
DEFINED TERM SECTION
------------ -------
Information 10.1(a)
Intellectual Property 1.1(a)(vii)
Intellectual Property Agreement 1.3(b)
Leased Facilities 1.1(a)(viii)
Legal Permits 1.1(a)(viii)
LTD AIS Employees 9.2(a)
Materials of Environmental Concern 2.18(a)(iii)
Most Recent Balance Sheet 2.4
Neutral Accountant 1.2(b)(I)
Noncompetition Period 10.2
Non-AIS Information 10.15
Non-controlling Party 7.3(a)
Novation Agreement 10.3(a)
Off-Site Liabilities 2.18(a)(vi)
Owned Real Property 1.1(a)(iv)
P-3 SRP Program 10.1(a)
Parties Preliminary Statement
PTO Policies 9.7
Purchase Price 1.2(a)
Raytheon Preliminary Statement
Raytheon Australia Preliminary Statement
Raytheon Certificate 5.1(d)
Raytheon Subsidiary 10.2
Real Estate Leases 1.1(a)(v)
Release 2.18(a)(I)
Response 7.4(b)
Restricted Business 10.2
Savings Plan 9.3
Schedule of Exceptions Article II
Seller Preliminary Statement
Seller Guarantees 4.2
Sellers' Pension Plans 9.4
Special Damages 7.6(c)
Statistical Profit 10.5(a)
Target Net Tangible Book Value 1.4(a)
Tax Purchase Price 1.2(b)
Tax Returns 2.7
Taxes 2.7
ix
DEFINED TERM SECTION
------------ -------
Taxing Authority 8.5(a)
Third Party Action 7.3(a)
Third Party Event 1.4(b)
Third Party Consents 4.1(a)
Title Commitments 4.8
Title Company 5.1(h)
Title Policy 5.1(h)
Transferred Employees 9.2(a)
Transition Services Agreement 1.3(b)
U.S. Governmental Entity 2.13(a)
Union 2.16(b)
Union Pension Plan 9.4
Unresolved Objections 1.4(d)(iii)
WARN 9.8
x
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is entered into as of January 11, 2002
among Raytheon Company, a Delaware corporation ("Raytheon"), Raytheon Australia
Pty Ltd., a corporation organized under the laws of Australia and a wholly-owned
indirect subsidiary of Raytheon ("Raytheon Australia") (Raytheon and Raytheon
Australia are each individually referred to herein as a "Seller" and are
collectively referred to herein as the "Sellers"), and L-3 Communications
Corporation, a Delaware corporation (the "Buyer"). The Sellers and the Buyer are
collectively referred to herein as the "Parties."
INTRODUCTION
For purposes of this Agreement, the "AIS Business" means those
operations of Raytheon or any of its Subsidiaries that are conducted as of the
Closing Date through its Aircraft Integration Systems business unit principally
at facilities located in Greenville, Texas, Waco, Texas, Lexington, Kentucky and
Avalon, Australia (but expressly excluding any business or operations similar or
identical to the type performed by Raytheon or its Subsidiaries at facilities
other than those named above which are managed by personnel other than AIS
management, including, but not limited to, the business and operations of the
type performed at Raytheon's Wichita, Kansas, McKinney, Texas, Garland, Texas,
El Segundo, California, Goleta, California, Fort Xxxxx, Indiana, Indianapolis,
Indiana, and Falls Church, Virginia facilities).
The Buyer desires to purchase from the Sellers, and the Sellers desire
to sell to the Buyer, the assets of the Sellers relating exclusively or
primarily to the AIS Business (other than assets excluded pursuant hereto),
subject to the assumption of related liabilities, upon the terms and subject to
the conditions set forth herein.
In consideration of the representations, warranties, covenants and
agreements contained in this Agreement and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Parties agree as
follows:
ARTICLE I
ASSET PURCHASE
1.1 Purchase and Sale of Assets; Assumption of Liabilities.
(a) Transfer of Assets. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth in this Agreement, at the Closing (as defined in
Section 1.3(a)), each Seller shall sell, convey, assign and transfer to the
Buyer, and the Buyer shall purchase and acquire from such Seller, all of such
Seller's right, title and interest in and to the assets, properties and rights
of such Seller, of every kind, nature, character and description (accrued,
contingent or otherwise), tangible and intangible, real, personal or mixed,
wherever located, existing as of the Closing which are utilized exclusively or
primarily in the AIS Business (the "Acquired Assets"), including, without
limitation, the following assets, properties and rights, in each case to the
extent the assets or properties are owned or the rights are held by a Seller as
of the Closing and exclusively or primarily utilized in or relating to the AIS
Business:
(i) all accounts receivable and other receivables (whether or
not billed);
(ii) all inventory of raw materials, work in process, finished
goods, office supplies, maintenance supplies and packaging materials, together
with spare parts,
2
supplies, promotional materials and inventory (in each case, whether on hand, in
transit or on order);
(iii) all computer hardware, equipment, furniture,
furnishings, fixtures, machinery, installations, supplies, work stations, data
processing equipment, networking equipment, vehicles, tools and tooling and
other tangible personal property and all warranties and guarantees, if any,
express or implied, existing for the benefit of a Seller in connection
therewith;
(iv) the real property described on Schedule 1.1(a)(iv) (the
"Owned Real Property");
(v) all of the Sellers' rights under the real property leases
or subleases described on Schedule 1.1(a)(v) (the "Real Estate Leases"), except
as provided in Section 1.5;
(vi) the rights under all contracts or agreements to which any
Seller is a party (excluding the Real Estate Leases), including those listed on
Schedule 2.12, but excluding those listed on Schedule 4.2 (the "Assigned
Contracts"), except as provided in Section 1.5;
(vii) all (A) patents and patent applications listed on
Schedule 1.1(a)(vii), and any patent applications that are filed based on the
invention disclosures listed on Schedule 1.1(a)(vii), related (i.e., claiming
priority to at least one of such patents or patent applications) and foreign
counterpart patent applications and patents, including any reissues,
re-examinations, continuations, continuations-in-part or divisionals thereof,
(B) copyrights and copyright registrations and works of authorship in any media,
(C) computer software and management information systems, and (D) technical
information, trade secrets, technology, know-how, specifications, designs,
inventions, discoveries, developments, techniques, drawings
3
and processes and quality control data, and other confidential, proprietary or
non-public business information, documents, analyses, research and lists
(including current and potential customer lists and vendor lists) and all other
intellectual property of any nature, including text, images and other content
relating exclusively or primarily to the AIS Business contained in websites
maintained by the Sellers (collectively, "Intellectual Property");
(viii) all licenses, permits, franchises, grants, consents,
concessions, orders, authorizations, approvals or registrations issued by any
Governmental Entity (as defined below) (collectively, "Legal Permits") relating
to the development, use, maintenance or occupation of the Owned Real Property,
the facilities covered by the Real Property Leases (the "Leased Facilities") or
the Acquired Assets or the AIS Business, to the extent that such Legal Permits
are transferable (for purposes of this Agreement, "Governmental Entity" means
any government, court, arbitrational tribunal, administrative agency or
commission or other governmental or regulatory authority or agency, whether
federal, state, local, foreign or multinational);
(ix) all goods and services and all other economic benefits to
be received subsequent to the Closing arising out of prepayments and payments by
a Seller prior to the Closing, including credits, deferred charges, deposits,
prepaid assets and prepaid expenses;
(x) all books (other than stock record books), records,
accounts, ledgers, files, documents, correspondence, studies, reports and other
printed or written materials (whether in hard copy, magnetic tape or other
format or media), including property records, production records, purchasing and
sales records, personnel and payroll records, credit records, accounting
records, creative materials, and advertising and marketing materials, subject to
any
4
restrictions imposed by applicable law on the transfer of employee files and
other materials related to classified programs;
(xi) all goodwill;
(xii) the rights under purchase orders outstanding on the
Closing Date;
(xiii) all rights relating to refunds or recoupment of Taxes
(as defined in Section 2.7) relating to all periods ending after the Closing,
determined in accordance with Section 8.2, including rights under any legal or
administrative proceedings relating thereto, whether or not yet commenced;
(xiv) all actions, claims, causes of action, rights of
recovery, choses in action, rights of setoff of any kind, and all rights under
and pursuant to all indemnities, warranties, representations and guarantees
arising before, on or after the Closing relating exclusively or primarily to the
AIS Business, any Acquired Assets or any Assumed Liabilities; and
(xv) the insurance policies listed on Schedule 1.1(a)(xv).
(b) Excluded Assets. Notwithstanding anything to the contrary in this
Agreement, the Acquired Assets shall not include any of the following
(collectively, the "Excluded Assets"):
(i) all cash and cash equivalents or similar investments, bank
accounts, commercial paper, certificates of deposit, Treasury bills and other
marketable securities;
(ii) all assets, properties and rights utilized exclusively or
primarily in the Boeing Business Jet Division (for the purposes of this
Agreement, the "Boeing Business Jet
5
Division" means those operations of the Sellers that are currently conducted
through its AIS Business at facilities located in Waco, Texas and that relate
specifically to the design, configuration, manufacture, modification,
installation and delivery of interior structures, furnishings and components for
the aircraft listed by Aircraft Serial Number in Schedule 1.1(b)(ii) in
accordance with the contracts listed in Schedule 1.1(b)(ii) and to the Consigned
Assets (as defined in Section 10.10(c));
(iii) the assets, properties or rights listed on, or arising
under the contracts or agreements listed on, Schedule 1.1(b)(iii); provided that
the $44,651,603 SSDMP receivable listed thereon was considered an Excluded Asset
as of September 30, 2001 and is therefore not reflected on the Most Recent
Balance Sheet or in Schedule 1.4, but any portion of such receivable that
remains uncollected as of the Closing shall become an Acquired Asset and shall
be conveyed and assigned to the Buyer and shall be reflected on the Closing
Statement (which shall have the effect of increasing the Closing Net Tangible
Book Value);
(iv) all rights to any of the Intellectual Property licensed
by Raytheon or an Affiliate (for purposes of this Agreement, "Affiliate" has the
meaning assigned to it in Rule 12b-2 under the Securities Exchange Act of 1934)
thereof to the Buyer, or otherwise retained by Raytheon or its Affiliates under
the terms of the Intellectual Property Agreement (as defined in Section 1.3(b));
(v) all trademarks, trademark registrations and trademark
applications (together with the goodwill associated therewith);
(vi) all accounts receivable and similar rights to payment
from Raytheon or any Subsidiary of Raytheon that are accrued prior to the
Closing;
6
(vii) the capital stock of all subsidiaries of each Seller;
(viii) all rights relating to refunds or recoupment of Taxes
(as defined in Section 2.7) relating to all periods ending on or prior to the
Closing, determined in accordance with Section 8.2, including rights under any
legal or administrative proceedings relating thereto, whether or not yet
commenced;
(ix) all rights to any payment, recovery or settlement
relating to or arising out of the litigation with Bombardier, Inc. and Learjet,
Inc. filed on June 2, 2000 (196th Judicial District Court, Xxxx County, Texas,
Docket No. 621284) (the "Bombardier Litigation");
(x) all actions, claims, causes of action, rights of recovery,
choses in action and rights of setoff of any kind arising before, on or after
the Closing to the extent relating to (A) the items set forth in this Section
1.1(b) or (B) any Excluded Liabilities;
(xi) all rights of the Sellers under the AIS Benefit Plans (as
defined in Section 2.17);
(xii) the rights which accrue or will accrue to the benefit of
the Sellers under this Agreement or any Ancillary Agreement (as defined in
Section 1.3(b)); and
(xiii) all books, records, accounts, ledgers, files,
documents, correspondence, studies, reports and other printed or written
materials related exclusively or primarily to any Excluded Assets or Excluded
Liabilities.
(c) Assumed Liabilities. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth in this Agreement, at the Closing, the Buyer shall
assume and agree to pay, perform and discharge when due all liabilities and
obligations of each Seller, of every kind, nature, character and
7
description (whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated and whether due or to become due), which are related
exclusively or primarily to the AIS Business or the Acquired Assets (the
"Assumed Liabilities"), including, without limitation, the following liabilities
and obligations, in each case to the extent related exclusively or primarily to
the AIS Business or the Acquired Assets:
(i) all liabilities reflected on the Most Recent Balance Sheet
(as defined in Section 2.4) and any other liabilities as of September 30, 2001
(the "Balance Sheet Date") which are not required to be reflected thereon
according to United States generally accepted accounting principles as in effect
as of the Balance Sheet Date ("GAAP"), except to the extent satisfied prior to
the Closing;
(ii) all liabilities arising subsequent to the Balance Sheet
Date, except to the extent satisfied prior to the Closing;
(iii) all liabilities and obligations under the Assigned
Contracts and under the Real Estate Leases, except as provided in Section 1.5;
(iv) all liabilities and obligations under the Legal Permits
transferred pursuant to Section 1.1(a)(viii);
(v) all liabilities and obligations in respect of the AIS
Business or the Acquired Assets arising or incurred by the Buyer after the
Closing;
(vi) all liabilities and obligations arising out of the
ownership, leasing or operation of any Leased Facility, Owned Real Property or
other real property at any time;
(vii) all liabilities and obligations for Environmental
Matters (as defined in Section 2.18(a)) or liability under common law with
respect to Materials of Environmental
8
Concern (as defined in Section 2.18(a)) that relate exclusively or primarily to
the AIS Business or the Acquired Assets;
(viii) all liabilities and obligations in respect of employees
or employee benefits assumed by the Buyer pursuant to Article IX; and
(ix) all liabilities with respect to all actions, suits,
proceedings, disputes, claims or investigations that relate exclusively or
primarily to the AIS Business or the Acquired Assets.
(d) Excluded Liabilities. Notwithstanding anything to the contrary in
this Agreement, the Assumed Liabilities shall not include the following
(collectively, the "Excluded Liabilities"):
(i) all liabilities and obligations relating exclusively or
primarily to the Excluded Assets;
(ii) all liabilities and obligations for Taxes (whether or not
reflected on the Most Recent Balance Sheet) relating to all periods ending on or
prior to the Closing, determined in accordance with Section 8.2;
(iii) all liabilities and obligations of the Sellers in
respect of employees or employee benefits retained by a Seller pursuant to
Article IX;
(iv) all liabilities and obligations of the Sellers under the
agreements listed on Schedule 1.1(d)(iv);
(v) all liabilities and obligations of the Sellers under this
Agreement or any Ancillary Agreement;
9
(vi) all liabilities and obligations of any Seller for costs
and expenses incurred in connection with this Agreement or the consummation of
the transactions contemplated by this Agreement (including without limitation
any fees for financial advisors engaged by or on behalf of the Sellers) and any
Taxes arising in connection with the consummations of the transactions
contemplated hereby (other than Taxes referred to in Section 8.1(d));
(vii) all liabilities and obligations arising out of
disallowances, redeterminations and reallocations of overhead charges and other
allocated expenses and rates included in costs incurred on or prior to the
Closing under any Government Contract included in the Acquired Assets, but only
to the extent such overhead charges and allocated expenses and rates relate
exclusively or primarily to operations of Raytheon other than the AIS Business;
(viii) all accounts payable or similar payment obligations by
the AIS Business to Raytheon or any Subsidiary of Raytheon; and
(ix) all liabilities and obligations of the Sellers relating
to or arising out of the Bombardier Litigation.
1.2 Purchase Price and Related Matters.
(a) Purchase Price. In consideration for the sale and transfer of the
Acquired Assets, the Buyer shall at the Closing assume the Assumed Liabilities
as provided in Section 1.1(c) and shall pay to the Sellers an aggregate amount
of $1,130,000,000 (the "Purchase Price"). The Purchase Price shall be subject to
adjustment as provided in Section 1.4. The Purchase Price, as adjusted pursuant
to such Section, is referred to herein as the "Adjusted Purchase Price."
10
(b) Allocation of Purchase Price. The amount of the Adjusted Purchase
Price and the Assumed Liabilities (the "Tax Purchase Price") shall be allocated
among the Acquired Assets and the covenant contained in Section 10.2 as follows.
(i) Raytheon shall prepare and deliver to the Buyer, within
180 days following the final determination of the Adjusted Purchase Price
pursuant to Section 1.4, a schedule setting forth a proposed allocation of the
Tax Purchase Price among the Sellers. The Buyer shall deliver to Raytheon,
within 30 days after delivery of such allocation schedule, either a notice
indicating that the Buyer accepts such allocation schedule or a statement
detailing its objections to such allocation schedule. If the Buyer delivers to
Raytheon a notice accepting Raytheon's allocation schedule, or if the Buyer does
not deliver a written objection within such 30-day period, then, effective as of
either the date of delivery of such notice of acceptance or as of the close of
business on such 30th day, such allocation schedule shall be deemed to be
accepted by the Buyer. If the Buyer timely objects to Raytheon's schedule and
the Buyer and Raytheon cannot reach agreement on such allocation within 15 days
following the date that the Buyer notified Raytheon of the objection, then the
Buyer and Raytheon shall jointly engage a mutually agreeable "big five"
accounting firm (other than PricewaterhouseCoopers LLP) (the "Neutral
Accountant"). If the Neutral Accountant determines that the allocation schedule
provided by Raytheon was reasonable, such allocation schedule shall be final. If
the Neutral Accountant determines that the allocation schedule provided by
Raytheon was unreasonable, the Neutral Accountant shall prepare the allocation
schedule based upon appraisal of the fair value of the assets among which the
Tax Purchase Price is to be allocated and such appraisal shall be determined by
an independent appraisal firm. The Buyer and Raytheon agree to provide to the
11
Neutral Accountant such information as the Neutral Accountant may reasonably
request in connection with the preparation of such schedule and shall request
that the Neutral Accountant prepare and deliver to Raytheon and the Buyer such
allocation schedule as promptly as practicable. The Buyer and Raytheon shall
share equally the costs and expenses of the Neutral Accountant and the
independent appraisal firm for its services under this Section 1.2(b)(i).
(ii) Within 30 days following the final determination of the
allocation of the Tax Purchase Price among the Sellers in accordance with clause
(i) above, the Buyer shall prepare and deliver to Raytheon a schedule with
respect to each Seller setting forth a proposed allocation of the portion of the
Tax Purchase Price allocated to such Seller pursuant to clause (i) above among
the Acquired Assets that were acquired from such Seller and the covenant
contained in Section 10.2 hereof in accordance with the rules under Section 1060
of the Code and the regulations promulgated thereunder (the "Allocation
Schedule"). The Allocation Schedule so proposed by the Buyer shall be final
unless Raytheon in good faith objects to such Allocation Schedule within 30 days
after receiving the Allocation Schedule from the Buyer. If Raytheon timely
objects to the Allocation Schedule and the Buyer and Raytheon cannot reach an
agreement on the Allocation Schedule within 15 days following the date that
Raytheon notified the Buyer of the objection, then the Buyer and Raytheon shall
jointly engage the Neutral Accountant. If the Neutral Accountant determines that
the Allocation Schedule provided by the Buyer was reasonable, the Allocation
Schedule shall be final. If the Neutral Accountant determines that the
Allocation Schedule provided by the Buyer was unreasonable, the Neutral
Accountant shall prepare the Allocation Schedule based upon appraisal of the
fair value of the assets among the assets to which the Tax Purchase Price is to
be allocated and such appraisal
12
shall be determined by an independent appraisal firm. The Buyer and Raytheon
agree to provide the Neutral Accountant with such information as the Neutral
Accountant may reasonably request in connection with the preparation of the
Allocation Schedule and shall request that the Neutral Accountant prepare and
deliver to the Buyer and Raytheon such Allocation Schedule as promptly as
possible. The Buyer and Raytheon shall share equally the costs and expenses of
the Neutral Accountant and the independent appraisal firm for its services under
this Section 1.2(b)(ii).
(iii) The Buyer and the Sellers agree that amounts payable to
any parties pursuant to the agreements set forth in clauses (x) through (xxii)
of Section 1.3(b) were separately agreed upon and represent arm's length
payments for the goods and services to be provided thereunder. Accordingly, no
portion of the Tax Purchase Price is properly allocable to such agreements or
the goods or services provided thereunder.
(iv) The final determination of the Allocation Schedule shall
be used by each party in preparing any filings required pursuant to Section 1060
of the Code or any similar provisions of state or local law and all relevant
income and franchise Tax Returns. Neither the Buyer nor any Seller shall take a
position before any taxing authority or in any judicial proceeding that is
inconsistent with such Allocation Schedule without the prior written consent of
the other Party. The Parties shall in good faith exercise reasonable efforts to
support such Allocation Schedule in any audit proceedings initiated by any
taxing authorities. Notwithstanding the foregoing, if the Allocation Schedule
has not been finally determined in accordance with this Section 1.2(b) by the
time (taking into account all applicable extensions) that any Seller, the Buyer,
or any of their respective Affiliates is required to file any Tax Return
13
reflecting an allocation of the Tax Purchase Price between the Sellers and/or
among the Acquired Assets and the covenant contained in Section 10.2 hereof,
such party shall be entitled to file such Tax Return based upon an allocation of
the Tax Purchase Price that reflects (i) any allocation pursuant to Section
1.2(b)(i) that has become final, (ii) any allocation to any item pursuant to
Section 1.2(b)(ii) hereof upon which the Parties have agreed or with respect to
which the 30-day period for objecting has passed with no objection having been
made by Raytheon to the allocation to the item and (iii) an allocation of any
remaining amounts based upon a good faith determination by such party of the
respective fair market values of the Acquired Assets, provided that such
allocation is not inconsistent with any allocations specified in clauses (i) and
(ii) of this sentence.
1.3 The Closing.
(a) Time and Location. The closing of the transactions contemplated by
this Agreement ("Closing") shall take place at the offices of Xxxx and Xxxx LLP
in Boston, Massachusetts, commencing at 10:00 a.m., local time, on February 28,
2002 or, if all of the conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (excluding the delivery of any
documents to be delivered at the Closing by any of the Parties) have not been
satisfied in full or waived by such date, on such mutually agreeable later date
as soon as practicable (but in no event more than three Business Days (as
defined below)) after the first date on which the conditions to the obligations
of the Parties to consummate the transactions contemplated hereby (excluding the
delivery of any documents to be delivered at the Closing by any of the Parties)
have been satisfied or waived (the "Closing Date"). For purposes of this
Agreement, a "Business Day" shall be any day other than (i) a Saturday or Sunday
or (ii) a day
14
on which banking institutions located in New York, New York are permitted or
required by law, executive order or governmental decree to remain closed.
(b) Actions at the Closing.
At the Closing:
(i) the Sellers shall deliver (or cause to be delivered) to
the Buyer the various certificates, instruments and documents required to be
delivered under Section 5.1;
(ii) the Buyer shall deliver (or cause to be delivered) to the
Sellers the various certificates, instruments and documents required to be
delivered under Section 5.2;
(iii) the Sellers and the Buyer shall execute and deliver a
Xxxx of Sale in substantially the form attached hereto as Exhibit A;
(iv) Raytheon and any other Affiliate thereof owning patents
or patent applications included in the Acquired Assets shall execute and deliver
a Patent Assignment in substantially the form attached hereto as Exhibit B;
(v) Raytheon and any other Affiliate thereof owning any of the
Owned Real Property shall execute and deliver a Special Warranty Deed in
substantially the form attached hereto as Exhibit C with respect to each parcel
of Owned Real Property;
(vi) the Sellers and the Buyer shall execute and deliver an
Assignment and Assumption of Leases with respect to each Real Estate Lease in
substantially the form attached hereto as Exhibit D;
(vii) the Sellers and the Buyer shall execute and deliver such
other instruments of conveyance as the Buyer may reasonably request in order to
effect the sale, conveyance, assignment and transfer to the Buyer of valid
ownership of the Acquired Assets;
15
(viii) the Sellers and the Buyer shall execute and deliver an
Assumption Agreement in substantially the form attached hereto as Exhibit E;
(ix) the Sellers and the Buyer shall execute and deliver such
other instruments as any Seller may reasonably request in order to effect the
assumption by the Buyer of the Assumed Liabilities;
(x) Raytheon and the Buyer shall execute and deliver the
Supply Agreement in substantially the form attached hereto as Exhibit F;
(xi) Raytheon and the Buyer shall execute and deliver the
Supply Agreement in substantially the form attached hereto as Exhibit G;
(xii) Raytheon Technical Services Company and the Buyer shall
execute and deliver the Supply Agreement in substantially the form attached
hereto as Exhibit H;
(xiii) Raytheon Technical Services Company and the Buyer shall
execute and deliver the Supply Agreement in substantially the form attached
hereto as Exhibit I;
(xiv) Thales-Raytheon Systems Co., LLC and the Buyer shall
execute and deliver the Supply Agreement in substantially the form attached
hereto as Exhibit J;
(xv) Raytheon Systems Canada, Ltd. and the Buyer shall execute
and deliver the Supply Agreement in substantially the form attached hereto as
Exhibit K;
(xvi) Raytheon Aircraft Company and the Buyer shall execute
and deliver the Supply Agreement in substantially the form attached hereto as
Exhibit L;
(xvii) Raytheon Systems Limited and the Buyer shall execute
and deliver the Subcontract Agreement in substantially the form attached hereto
as Exhibit M;
16
(xviii) Raytheon and the Buyer shall execute and deliver a
Lease Agreement in substantially the form attached hereto as Exhibit N-1, a
Sublease Agreement in substantially the form attached hereto as Exhibit N-2 and
an Equipment License Agreement in substantially the form attached hereto as
Exhibit N-3;
(xix) Raytheon and the Buyer shall execute and deliver the
Intellectual Property Agreement in substantially the form attached hereto as
Exhibit O (the "Intellectual Property Agreement");
(xx) Raytheon Commercial Ventures, Inc. and the Buyer shall
execute and deliver the Cooling Technology Marketing Agreement in substantially
the form attached hereto as Exhibit P;
(xxi) Raytheon and the Buyer shall execute and deliver the
Transition Services Agreement in substantially the form attached hereto as
Exhibit Q (the "Transition Services Agreement");
(xxii) Raytheon and the Buyer shall execute and deliver the
Business Jet Services Agreement in substantially the form attached hereto as
Exhibit R;
(xxiii) the Buyer shall pay to the Sellers the Purchase Price
in cash by wire transfer of immediately available funds into an account
designated by Raytheon in writing prior to the Closing;
(xxiv) the Sellers shall deliver to the Buyer, or otherwise
put the Buyer in possession and control of, all of the Acquired Assets of a
tangible nature owned by the Sellers; and
17
(xxv) the Parties shall execute and deliver to each other a
cross-receipt evidencing the transactions referred to above.
The agreements and instruments referred to in clauses (iii) through
(xxii) above are referred to herein as the "Ancillary Agreements."
1.4 Post-Closing Adjustment. The Purchase Price set forth in Section
1.2(a) shall be subject to adjustment after the Closing Date as follows:
(a) For purposes of this Agreement, the "Target Net Tangible Book
Value" shall be $475,200,000. Such figure is $25,000,000 in excess of the figure
derived from the Most Recent Balance Sheet in the manner shown on Schedule 1.4.
(b) Within 75 days after the Closing Date, Raytheon shall prepare and
deliver to the Buyer a statement (the "Closing Statement") that is prepared in
accordance with GAAP (provided that in the event of any inconsistency between
GAAP and the methodologies described below, the methodologies described below
shall control) and that sets forth the Acquired Assets and Assumed Liabilities
as of the Closing (without giving effect to the transactions contemplated by
this Agreement) and also showing the excess of the Acquired Assets, excluding
goodwill and other intangible assets, over the Assumed Liabilities as shown
thereon (the "Closing Net Tangible Book Value"), together with a special purpose
audit report by PricewaterhouseCoopers LLP which shall state that the Closing
Statement fairly presents, in all material respects, the Acquired Assets and the
Assumed Liabilities as of the Closing Date on a basis consistent with this
Section 1.4. All fees, costs and expenses of the services rendered by
PricewaterhouseCoopers LLP in connection with the preparation of the Closing
Statement shall be borne by the Sellers. Subject to the methodologies and
procedures described in the balance of
18
this Section 1.4(b), the Closing Statement shall be prepared using the same
accounting principles, practices, procedures, policies and methods, with
consistent classifications, judgments, inclusions, exclusions and valuation and
estimation methodologies, that were employed in the preparation of the balance
sheet attached as Schedule 1.4 and the derivation of the Target Net Tangible
Book Value. Except as specifically provided in the following sentence, (A) the
Closing Net Tangible Book Value, and any difference between the Target Net
Tangible Book Value and the Closing Net Tangible Book Value, shall not reflect
any of the following items: (i) the effect of any changes to estimates used to
prepare the Most Recent Balance Sheet (it being agreed that increases in
percentage of completion resulting from normal cost-to-cost accounting applied
to additional contract expenditures shall not be considered estimates for
purposes of this section), (ii) any changes in or adjustments to the reserves or
estimates at completion used in the preparation of the balance sheet attached as
Schedule 1.4, (iii) deferred tax asset or liability accounts, or (iv) any
changes in any of the assets or liabilities of the AIS Business between the
Balance Sheet Date and the Closing Date, and (B) all estimates at completion,
contract profit rates and loss or other reserves associated with contracts in
process used in the preparation of the balance sheet attached as Schedule 1.4
shall be the same in Schedule 1.4 and in the Closing Statement, and any
associated impacts on any other accounts which change based on a change in such
estimates at completion, contract profit rates and loss or other reserves shall
be ignored. Notwithstanding the foregoing sentence, the following items and
changes shall be taken into account in preparing the Closing Statement: (i) all
amounts of any reserve or valuation accounts shall be reduced for any cash
payments with respect to such reserve and valuation accounts after the Balance
Sheet Date; (ii) changes shall be made to any
19
reserves or valuation accounts relating to depreciation of physical assets to
the extent that such changes are required by the passage of time after the
Balance Sheet Date; (iii) estimates at completion, contract profit rates and
loss and other reserves associated with contracts in process used in the
preparation of the Most Recent Balance Sheet may be revised from the amount used
in such preparation for, and only for, the occurrence of a Third Party Event,
and only to the extent of the impact of that Third Party Event; and (iv) changes
to other components of the Acquired Assets (excluding goodwill and other
intangible assets and excluding estimates at completion, contract profit rates
and loss or other reserves associated with contracts in process used in the
preparation of the balance sheet attached as Schedule 1.4) and the Assumed
Liabilities that result from the operation of the AIS Business between the
Balance Sheet Date and the Closing Date shall be reflected. A "Third Party
Event" is an event that (i) occurs between the Balance Sheet Date and the
Closing, (ii) is communicated to a Seller on or prior to the date 30 days after
the Closing Date, from a source outside the personnel, premises and operations
of the Sellers, and (iii) states a claim or provides notice of a condition, the
financial statement effect of which is probable of occurrence and reasonably
stated or estimable, and would therefore require, under GAAP, the revision,
upward or downward, of a contract reserve or estimate at completion in the
absence of the other provisions of this Section 1.4. For the purposes of the
previous sentence only, "communicated" shall mean the receipt by a Seller of a
written notice from a customer, Governmental Entity, subcontractor or
third-party vendor. The intent of the Buyer and the Sellers with regard to the
methodologies described above is to prohibit a Purchase Price adjustment with
respect to changes in estimates at completion and/or
20
views of risks, opportunities or judgments with respect to agreements existing
as of September 30, 2001, except upon the occurrence of a Third Party Event.
(c) Upon receipt of the Closing Statement by the Buyer, the Buyer and
the Buyer's independent accountants shall have reasonable access during normal
business hours to the Closing Statement working papers of PricewaterhouseCoopers
LLP to the extent reasonably required to complete review of the Closing
Statement. The Buyer shall deliver to Raytheon, within 30 days after delivery by
Raytheon to the Buyer of the Closing Statement, either a notice indicating that
the Buyer accepts the Closing Statement or a statement describing the Buyer's
objections to the Closing Statement, which statement of objections shall
describe in reasonable detail the specific nature and amount of each objection
and shall state in reasonable detail all bases upon which the Buyer believes the
Closing Statement is not in conformity with the requirements set forth in
Section 1.4(b). If the Buyer delivers to Raytheon a notice accepting the Closing
Statement, or the Buyer does not deliver a written objection to the Closing
Statement within such 30-day period, then, effective as of either the date of
delivery of such notice of acceptance or as of the close of business on such
30th day, the Closing Statement shall be deemed to be accepted by the Buyer.
(d) If the Buyer timely objects to the Closing Statement, such
objections shall be resolved as follows:
(i) The Buyer and Raytheon shall first use reasonable efforts
to resolve such objections.
(ii) If the Buyer and Raytheon are able to resolve such
objections within 30 days after delivery to Raytheon of such statement of
objections, the Buyer and
21
Raytheon shall, within 45 days after delivery of such statement of objections,
jointly prepare and sign a statement setting forth the Acquired Assets and
Assumed Liabilities as of the Closing and the Closing Net Tangible Book Value,
which amounts shall reflect the resolution of objections agreed to by the Buyer
and Raytheon.
(iii) If the Buyer and Raytheon do not reach a resolution of
all objections set forth on the Buyer's statement of objections within 30 days
after delivery of such statement of objections, the Buyer and Raytheon shall,
within 30 days after the expiration of such 30-day period, (A) jointly prepare
and sign a statement setting forth (1) those objections (if any) that the Buyer
and Raytheon have resolved and the resolution of such objections and (2) those
objections that the Buyer and Raytheon did not resolve (the "Unresolved
Objections") and (B) engage the Neutral Accountant to resolve the Unresolved
Objections.
(iv) The Buyer and Raytheon shall jointly submit to the
Neutral Accountant, within 10 days after the date of the engagement of the
Neutral Accountant (as evidenced by the date of the engagement agreement), a
copy of the Closing Statement (along with PricewaterhouseCoopers LLP's special
purpose audit report thereon), a copy of the statement of objections delivered
by the Buyer to Raytheon, and the joint statement referred to in Section
1.4(d)(iii)(A) above. Each of the Buyer and Raytheon shall submit to the Neutral
Accountant (with a copy delivered to the other Party on the same day), within 45
days after the date of the engagement of the Neutral Accountant, a memorandum
(which may include supporting exhibits) setting forth their respective positions
on the Unresolved Objections. Each of the Buyer and Raytheon may (but shall not
be required to) submit to the Neutral Accountant (with a copy delivered to the
other Party on the same day), within 75 days after the date of the
22
engagement of the Neutral Accountant, a memorandum responding to the initial
memorandum submitted to the Neutral Accountant by the other Party. Unless
requested by the Neutral Accountant in writing, neither the Buyer nor Raytheon
may present any additional information or arguments to the Neutral Accountant,
either orally or in writing.
(v) The Buyer and Raytheon shall instruct the Neutral
Accountant that (A) the scope of its review and authority shall be limited to
resolving the Unresolved Objections, (B) in resolving the Unresolved Objections,
the Neutral Accountant shall accept each of the values set forth on the Closing
Statement unless the Buyer demonstrates that such value is contrary to the
requirements of the Closing Statement set forth in Section 1.4(b) (in which case
its resolution of each Unresolved Objection shall consist of the determination
of an appropriate value for each Closing Statement item that is the subject of
an Unresolved Objection, which value shall be equal to one of, or between, the
values proposed by Raytheon in the Closing Statement and by the Buyer in its
statement of objections), and (C) issue a ruling which sets forth the resolution
of each Unresolved Objection and includes a statement setting forth the Closing
Net Tangible Book Value, reflecting the Neutral Accountant's resolution of the
Unresolved Objections. The "Final Closing Statement" shall be the statement
accepted (or deemed accepted) by the Buyer pursuant to Section 1.4(c), prepared
and signed pursuant to Section 1.4(d)(ii) or delivered by the Neutral Accountant
pursuant to this Section 1.4(d)(v), as the case may be.
(vi) The resolution by the Neutral Accountant of the
Unresolved Objections shall be conclusive and binding upon the Buyer and the
Sellers. The Buyer and the Sellers agree that the procedure set forth in this
Section 1.4(d) for resolving disputes with respect to the Closing Statement
shall be the sole and exclusive method for resolving any such disputes;
23
provided that this provision shall not prohibit any Party from instituting
litigation to enforce the ruling of the Neutral Accountant.
(vii) The Buyer and Raytheon shall share equally the fees and
expenses of the Neutral Accountant for its services under this Section 1.4(d).
Other than such fees and expenses of the Neutral Accountant, the Buyer and
Raytheon shall each be responsible for their own costs and expenses incurred in
connection with any actions taken pursuant to Section 1.4(c) and this Section
1.4(d).
(e) If the Closing Net Tangible Book Value as shown on the Final
Closing Statement is less than the Target Net Tangible Book Value, the Purchase
Price shall be reduced by such deficiency and Raytheon shall pay to the Buyer,
by wire transfer or other delivery of immediately available funds, within three
Business Days after the date on which the Final Closing Statement is finally
determined pursuant to this Section 1.4, an amount equal to such deficiency
(plus interest thereon at the rate of 8.0% per annum, compounded monthly, from
the Closing Date). If the Closing Net Tangible Book Value as shown on the Final
Closing Statement exceeds the Target Net Tangible Book Value, the Purchase Price
shall be increased by such excess amount and the Buyer shall pay to Raytheon, by
wire transfer or other delivery of immediately available funds, within three
Business Days after the date on which the Final Closing Statement is finally
determined pursuant to this Section 1.4, an amount equal to such excess (plus
interest thereon at the rate of 8.0% per annum, compounded monthly, from the
Closing Date).
1.5 Consents to Assignment. If (a) any Assigned Contract or Real Estate
Lease may not be assigned and transferred by the applicable Seller to the Buyer
(as a result of either the
24
provisions thereof or applicable laws, statutes, rules, regulations, judgments,
rulings, decisions, writs, orders or decrees) without the consent or approval of
a third party (including, for example, a Governmental Entity) and (b) such
consent or approval has not been obtained prior to the Closing, then, with
respect to each such Assigned Contract or Real Estate Lease, (i) notwithstanding
any other provision of this Agreement, such Assigned Contract or Real Estate
Lease shall not be assigned and transferred by such Seller or assumed by the
Buyer at the Closing, (ii) such Seller and the Buyer will cooperate, in all
reasonable respects, to obtain the necessary consent or approval as soon as
practicable after the Closing, provided that neither Party shall be required to
make any payments or agree to any material undertakings in connection therewith
(except to the extent provided in Section 4.1), (iii) if and when such consent
or approval is obtained, such Seller and the Buyer shall execute such further
instruments of conveyance (in substantially the form executed at the Closing) as
may be necessary to assign and transfer such Assigned Contract or Real Estate
Lease to the Buyer and (iv) from and after the Closing until the assignment of
such Assigned Contract or Real Estate Lease pursuant to clause (iii) above, such
Seller and the Buyer shall cooperate, in all reasonable respects to (1) provide
the Buyer with all of the rights and obligations under any such Assigned
Contract or Real Estate Lease, (2) cooperate in any reasonable and lawful
arrangement designed to provide such rights and obligations to the Buyer,
including subcontracting, sublicensing or subleasing to the Buyer or the
appointment of the Buyer as the agent of the Seller for purposes of such
Assigned Contract or Real Estate Lease, and (3) enforce, at the request of the
Buyer and for the account of the Buyer, any and all rights of the applicable
Seller arising under any such Assigned Contract or
25
Real Estate Lease (provided that Section 10.3(b), and not this clause (iv),
shall apply in the case of any such Assigned Contract that is a Government
Contract (as defined in Section 2.13)) .
1.6 Further Assurances. At any time and from time to time after the
Closing Date, as and when requested by any Party hereto and at such Party's
expense, the other Party or Parties shall promptly execute and deliver, or cause
to be executed and delivered, all such documents, instruments and certificates
and shall take, or cause to be taken, all such further or other actions as are
necessary to evidence and effectuate the transactions contemplated by this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers jointly and severally represent and warrant to the Buyer
that, except as set forth in the Schedule of Exceptions provided by the Sellers
to the Buyer on the date hereof (the "Schedule of Exceptions"), the statements
contained in this Article II are true and correct as of the date hereof and will
be true and correct as of the Closing to the extent required by Section 5.1(a).
The Schedule of Exceptions shall be arranged in sections and subsections
corresponding to the numbered and lettered sections and subsections contained in
this Article II. The disclosures in any section or subsection of the Schedule of
Exceptions shall qualify other sections and subsections in this Article II to
the extent it is clear from a reading of the disclosure that such disclosure is
applicable to such other sections and subsections. The inclusion of any
information in the Schedule of Exceptions (or any update thereto) shall not be
deemed to be an admission or acknowledgment, in and of itself, that such
information is required by the terms hereof to be disclosed, is material to the
AIS Business, has resulted in or would result in an AIS Material Adverse Effect
(as defined in Section 2.1), or is outside the ordinary course of business.
26
For purposes of this Agreement, the phrase "to the knowledge of the Sellers" or
any phrase of similar import shall mean and be limited to the actual knowledge
of the following individuals: Xxxxxxx X. Xxxxxxxx, Xxxx Xxxxxx, Xxxxxxx X.
Xxxxx, Xxxxxx Xxxxxx, Xx Xxxxxxx, Xxxxxxx X. O'Xxxxx, Xxxxxx X'Xxxxxx, Xxxxxx
Post, Xxxxx X. Pride, Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxx, Xx., Xxxxxx X. Xxxxx,
Xxxxxx X. Xxxxx, and E. Xxxx Xxxxxxx, and with respect to ASTOR, Xxx Xxxxxx, Xxx
Xxxxxxx and Xxxxxx Xxxxxx.
2.1 Organization, Qualification and Corporate Power. Each of the Sellers is
a corporation duly organized, validly existing and, where applicable, in good
standing under the laws of its respective jurisdiction of organization, and is
duly qualified to conduct business under the laws of each jurisdiction where the
character of the properties or assets owned, leased or operated by it or the
nature of its activities, in each case as they relate exclusively to the AIS
Business, makes such qualification necessary, except for any such failures to be
qualified that would not, individually or in the aggregate, reasonably be
expected to result in an AIS Material Adverse Effect. Each Seller has all
requisite corporate power and authority to carry on the AIS Business in which it
is now engaged and to own, lease and use the Acquired Assets currently owned,
leased and used by it. For purposes of this Agreement, "AIS Material Adverse
Effect" means any material adverse effect on (a) the assets, financial condition
or results of operations of the AIS Business as a whole (other than (i) any
effect arising out of or resulting from economic factors affecting the economy
as a whole or factors generally affecting the industry in which the AIS Business
competes, (ii) any effect proximately caused by the announcement of this
Agreement and/or the transactions contemplated hereby, and (iii) the failure of
a Seller to be
27
awarded any particular new contract or contracts), or (b) the ability of the
Sellers to consummate the transactions contemplated by this Agreement.
2.2 Authorization of Transaction. Each Seller has all requisite corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it will be a party and to perform its obligations hereunder
and thereunder. The execution and delivery by each Seller of this Agreement and
such Ancillary Agreements and the consummation by each Seller of the
transactions contemplated hereby and thereby have been validly authorized by all
necessary corporate action on the part of each Seller. This Agreement has been,
and such Ancillary Agreements will be, validly executed and delivered by each
Seller and, assuming this Agreement and each such Ancillary Agreement constitute
the valid and binding agreement of the Buyer, constitutes or will constitute a
valid and binding obligation of each Seller, enforceable against each Seller in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors generally and by
equitable principles, including those limiting the availability of specific
performance, injunctive relief and other equitable remedies and those providing
for equitable defenses.
2.3 Noncontravention. Subject to compliance with the applicable
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "Xxxx-Xxxxx-Xxxxxx Act"), and applicable foreign antitrust or trade
regulation laws, neither the execution and delivery by any Seller of this
Agreement or the Ancillary Agreements to which such Seller will be a party, nor
the consummation by any Seller of the transactions contemplated hereby or
thereby, will:
28
(a) conflict with or violate any provision of the charter or bylaws of
any Seller;
(b) except for consents to transfer or novations required with respect
to contracts with Governmental Entities, require on the part of any Seller any
filing, designation, declaration or registration with, or any permit,
authorization, consent or approval of, any Governmental Entity, except for any
filing, designation, declaration, registration, permit, authorization, consent
or approval which if not obtained or made would not, individually or in the
aggregate, reasonably be expected to result in an AIS Material Adverse Effect;
(c) conflict with, result in a breach of, constitute (with or without
due notice or lapse of time or both) a default under, result in the acceleration
of obligations under, result in the loss of a benefit or increase in liabilities
or fees under, create in any party the right to terminate, cancel or modify, or
require any notice, consent, approval, authorization or waiver under, any
Assigned Contract or Real Estate Lease, except for (i) any conflict, breach,
default, acceleration, loss, increase, or right to terminate, cancel or modify
that would not, individually or in the aggregate, reasonably be expected to
result in an AIS Material Adverse Effect or (ii) any notice, consent, approval,
authorization or waiver the absence of which would not, individually or in the
aggregate, reasonably be expected to result in an AIS Material Adverse Effect;
(d) violate any order, writ, injunction, judgment, ruling, decision or
decree specifically naming, or statute, rule, law, ordinance or regulation
applicable to, any Seller or any of their respective properties or assets or the
Acquired Assets or Assumed Liabilities, except for any violation that would not,
individually or in the aggregate, reasonably be expected to result in an AIS
Material Adverse Effect; or
29
(e) result in the creation of any Encumbrance (as defined in Section
2.8) upon any of the Acquired Assets.
2.4 Financial Statements. Schedule 2.4 includes copies of the following
financial statements with respect to the AIS Business: (a) the audited combined
balance sheet and combined statements of operations, parent company investment
and cash flows as of and for the fiscal years ended December 31, 1999 and
December 31, 2000 and (b) the unaudited statement of operations for the
nine-month period ended September 30, 2001. Schedule 1.4 includes a copy of the
unaudited balance sheet of the AIS Business as of September 30, 2001 (the "Most
Recent Balance Sheet"). The audited financial statements referenced in clause
(a) above have been prepared in accordance with GAAP and fairly present, in all
material respects, the financial condition and results of operations and cash
flows of the AIS Business as of the respective dates thereof and for the periods
referred to therein in accordance with GAAP; provided that Schedule 2.4
describes any differences between the AIS Business (as defined herein) and the
business and operations that are covered by such financial statements. The
unaudited statement of operations referenced in clause (b) above (i) has, to the
knowledge of the Sellers, been prepared in accordance with GAAP and (ii) fairly
presents, in all material respects, the results of operations of the AIS
Business for the period referred to therein; provided that (i) such statement of
operations includes the audit adjustments made to the audited financial
statements referenced in clause (a) above, updated to reflect the appropriate
amounts as of September 30, 2001 and (ii) Schedule 2.4 describes any differences
between the AIS Business (as defined herein) and the business and operations
that are covered by such statement of operations. The Most Recent Balance Sheet
(i) has, to the knowledge of the Sellers, been prepared in accordance with GAAP
30
and (ii) fairly presents, in all material respects, the assets and liabilities
that would constitute the Acquired Assets and the Assumed Liabilities if the
Closing were to occur on September 30, 2001.
2.5 Absence of Certain Changes. Since the Balance Sheet Date, there has not
been any change, event or development in the AIS Business other than (i) the
pending sale of the AIS Business contemplated by this Agreement and (ii)
changes, events or developments arising in the ordinary course of business that
would not, individually or in the aggregate, reasonably be expected to result in
an AIS Material Adverse Effect. From the Balance Sheet Date to the date of this
Agreement, the AIS Business has been operated in the ordinary course of
business, and none of the Sellers has taken any of the following actions (or
permitted any of the following events to occur) with respect to the AIS
Business:
(a) conveyed, exchanged, sold, assigned, abandoned, disposed of or
transferred any portion of the Acquired Assets in a single transaction or series
of related transactions in an amount in excess of $1,000,000, except in the
ordinary course of business;
(b) suffered any extraordinary losses (whether or not covered by
insurance) material to the AIS Business;
(c) incurred or guaranteed any indebtedness for borrowed money,
including capitalized lease obligations, sale leaseback obligations and other
similar indebtedness obligations, whether current or funded, or secured or
unsecured ("Indebtedness") (all of which is reflected on the Most Recent Balance
Sheet);
31
(d) granted or amended any rights to severance benefits, "stay pay" or
termination pay to any AIS Employee (as defined in Section 9.1) that will
constitute an Assumed Liability;
(e) made any capital expenditures or commitments therefor in an amount
in excess of $1,000,000, except in accordance with the AIS Business' capital
expenditure budget included in Schedule 2.5(e);
(f) acquired any operating business, whether by merger, stock purchase
or asset purchase, except for any such business which did not, and is not
expected to, become part of the AIS Business;
(g) entered into any employment, compensation or deferred compensation
agreement (or any amendment to any such existing agreement) with any AIS
Employee whose annual base salary exceeds $150,000 that is an Assumed Liability;
(h) established, terminated or materially amended any AIS Benefit
Plan, except as required by law or as a result of the combination by the Sellers
of any AIS Benefit Plans and as disclosed to the Buyer;
(i) materially changed its accounting principles, methods or
practices, except in each case to conform to changes in GAAP;
(j) created or suffered the imposition of any Encumbrance on any of
the Acquired Assets;
(k) forgiven or cancelled any material debt or claim of the AIS
Business or voluntarily waived any right of material value other than
compromises of accounts receivable in the ordinary course of business consistent
with past practice;
32
(l) terminated or cancelled, or permitted to lapse, terminate or
expire, any of the Assigned Contracts;
(m) entered into, or performed previously agreed upon, intercompany
transactions relating to the AIS Business with any Affiliate of any of the
Sellers, except any transactions which were in the ordinary course of business
consistent with past practice;
(n) increased (or committed to increase) the compensation, pension or
other benefits payable or to become payable to any AIS Employee or paid any
bonus payments or arrangements to any of them, that will constitute Assumed
Liabilities, other than (i) increases amounting to less than $100,000 (an
annualized basis) in the aggregate effected in the ordinary course of the AIS
Business on a basis consistent with the past practice of the Seller and (ii) any
increase required under the terms of any AIS Benefit Plan; or
(o) entered into any agreement or commitment with respect to any of
the matters referred to in paragraphs (a) through (n) of this Section 2.5.
2.6 Undisclosed Liabilities. There are no material liabilities relating
exclusively or primarily to the AIS Business, except for (a) liabilities shown
on the Most Recent Balance Sheet, (b) liabilities which have arisen since the
Balance Sheet Date in the ordinary course of business and which are not,
individually or in the aggregate, reasonably expected to result in an AIS
Material Adverse Effect, (c) contractual and other liabilities which are not
required by GAAP to be reflected on a balance sheet or in the footnotes thereto
and (d) the Excluded Liabilities.
2.7 Tax Matters. Each Seller has filed or had filed on its behalf all
material Tax Returns (as defined below) that it was required to file (separately
or as part of a consolidated, combined or unitary group) and all such Tax
Returns were complete and accurate to the extent
33
they relate to the AIS Business or the Acquired Assets, except for any failure
to file, error or omission that would not, individually or in the aggregate,
reasonably be expected to result in an AIS Material Adverse Effect. Each Seller
has paid (or had paid on its behalf) all Taxes that are shown to be due on any
such Tax Returns to the extent they relate to the AIS Business or the Acquired
Assets. None of the Acquired Assets is tax-exempt use property within the
meaning of Section 168(h) of the Code. None of the Acquired Assets is property
that is or will be required to be treated as being owned by another person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986. There are no liens for any Tax due on the Acquired Assets,
except for Taxes not yet due and payable. Raytheon is not a foreign person as
defined in Treasury Regulation Section 1.1445-2(b)(2)(i) and will not be subject
to withholding under Section 1445 of the Code and the Treasury Regulations
promulgated thereunder with respect to the sale of the Acquired Assets. None of
the Acquired Assets to be acquired from Raytheon Australia are United States
real property interests as defined in Section 897(c)(1) and the regulations
promulgated thereunder. For purposes of this Agreement, "Taxes" means all taxes,
including without limitation income, gross receipts, ad valorem, value-added,
excise, real property, personal property, sales, use, transfer, withholding,
employment, profits, estimated, windfall profits, severance, intangible
property, occupation, production, license, capital gains, stamp, capital stock,
payroll, goods and services, alternative minimum tax and franchise taxes or any
other tax, custom or duty, or other like assessment or charge of any kind
whatsoever, imposed by the United States of America or any state, local or
foreign government, or any agency thereof, or other political subdivision of the
United States or any such government, and
34
any interest, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any tax or any contest or dispute
thereof. For purposes of this Agreement, "Tax Returns" means all reports,
returns, declarations, statements, forms or other information required to be
supplied to a taxing authority in connection with Taxes.
2.8 Tangible Personal Property. One of the Sellers owns all of the tangible
personal property reflected on the Most Recent Balance Sheet (other than
property sold, consumed or otherwise disposed of in the ordinary course of
business since the Balance Sheet Date), free and clear of all Encumbrances. For
purposes of this Agreement, "Encumbrance" means any mortgage, pledge, security
interest, encumbrance, charge or other lien (whether arising by contract or by
operation of law), other than (i) mechanic's, materialmen's, landlord's and
similar liens arising in the ordinary course of business, (ii) liens arising
under worker's compensation, unemployment insurance, social security, retirement
and similar legislation, (iii) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the ordinary course of
business, (iv) liens for Taxes not yet due and payable, (v) liens for Taxes
which are being contested in good faith and by appropriate proceedings, (vi)
liens relating to capitalized lease financings or purchase money financings that
have been entered into in the ordinary course of business, and (vii) liens
arising solely by action of the Buyer; provided that any of the items set forth
in the foregoing clauses (i) through (vii) shall be considered an Encumbrance if
the existence of any such items, individually or in the aggregate, (x) would
reasonably be expected to result in an AIS Material Adverse Effect or (y)
materially and adversely impairs the present use or value of the Acquired
Assets.
35
2.9 Owned Real Property. The Owned Real Property constitutes all real
property owned by any Seller that is used exclusively or primarily in the AIS
Business. With respect to each piece of Owned Real Property:
(a) one of the Sellers has record and marketable fee simple title to,
and is in possession of, such Owned Real Property, free and clear of any
Encumbrance, except for recorded easements, covenants and other restrictions
which do not, individually or in the aggregate, materially impair the value or
current uses of such Owned Real Property;
(b) there are no leases, subleases or agreements granting to any party
or parties the right of use or occupancy of any portion of such Owned Real
Property, and no third party is in possession of any of the Owned Real Property;
(c) there are no outstanding options or rights of first refusal to
purchase such Owned Real Property;
(d) none of the Sellers has received notice of, and to the knowledge
of the Sellers, there is no pending eminent domain proceeding or proceeding to
change or redefine the zoning classification with respect to such Owned Real
Property; and
(e) to the knowledge of the Sellers, (i) the improvements constructed
on such Owned Real Property are in good condition, normal wear and tear
excepted, (ii) no Seller has received any uncured notice, demand or request
stating that such Owned Real Property is not in compliance with any applicable
law, statute, ordinance or code, and (iii) there are no violations of any deed
restrictions or recorded covenants affecting such Owned Real Property.
2.10 Leased Real Property. The Real Estate Leases constitute all leases or
subleases of any Seller covering real property which is used exclusively or
primarily in the AIS Business.
36
The Sellers have made available to the Buyer complete and accurate copies of the
Real Estate Leases and all amendments and modifications thereto. With respect to
each Real Estate Lease:
(a) the Real Estate Lease is a valid and binding obligation of the
applicable Seller and, to the knowledge of the Sellers, each other party to such
Real Estate Lease;
(b) one of the Sellers is the holder of the tenant's interest under
the Real Estate Lease and is in possession of the Leased Facility, and, to the
knowledge of the Sellers, is entitled to quiet enjoyment and use of the Leased
Facility in connection with the conduct of the AIS Business without any
interference or claims by any Person;
(c) none of the Sellers nor, to the knowledge of the Sellers, any
other party to the Real Estate Lease is in breach or default and, to the
knowledge of the Sellers, no event has occurred which, with notice or lapse of
time or both, would constitute a breach or default or permit termination,
modification or acceleration thereunder, except for any such breach or default
as would not, individually or in the aggregate, reasonably be expected to result
in an AIS Material Adverse Effect; and
(d) none of the Sellers has assigned, transferred, conveyed,
mortgaged, deeded in trust, encumbered or otherwise permitted, created, or
suffered any Encumbrance on any interest in the leasehold or subleasehold to the
Real Estate Lease.
2.11 Intellectual Property.
(a) Schedule 1.1(a)(vii) lists substantially all of the patents and
patent applications owned by any Seller or an Affiliate that are used or planned
for use exclusively or primarily in the AIS Business as conducted prior to and
up to the date of this Agreement (the "Designated Intellectual Property"). To
the knowledge of the Sellers, the Sellers own or have
37
the right to use, and pursuant to this Agreement, the Intellectual Property
Agreement or the Transition Services Agreement will assign, license or provide
access to the Buyer, all of the Intellectual Property of the Seller (except for
any Intellectual Property set forth on Schedule 2.14) necessary to conduct the
AIS Business, free of all Encumbrances. There are no copyright registrations
owned by any Seller or an Affiliate that are used exclusively or primarily in
the AIS Business.
(b) Except for any claims which have previously been resolved and are
no longer outstanding or which were made more than three years prior to the date
of this Agreement and which have not been subsequently pursued, none of the
Sellers has received notice of, or has, to the knowledge of the Sellers, been
threatened with, any written claim from any third party, and there are no
pending actions, suits or proceedings alleging (i) infringement or violation of
such third party's Intellectual Property which is based on the use of the
Intellectual Property to be sold to the Buyer pursuant to this Agreement or the
Acquired Assets and which would reasonably be expected to result in an AIS
Material Adverse Effect, or (ii) the invalidity or unenforceability of any of
the Intellectual Property to be sold to the Buyer pursuant to this Agreement.
(c) The Buyer acknowledges that the Intellectual Property to be
assigned to the Buyer pursuant to this Agreement may be subject to certain
pre-existing rights or licenses which have previously been granted to, or
acquired by, the United States Government or other third parties. Other than
rights and licenses granted in the ordinary course of business, none of the
Sellers has granted to any third party any license or right to the commercial
use of any of the Designated Intellectual Property.
38
(d) To the knowledge of the Sellers, no third party is infringing any
of the Intellectual Property to be sold to the Buyer pursuant to this Agreement.
2.12 Contracts.
(a) Schedule 2.12 lists all of the following contracts or agreements
to which any Seller is a party as of the date of this Agreement that relate
exclusively or primarily to the AIS Business (excluding Real Estate Leases, any
contracts or agreements relating to Excluded Assets or Excluded Liabilities and
excluding any contracts or agreements that cannot be disclosed to the Buyer due
to the provisions of applicable law or regulations):
(i) any agreement (or group of related agreements with the same
party) for the lease of personal property from or to third parties providing for
lease payments the remaining unpaid balance of which is in excess of $500,000;
(ii) any agreement (or group of related agreements with the same
party) for the purchase of products or services under which the undelivered
balance of such products and services is in excess of $500,000, other than
agreements executed in the ordinary course of business which are cancelable by
the applicable Seller without penalty upon six months or shorter notice;
(iii) any agreement (or group of related agreements with the same
party) relating exclusively or primarily to the AIS Business which involves a
payment to be made to any Seller in excess of $500,000, either pursuant to a
contract with a customer of the AIS Business or pursuant to any other contract
or agreement for the sale of goods and services outside the ordinary course of
business;
39
(iv) any agreement for the acquisition by any Seller of any
operating business, whether by merger, stock purchase or asset purchase, except
for any such business which did not or will not become part of the AIS Business;
(v) any agreement establishing a partnership or joint venture;
(vi) any agreement (or group of related agreements with the same
party) under which any Seller has created, incurred, assumed or guaranteed
Indebtedness the outstanding balance of which is more than $500,000 or under
which it has imposed an Encumbrance on any of the Acquired Assets;
(vii) any agreement that contains non-competition covenants
limiting or restricting the ability of any Seller or any subsequent transferees
or assignees, including the Buyer, from engaging in the AIS Business anywhere in
the world;
(viii) any agreement for the employment of any AIS Employee
providing base annual compensation at a rate in excess of $150,000;
(ix) any employment, change in control, severance, "stay pay" or
termination agreement with any AIS Employee;
(x) any agreement relating exclusively or primarily to the AIS
Business and requiring estimated or actual annual capital expenditures in excess
of $1,000,000;
(xi) any material agreement with respect to the representation of
the AIS Business in foreign countries;
(xii) any agreement relating to any material indemnification
obligations of any of the Sellers;
40
(xiii) any agreement relating to any litigation, suit,
proceeding, action, investigation, claim, settlement, judgment, award, order or
decree which involves liability of the Sellers in excess of $500,000; and
(xiv) any license of computer software used primarily in the AIS
Business, requiring payments in excess of $500,000 per year.
(b) The Sellers have made available to the Buyer a complete and
accurate copy of each contract and agreement listed in Schedule 2.12 (the
"Designated Contracts"), other than any contracts or agreements that cannot be
provided to the Buyer due to the provisions of applicable law or regulations.
Each Designated Contract (i) is in full force and effect and (ii) constitutes a
valid and binding obligation of the applicable Seller and, to the knowledge of
the Sellers, of each other party thereto, and there exists no defaults of any
Seller or, to the knowledge of the Sellers, any other party thereto under any
Designated Contract, except for any such failure to be valid and binding or
default that would not, individually or in the aggregate, reasonably be expected
to result in an AIS Material Adverse Effect. To the knowledge of the Sellers, no
outstanding bid or proposal to provide products or services to a third party or
Governmental Entity was bid, such that if accepted such bid or proposal would
reasonably be expected to generate a net loss to the Seller in the performance
thereof.
2.13 Government Contracts.
(a) (i) None of the AIS Employees is or during the last three years
has been (except as to routine security investigations) under administrative,
civil or criminal investigation, indictment or information by any agency, entity
or regulatory authority of the United States Federal Government (a "U.S.
Governmental Entity"), (ii) there is no pending or, to the
41
knowledge of the Sellers, threatened audit or investigation by any U.S.
Governmental Entity of the AIS Business or any AIS Employee with respect to the
AIS Business with respect to any alleged irregularity, misstatement or omission
arising under or relating to a Government Contract or Government Bid, and (iii)
during the last three years, none of the Sellers has made a voluntary disclosure
with respect to any alleged irregularity, misstatement or omission arising under
or relating to a Government Contract or Government Bid with respect to the AIS
Business or included in the Acquired Assets, other than routine inquiries,
audits and reconciliations that, in each case, would not, individually or in the
aggregate, reasonably be expected to result in an AIS Material Adverse Effect.
To the knowledge of the Sellers, none of the Sellers nor any of their respective
employees has made any intentional misstatement or omission in connection with
any voluntary disclosure that has led or is 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. For purposes of this
Agreement, "Government Contract" means any Assigned Contract that (i) is between
any Seller and a U.S. Governmental Entity or (ii) is entered into by any Seller
as a subcontractor (at any tier) in connection with a contract between another
entity and a U.S. Governmental Entity, and "Government Bid" means any offer to
sell made by any of the Sellers prior to the Closing Date which, if accepted,
would result in a Government Contract.
(b) There are (i) no outstanding claims against any Seller by a U.S.
Governmental Entity or any non-U.S. Governmental Entity or by any prime
contractor, subcontractor or vendor arising under any Government Contract or
Government Bid with respect to the AIS Business or otherwise included in the
Acquired Assets and (ii) no disputes between
42
any Seller and a U.S. Governmental Entity or non-U.S. Governmental Entity under
the Contract Disputes Act or any other federal statute or between any Seller and
any prime contractor, subcontractor or vendor arising under or relating to any
such Government Contract or Government Bid with respect to the AIS Business or
otherwise included in the Acquired Assets, except any such claim or dispute that
would not, individually or in the aggregate, reasonably be expected to result in
an AIS Material Adverse Effect.
(c) None of the Sellers nor any of the AIS Employees is (or during the
last three years has been) suspended or debarred from doing business with a U.S.
Governmental Entity or a non-U.S. Governmental Entity or is (or during such
period was) the subject of a finding of non-responsibility or ineligibility for
U.S. Government or non-U.S. Government contracting.
(d) No misstatement contained in schedules of U.S.
Government-furnished equipment provided to any Governmental Entity under any
Government Contract relating to the AIS Business are reasonably expected,
individually or in the aggregate, to result in an AIS Material Adverse Effect.
(e) The rates and rate schedules submitted to U.S. Governmental
Entities with respect to the Government Contracts relating to the AIS Business
or otherwise included in the Acquired Assets have been closed for all years
prior to 1995.
2.14 Entire Business. Except for (i) the Excluded Assets, (ii) any services
or functions provided to the Buyer under the Transition Services Agreement,
(iii) any Assigned Contracts covered by Section 1.5 and (iv) those items listed
in Schedule 2.14, (x) the Acquired Assets are, when utilized by a labor force
substantially similar to that employed by the Sellers in connection
43
with the AIS Business, adequate to conduct the AIS Business in all material
respects as currently conducted, and (y) no material assets used exclusively or
primarily in the AIS Business (other than assets leased or licensed by a Seller)
are owned by a party other than the Sellers.
2.15 Litigation. Schedule 2.15 lists, as of the date of this Agreement,
each (a) judgment, writ, order, decree, stipulation, ruling, decision or
injunction of any Governmental Entity specifically naming any Seller that
relates to the AIS Business that would reasonably be expected, individually or
in the aggregate, to result in an AIS Material Adverse Effect and (b) action,
suit, arbitration or proceeding by or before any Governmental Entity to which
any Seller is a party or, to the knowledge of the Sellers, which has been
threatened in writing against any Seller that relates to the AIS Business and
that seeks either (i) unspecified damages which could reasonably expected to be
in excess of $500,000, (ii) damages in excess of $500,000 or (iii) equitable
relief that would materially impair the operation of the AIS Business as
currently conducted. There is no (i) judgment, writ, order, decree, stipulation,
ruling, decision or injunction of a Governmental Entity specifically naming any
Seller that relates to the AIS Business or (ii) action, suit, arbitration or
proceeding by or before any Governmental Entity to which any Seller is a party
or, to the knowledge of the Sellers, which has been threatened in writing
against any Seller that relates to the AIS Business, that, in either case, would
reasonably be expected, individually or in the aggregate, to result in an AIS
Material Adverse Effect.
2.16 Employment and Labor Matters.
(a) Schedule 2.16 contains a list, as of the date of this Agreement,
of all AIS Employees whose annual rate of compensation exceeds $150,000, along
with the position and the annual rate of compensation of each such person.
44
(b) Raytheon has a collective bargaining relationship with the United
Automobile, Aerospace and Agricultural Implement Workers of America (the
"Union") and is a party to a collective bargaining agreement with the Union
renewed as of August 21, 2001 (the "Collective Bargaining Agreement"). None of
the Sellers has any other collective bargaining relationship or is party to any
other collective bargaining agreement with respect to the AIS Business, and none
of the Sellers is negotiating any other collective bargaining agreement with
respect to the AIS Business. The Collective Bargaining Agreement will expire on
August 21, 2004 unless a successor agreement has been negotiated. The Union has
not engaged in a work stoppage or strike with respect to the AIS Business within
the preceding 20 years. There is not currently in effect any litigation between
any Seller and the Union relating to the collective bargaining relationship or
the collective bargaining agreement, including but not limited to grievances,
arbitrations or unfair labor practice proceedings, except any which would not,
individually or in the aggregate, reasonably be expected to result in an AIS
Material Adverse Effect. The Collective Bargaining Agreement shall be deemed an
Assigned Contract.
2.17 Employee Benefits.
(a) Schedule 2.17 contains a complete and accurate list, as of the
date of this Agreement, of all Employee Benefit Plans (as defined below)
maintained, or contributed to, by any Seller for the benefit of AIS Employees
(and their beneficiaries) or under which the AIS Business would otherwise
reasonably be expected to have liability in respect of the AIS Employees (the
"AIS Benefit Plans"). For purposes of this Agreement, "Employee Benefit Plan"
means (i) any "employee pension benefit plan" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) other
than a
45
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA), (ii) any
"employee welfare benefit plan" (as defined in Section 3(1) of ERISA), and (iii)
any other written or oral plan, agreement or arrangement involving compensation,
including without limitation insurance coverage, severance benefits, vacation,
disability benefits, deferred compensation, bonuses, stock options, stock
purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement compensation or benefits, but excluding any
Employee Benefit Plan required to be maintained or contributed to under foreign
law. Complete and accurate copies of all AIS Benefit Plans (or, if no written
plan or agreement, a complete and accurate written summary thereof) and all
related trust agreements, insurance contracts and summary plan descriptions have
been made available to the Buyer.
(b) Each AIS Benefit Plan has been administered in all material
respects in accordance with its terms and each Seller has met its obligations
with respect to such AIS Benefit Plan. Each AIS Benefit Plan is in compliance in
all material respects with the currently applicable provisions of ERISA and the
Internal Revenue Code of 1986, as amended (the "Code"), the regulations
thereunder and any other applicable laws.
(c) There are no termination proceedings or other claims (except
claims for benefits payable in the normal operation of the AIS Benefit Plans and
proceedings with respect to qualified domestic relations orders), suits or
proceedings against or involving any AIS Benefit Plan or asserting any rights or
claims to benefits under any AIS Benefit Plan, or, to the knowledge of the
Sellers, any pending or threatened such proceedings or other claims, suits,
proceedings, or investigations by any Governmental Entity involving any AIS
Benefit Plan, which could reasonably be expected to result in material liability
to the AIS Business.
46
(d) The AIS Benefit Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters from the Internal
Revenue Service to the effect that such AIS Benefit Plans are qualified and the
plans and the trusts related thereto are exempt from federal income Taxes under
Sections 401(a) and 501(a), respectively, of the Code, and nothing has occurred,
whether by action or failure to act, that would reasonably be expected to cause
the loss of any such qualification, except for such failures to qualify which
may be corrected without material liability to the AIS Business.
(e) None of the Sellers nor any ERISA Affiliate (as defined below) has
withdrawn from any multiemployer plan in a complete or partial withdrawal which
has resulted in any material withdrawal liability which has not been satisfied
in full, and none of the Sellers nor any ERISA Affiliate reasonably expects to
incur any such liability. All required contributions by any Seller or any ERISA
Affiliate to any such multiemployer plan have been made in full. For purposes of
this Agreement, "ERISA Affiliate" means any entity which is a member of (i) a
controlled group of corporations (as defined in Section 414(b) of the Code),
(ii) a group of trades or businesses under common control (as defined in Section
414(c) of the Code), or (iii) an affiliated service group (as defined under
Section 414(m) of the Code or the regulations under Section 414(o) of the Code),
any of which includes any Seller.
(f) No AIS Benefit Plan provides welfare benefits after termination of
employment to any AIS Employee (or to any beneficiary of any such employee),
excluding continuation of health coverage required to be continued under Section
4980B of the Code or other applicable laws.
47
(g) No act or omission has occurred and no condition exists with
respect to any AIS Benefit Plan maintained by any Seller or any ERISA Affiliate
that would subject any Seller or any ERISA Affiliate to any fine, penalty, Tax
or liability of any kind imposed under ERISA or the Code (other than liabilities
for benefits accrued under AIS Benefit Plans for AIS Employees and their
beneficiaries), except for any fine, penalty, Tax or liability that would not,
individually or in the aggregate, reasonably be expected to be material.
(h) No AIS Benefit Plan is a "multiple employer plan" within the
meaning of Section 413(c) of the Code.
2.18 Environmental Matters.
(a) For purposes of this Agreement, the following terms have the
meanings provided below.
(i) "Release" has the meaning assigned to that term under the
Federal Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended ("CERCLA").
(ii) "Environment" means any surface water, ground water,
drinking water supply, land surface or subsurface strata, or ambient air.
(iii) "Materials of Environmental Concern" means any hazardous
substance, pollutant or contaminant, as those terms are defined under CERCLA,
solid waste and hazardous waste, as those terms are defined in the Federal
Resource Conservation and Recovery Act, and oil, petroleum and petroleum
products.
(iv) "Environmental Law" means any foreign, federal, state,
provincial, or municipal statute, rule or regulation, order, or the common law,
relating to protection of the
48
Environment or occupational health and safety, including, without limitation,
any statute or regulation pertaining to (A) the presence, manufacture,
processing, use, treatment, storage, disposal, transportation, handling or
generation of Materials of Environmental Concern; (B) air, water and noise
pollution; (C) groundwater and soil contamination; or (D) the Release or
threatened Release of Materials of Environmental Concern to the Environment
(including without limitation bodily injury or property damage resulting
therefrom).
(v) "Environmental Matters" means any legal obligation or
liability arising under Environmental Law (including, without limitation, strict
liability under CERCLA and analogous Environmental Law) relating to the
properties and the business which are the subject of the transaction
contemplated by this Agreement, including, without limitation, Off-Site
Liabilities.
(vi) "Off-Site Liabilities" means Environmental Matters resulting
from any transportation, treatment, storage, disposal or Release, or the
arrangement therefor, in connection with the AIS Business, of any Materials of
Environmental Concern to or at any property, location, site or facility other
than an AIS Property, but Off-Site Liabilities do not include Environmental
Matters to the extent arising from Releases on an AIS Property, manifested by
contamination on such property which has migrated beyond a boundary of such
property through soil or ground water.
(vii) "AIS Properties" means the Owned Real Property and Leased
Facilities or government-owned facility now or formerly operated by the AIS
Business, but only to the extent operated by the AIS Business.
49
(b) To the knowledge of the Sellers, except as described or identified
in the Schedule of Exceptions or in a document listed in the Schedule of
Exceptions:
(i) the AIS Business' operations at the AIS Properties are in
compliance with applicable Environmental Laws, except for any failure to comply
with Environmental Laws that would not, individually or in the aggregate,
reasonably be expected to result in an AIS Material Adverse Effect;
(ii) there is no pending or threatened civil or criminal
litigation, written notice of violation or formal administrative proceeding,
investigation or claim relating to any Environmental Law involving the AIS
Business, any of the AIS Properties, any property formerly owned or operated by
the AIS Business, except for any such litigation, notice, proceeding,
investigation or claim that would not, individually or in the aggregate,
reasonably be expected to result in an AIS Material Adverse Effect;
(iii) The Sellers have those permits, licenses and approvals
required under Environmental Law to operate the AIS Properties as currently
operated by the Sellers, except for any such permit, license or approval the
absence of which would not, individually or in the aggregate, reasonably be
expected to result in an AIS Material Adverse Effect; and
(iv) No Materials of Environmental Concern have been Released by
the AIS Business that would require remediation under applicable Environmental
Law, except for any such Release that would not, individually or in the
aggregate, reasonably be expected to result in an AIS Material Adverse Effect.
(c) The Parties agree that the only representations and warranties of
the Sellers herein as to any Environmental Matters are those contained in this
Section 2.18. Without
50
limiting the generality of the foregoing, the Buyer specifically acknowledges
that the representations and warranties contained in Sections 2.15, 2.19 and
2.20 do not relate to Environmental Matters.
2.19 Legal Compliance. Each Seller is in compliance with all applicable
laws (including rules, regulations, statutes, writs, orders, judgments and
decrees thereunder) of any federal, state or foreign government, or any
Governmental Entity, currently in effect with respect to the AIS Business,
except where the failure to comply therewith would not, individually or in the
aggregate, reasonably be expected to result in an AIS Material Adverse Effect.
None of the Sellers has received written notice of any pending action, suit,
proceeding, hearing or investigation relating to the AIS Business alleging any
failure to so comply, except for any that would not, individually or in the
aggregate, reasonably be expected to result in an AIS Material Adverse Effect.
2.20 Permits. Schedule 2.20 lists all Legal Permits held by any Seller
relating to the AIS Business or the use and ownership of the Acquired Assets,
the absence of which would, individually or in the aggregate, reasonably be
expected to result in an AIS Material Adverse Effect. To the knowledge of the
Sellers, (a) each Legal Permit listed in Schedule 2.20 is in full force and
effect and none of the Sellers is in violation of or default thereunder, and (b)
no suspension or cancellation of any such Legal Permit is threatened, except for
any violation, default, suspension or cancellation that would not, individually
or in the aggregate, reasonably be expected to result in any material liability
to the AIS Business or materially impair the operation of the AIS Business.
51
2.21 Title to Assets. Each of the Sellers owns or has the right to transfer
all of the Acquired Assets. All of the tangible Acquired Assets have been
adequately maintained for their continued operation, subject to normal wear and
tear, except where the failure to maintain such Acquired Assets would not,
individually or in the aggregate, reasonably be expected to have an AIS Material
Adverse Effect.
2.22 Government-Furnished Equipment. Schedule 2.22 incorporates by
reference to their location the most recent schedules delivered to any
Governmental Entity, as of the date of this Agreement, which identifies by
description or by inventory number certain equipment and fixtures loaned, bailed
or otherwise furnished to or held by any Seller by or on behalf of any
Governmental Entity and used exclusively or primarily in the AIS Business. Such
schedules are maintained in the files of the respective projects and were
accurate and complete and, as of the Closing Date, would contain only those
additions and omit only those deletions of equipment and fixtures that have
occurred in the ordinary course of business, except for such inaccuracies that
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
2.23 Accounts Receivable. All accounts receivable of the AIS Business, as
reflected in Most Recent Balance Sheet, arose from sales actually made or
services actually performed in the ordinary course of business.
2.24 Brokers Fees. Except for Bear, Xxxxxxx & Co. Inc., whose fees and
expenses will be paid by the Sellers, no finder, broker, agent or other
intermediary has worked for or on behalf of any of the Sellers in connection
with the negotiation or consummation of the transactions contemplated hereby.
52
2.25 Affiliate Relationships. No agreement, arrangement or relationship
exists between the AIS Business on the one hand and any of the Sellers or their
Affiliates on the other hand, except for agreements, arrangements and
relationships (i) with respect to accounts receivable and accounts payable
relating to the AIS Business that do not constitute Acquired Assets or Assumed
Liabilities, and (ii) contemplated by the Ancillary Agreements or Section 10.5
of this Agreement.
2.26 Liability for Cost and Pricing Data. To the knowledge of the Sellers,
there exists no reasonable basis for a claim for any liability of the AIS
Business by any Governmental Entity as a result of defective cost and pricing
data submitted to any Governmental Entity, including, without limitation, any
such data relating to liabilities accrued on the books of the AIS Business or in
the financial accounts for deferred compensation to any AIS Employee, except any
such liability that would not, individually or in the aggregate, reasonably be
expected to result in an AIS Material Adverse Effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to each Seller that the statements
contained in this Article III are true and correct as of the date hereof and
will be true and correct as of the Closing to the extent required by Section
5.2(a). For purposes of this Agreement, the phrase, "to the knowledge of the
Buyer" or any phrase of similar import shall mean and be limited to the actual
knowledge of the following individuals: Xxxxx X. Xxxxx, Xxxxxx X. XxXxxxx,
Xxxxxxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxxxx, and Xxxxx X. Xxxxxx.
53
3.1 Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware.
3.2 Authorization of Transaction. The Buyer has all requisite corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it will be a party and to perform its obligations hereunder
and thereunder. The execution and delivery by the Buyer of this Agreement and
such Ancillary Agreements and the consummation by the Buyer of the transactions
contemplated hereby and thereby have been validly authorized by all necessary
corporate action on the part of the Buyer. This Agreement has been, and such
Ancillary Agreements will be, validly executed and delivered by the Buyer and,
assuming this Agreement and each such Ancillary Agreement constitute the valid
and binding agreement of the Sellers, constitutes or will constitute a valid and
binding obligation of the Buyer, enforceable against the Buyer in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or other similar
laws relating to or affecting the rights of creditors generally and by equitable
principles, including those limiting the availability of specific performance,
injunctive relief and other equitable remedies and those providing for equitable
defenses.
3.3 Noncontravention. Subject to compliance with the applicable
requirements of the Xxxx-Xxxxx-Xxxxxx Act and applicable foreign antitrust or
trade regulation laws, neither the execution and delivery by the Buyer of this
Agreement or the Ancillary Agreements to which the Buyer will be a party, nor
the consummation by the Buyer of the transactions contemplated hereby or
thereby, will:
54
(a) conflict with or violate any provision of the charter or bylaws of
the Buyer;
(b) require on the part of the Buyer any filing, designation,
declaration or registration with, or permit, authorization, consent or approval
of, any Governmental Entity, except for any filing, designation, declaration,
registration, permit, authorization, consent or approval which if not obtained
or made would not, individually or in the aggregate, reasonably be expected to
result in a material adverse effect on the ability of the Buyer to consummate
the transactions contemplated by this Agreement (a "Buyer Material Adverse
Effect");
(c) conflict with, result in a breach of, constitute (with or without
due notice or lapse of time or both) a default under, result in the acceleration
of obligations under, create in any party the right to terminate, cancel or
modify, or require any notice, consent, approval, authorization or waiver under,
any contract or agreement to which the Buyer is a party or by which the Buyer is
bound, except for (i) any conflict, breach, default, acceleration or right to
terminate, cancel or modify that would not, individually or in the aggregate,
reasonably be expected to result in a Buyer Material Adverse Effect, (ii) any
notice, consent, approval, authorization or waiver the absence of which would
not, individually or in the aggregate, reasonably be expected to result in a
Buyer Material Adverse Effect or (iii) any consent set forth on Schedule 3.3(c);
or
(d) violate any order, writ, injunction, judgment, ruling, decision or
decree specifically naming, or statute, rule, law, ordinance or regulation
applicable to, the Buyer or any of its properties or assets, except for any
violation that would not, individually or in the aggregate, reasonably be
expected to result in a Buyer Material Adverse Effect.
55
3.4 Litigation. There is no (a) judgment, writ, order, decree, stipulation,
ruling, decision or injunction of any Governmental Entity specifically naming
the Buyer or (b) action, suit, arbitration or proceeding by or before any
Governmental Entity to which the Buyer is a party or, to the knowledge of the
Buyer, which has been threatened against the Buyer, that, in the case of either
clause (a) or (b), would reasonably be expected, individually or in the
aggregate, to result in a Buyer Material Adverse Effect.
3.5 Financing. The Buyer has, and at the Closing will have, sufficient
sources of financing in order to consummate the transactions contemplated by the
Agreement and to fulfill its obligations hereunder, including without limitation
payment to the Sellers of the Purchase Price at the Closing.
3.6 Due Diligence by the Buyer. The Buyer acknowledges that it has
conducted an independent investigation of the financial condition, results of
operations, assets, liabilities, properties and projected operations of the AIS
Business and, in making its determination to proceed with the transactions
contemplated by this Agreement, the Buyer has relied solely on the results of
such investigation and the representations, warranties, covenants and agreements
of the Sellers set forth herein, including the Schedule of Exceptions and other
Schedules hereto, and in the Ancillary Agreements. Such representations and
warranties by the Sellers constitute the sole and exclusive representations and
warranties of the Sellers to the Buyer in connection with the transactions
contemplated hereby, and the Buyer acknowledges and agrees that the Sellers are
not making any representation or warranty whatsoever, express or implied, beyond
those expressly given in this Agreement and the Ancillary Agreements, including
any implied warranty as to condition, merchantability, or suitability as to any
of the Acquired Assets. The
56
Buyer further acknowledges and agrees that any cost estimates, projections or
other predictions that may have been provided to the Buyer or any of its
employees, agents or representatives are not representations or warranties of
the Sellers or any of their Affiliates; provided that the foregoing is not
intended to and shall not limit the scope of the representations and warranties
contained herein and in the Ancillary Agreements, including Sections 2.4, 2.6
and 2.26 hereof and in the appendices to the Supply Agreements.
ARTICLE IV
PRE-CLOSING COVENANTS
4.1 Closing Efforts; Xxxx-Xxxxx-Xxxxxx Act.
(a) Each of the Parties shall use reasonable commercial efforts to
take all actions and to do all things reasonably necessary or advisable to
consummate the transactions contemplated by this Agreement, including using
reasonable commercial efforts to (i) obtain all waivers, permits, consents,
approvals or other authorizations from Governmental Entities and other third
parties (the "Third Party Consents"), (ii) effect all registrations,
declarations, filings and notices with or to Governmental Entities (the
"Governmental Filings"), (iii) otherwise comply in all material respects with
all applicable laws, statutes, orders, decrees, judgments, rules and regulations
in connection with the consummation of the transactions contemplated by this
Agreement, and (iv) take such other actions as may be reasonably necessary or as
another Party may reasonably request to satisfy the conditions set forth in
Article V hereof or otherwise to comply with this Agreement. Each of the Parties
shall promptly notify each of the other Parties of any fact, condition, or event
known to it that could reasonably be expected to prohibit, make unlawful or
delay the consummation of the transaction contemplated hereby. Each of the
57
Parties shall bear its own costs and expenses associated with obtaining Third
Party Consents from Governmental Entities and effecting Governmental Filings.
Notwithstanding the foregoing, none of the Parties shall be required to pay any
out-of-pocket costs associated with obtaining Third Party Consents from entities
other than Governmental Entities; provided that if an out-of-pocket payment is
required to obtain a Third Party Consent which is listed on Schedule 5.1(f) or
which Raytheon and the Buyer agree is advisable to obtain, Raytheon and the
Buyer shall each pay 50% of such out-of-pocket payment.
(b) Without limiting the generality of the foregoing, each of the
Parties shall (or shall cause the appropriate Affiliate thereof to) (i) promptly
file any Notification and Report Forms and related material that it may be
required to file with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, (ii)
use reasonable commercial efforts to obtain an early termination of the
applicable waiting period under the Xxxx-Xxxxx-Xxxxxx Act, (iii) make any
further filings or information submissions pursuant thereto that may be
reasonably necessary or advisable and (iv) promptly make any filings or
submissions required under any applicable foreign antitrust or trade regulation
law. Each of the Parties shall use reasonable commercial efforts to resolve any
objections that may be asserted by any Governmental Entity with respect to the
transactions contemplated hereby, and shall cooperate with each other to contest
any challenges to the transactions contemplated hereby by any Governmental
Entity. Each of the Parties shall promptly inform each other of any material
communication (and shall send a copy of any such written or electronic
communication to the other Parties) received by such Party from the Federal
Trade Commission, the Antitrust Division of the Department of Justice or any
other
58
Governmental Entity regarding any of the transactions contemplated hereby
(unless the provision of such information would (i) violate the provisions of
any applicable laws or regulations (including without limitation those relating
to security clearance or export controls) or any confidentiality agreement or
(ii) cause the loss of the attorney-client privilege with respect thereto);
provided that each such Party shall use its reasonable commercial efforts to
promptly communicate to the other Parties the substance of any such material
communication, whether by redacting parts of such material communication or
otherwise, so that such communication would not violate applicable laws or
regulations or cause the loss of the attorney-client privilege with respect
thereto.
4.2 Replacement of Guarantees and Letters of Credit. For purposes of this
Agreement, "Seller Guarantees" means all guarantees, covenants, indemnities,
letters of credit and similar credit assurances provided by any Seller or any of
their respective Affiliates that relate exclusively or primarily to the AIS
Business. Unless otherwise agreed to in writing by the Sellers, the Buyer shall
use commercially reasonable efforts to arrange, prior to the Closing, for
replacement arrangements (which shall include a full and complete release of
each Seller and their respective Affiliates), from all Seller Guarantees. To
fulfill such obligation, the Buyer shall not be obligated to pay any consent fee
or similar amount, but shall be obligated to offer to provide substitute
security or guarantees that it reasonably believes to be of like character,
quality and amount. The Buyer will consult with the Sellers from time to time
concerning the progress made with respect to such efforts, and shall permit the
Sellers reasonable participation in such process. All Seller Guarantees as of
the date of this Agreement are listed on Schedule 4.2. This Section 4.2 (and
Section 5.2(e)) shall not apply to any Seller Guarantee issued between
59
the date of this Agreement and the Closing unless (a) notice of such Seller
Guarantee is provided to the Buyer at least 15 days prior to the Closing and
such Seller Guarantee is for an amount of not more than $500,000, provided,
however, that the aggregate amount of all Seller Guarantees issued pursuant to
this clause (a) does not exceed $5,000,000, or (b) such Seller Guarantee is
issued with the consent of the Buyer (which shall not be unreasonably withheld
or delayed).
4.3 Operation of Business. Except as contemplated by this Agreement, or as
set forth on Schedule 4.3, during the period from the date of this Agreement
until the Closing, each of the Sellers shall use reasonable commercial efforts
to (i) operate the AIS Business in the ordinary course of business consistent
with past practice and (ii) preserve the present business organization of the
AIS Business intact. Without limiting the generality of the foregoing, prior to
the Closing, none of the Sellers shall, without the written consent of the
Buyer:
(a) sell, assign or transfer any portion of the Acquired Assets in a
single transaction or series of related transactions in an amount in excess of
$1,000,000, except in the ordinary course of business consistent with past
practice;
(b) incur or guarantee any Indebtedness relating exclusively or
primarily to the AIS Business;
(c) grant any rights to severance benefits, "stay pay" or termination
pay to any AIS Employee or increase the benefits payable or potentially payable
to any AIS Employee under any previously existing severance benefits, "stay-pay"
or termination pay arrangements, other than salary increases or bonus payments
made prior to the Closing that are substantially consistent with the past
practice of the AIS Business;
60
(d) make any capital expenditures or commitments therefor relating
exclusively or primarily to the AIS Business in an amount in excess of
$1,000,000 in the aggregate, except in accordance with the AIS Business' capital
expenditure budget included in Schedule 2.5(e);
(e) acquire any operating business, whether by merger, stock purchase
or asset purchase (except for any such business which will not become part of
the AIS Business);
(f) enter into any employment, compensation or deferred compensation
agreement (or any amendment to any such existing agreement) with any AIS
Employee whose annual base salary exceeds $150,000, except in the ordinary
course of business;
(g) establish, terminate or materially amend any AIS Benefit Plan,
except as required by law;
(h) materially change its accounting principles, methods or practices
insofar as they relate to the AIS Business, except in each case to conform to
changes in GAAP;
(i) enter into any contract or agreement relating exclusively or
primarily to the AIS Business outside the ordinary course of business;
(j) take any action that would be inconsistent with the maintenance of
the inventory of supplies, parts and other materials of the AIS Business,
including the preservation and maintenance of the Designated Intellectual
Property or the maintenance of the books, accounts, files and records of the AIS
Business, except in the ordinary course of business consistent with past
practice;
(k) amend, modify, terminate, cancel, or allow to lapse any insurance
policies related exclusively or primarily to the Acquired Assets or the AIS
Business;
61
(l) take any action that would not be in compliance in all material
respects with all applicable laws, statutes, rules, regulations, orders, writs,
decrees, rulings, judgments, obligations pursuant to agreements and any other
obligations related to the AIS Business, the Acquired Assets and the Assumed
Liabilities;
(m) except for any agreement, bid, proposal or other commitment
relating to Operation Enduring Freedom, (i) enter into any agreement, bid,
proposal or other commitment for the purchase of goods or services related to
the AIS Business which involves aggregate consideration in excess of $2,500,000
(in the case of a purchase in support of an existing customer program) or
$1,000,000 (in any other case); (ii) enter into any agreement, bid, proposal or
other commitment for the sale of goods or services of the AIS Business which
involves aggregate consideration in excess of $5,000,000 (provided that the
Buyer shall be deemed to have consented in writing to any agreement, bid,
proposal or other commitment involving aggregate consideration of between
$5,000,000 and $7,500,000 if it does not send to the applicable Seller (in
writing or via e-mail) an objection within two business days following receipt,
in writing or via e-mail, by such Seller to the Buyer of written notice
(including a reasonable description thereof) of such agreement, bid, proposal or
other commitment) or which is expected to result in a loss in excess of $100,000
for any individual agreement or $500,000 in the aggregate; or (iii) amend,
supplement, waive, modify, terminate, cancel or allow to lapse, or transfer any
material right or claim pursuant to, any Assigned Contract other than in the
ordinary course of the business consistent with past practice;
(n) permit or allow any of the Acquired Assets to become subject to
any Encumbrance;
62
(o) waive any material claims or rights relating to the AIS Business,
the Acquired Assets or the Assumed Liabilities;
(p) pay, discharge or satisfy any claims, liabilities, debts or
obligations (whether absolute, accrued, asserted, unasserted, contingent or
otherwise) in excess of $100,000 related to the AIS Business, the Acquired
Assets or the Assumed Liabilities, or settle or compromise any litigation,
arbitration, suit, claim, action or proceeding related to the AIS Business, the
Acquired Assets or the Assumed Liabilities, except in accordance with their
terms as in effect on the date hereof in the ordinary course of business
consistent with past practice;
(q) make any prepayment or other payment on or in respect of
Indebtedness unless required by the terms thereof on the date of this Agreement,
or assume, issue, incur or guarantee any new Indebtedness, debt securities or
warrants or rights to acquire any debt securities, enter into any "keep well" or
other similar arrangement, or enter into any agreement having the economic
effect on the AIS Business of any of the foregoing, in any case, which would
constitute, or increase the Buyer's obligation with respect to, any Assumed
Liability;
(r) make any changes or modifications in the current methods,
practices or procedures relating to accounts receivable, accounts payable or
inventory;
(s) except for any Government Bid relating to Operation Enduring
Freedom, (i) submit any new Government Bid which, if accepted, is expected to
result in a loss to the AIS Business or would result in a Government Contract
with a backlog value in excess of (A) $10,000,000 if a new Government Bid or (B)
$10,000,000 if a task order or purchase order under an existing Government
Contract; or (ii) enter into any new Government Contract with respect to an
existing Government Bid which is expected to result in a loss to the AIS
Business or which
63
would have a backlog value in excess of (A) $10,000,000 if a new Government Bid
or (B) $10,000,000 if a task order or purchase order under an existing
Government Contract;
(t) increase (or commit to increase) the compensation, pension or
other benefits payable or to become payable to any AIS Employee or pay (or
commit to pay) any bonus payments or arrangements to any of them, other than (i)
increases effected in the ordinary course of the AIS Business on a basis
consistent with the past practice of the Seller as disclosed in advance to the
Buyer and (ii) any increase required under the terms of any AIS Benefit Plan;
(u) enter into any agreement, arrangement or relationship with any of
the Sellers or their Affiliates, except for agreements, arrangements and
relationships (i) with respect to accounts receivable and accounts payable
relating to the AIS Business that do not constitute Acquired Assets or Assumed
Liabilities, and (ii) contemplated by the Ancillary Agreements or Section 10.5
of this Agreement; or
(v) agree in writing or otherwise to take any of the foregoing
actions.
4.4 Access.
(a) Each Seller shall permit the representatives, agents, employees,
counsel, advisors and potential financing sources of the Buyer to have access
(at reasonable times, on reasonable prior written notice and in a manner so as
not to interfere with the normal business operations of the AIS Business) to the
premises, properties, financial, accounting, tax and operating records,
contracts, and other records and documents, of or pertaining to the AIS
Business. Notwithstanding the foregoing, none of the Sellers shall be obligated
(i) to provide any information, documents or access to any person unless the
Buyer is responsible, pursuant to the terms of the confidentiality letter
agreement dated September 28, 2001 between the Buyer
64
and Raytheon (the "Confidentiality Agreement"), for the use and disclosure of
any information obtained by such person from Raytheon, or such person enters
into a confidentiality agreement with Raytheon on terms that are substantially
the same as those set forth in the Confidentiality Agreement or (ii) to provide
any information, documents or access that would (A) violate the provisions of
any applicable laws or regulations (including without limitation those relating
to security clearance or export controls) or any confidentiality agreement to
which it is a party or (B) cause the loss of the attorney-client privilege with
respect thereto; provided that each Seller shall use reasonable commercial
efforts to provide information, documents and access to the Buyer and its
representatives, agents, employees, counsel, advisors and potential financing
sources in a manner that would not violate applicable laws or regulations or
cause the loss of the attorney-client privilege with respect thereto. Prior to
the Closing, the Buyer and its representatives shall not contact or communicate
with the employees, customers and suppliers of any Seller in connection with the
transactions contemplated by this Agreement, except with the prior written
consent of the applicable Seller (not to be unreasonably withheld or delayed).
(b) The Buyer and the Sellers acknowledge and agree that the
Confidentiality Agreement remains in full force and effect and that information
provided by any Party to the other Party or Parties pursuant to this Agreement
prior to the Closing shall be treated in accordance with the Confidentiality
Agreement. If this Agreement is terminated prior to the Closing, the
Confidentiality Agreement shall remain in full force and effect in accordance
with its terms. If the Closing occurs, the Confidentiality Agreement, insofar as
it covers information relating exclusively or primarily to the AIS Business,
shall terminate effective as of the Closing, but shall remain in effect insofar
as it covers other information disclosed thereunder.
65
(c) Notwithstanding any provision of this Agreement to the contrary,
the Buyer and its representatives shall not have any access at any time prior to
the Closing to any information regarding pending or proposed bids for new
contracts or subcontracts or any related information where the Buyer or an
Affiliate of the Buyer also has submitted or intends to submit a bid for such
contract or subcontract.
4.5 Purchase of Equipment. One of the Sellers shall, prior to the Closing,
purchase any equipment or other tangible assets that (i) relate exclusively or
primarily to the AIS Business and (ii) are leased by any Seller or an Affiliate
thereof pursuant to a lease that is not an Assigned Contract. Such purchased
equipment and tangible assets shall be deemed Acquired Assets and shall be sold,
conveyed, assigned and transferred to the Buyer at the Closing.
4.6 Exclusivity. Each Seller shall not, and shall use its best efforts to
cause its officers, directors, employees, representatives and agents not to, (i)
initiate, solicit or encourage any proposal, offer or discussion with any party
(other than the Buyer) concerning any merger, business combination, sale of
stock or sale of assets (other than sales of assets in the ordinary course of
business) involving the AIS Business (other than as part of a sale of Raytheon
substantially in its entirety) or (ii) engage in discussions or negotiations
with any party (other than the Buyer) concerning any such transaction.
4.7 Schedules. The Sellers shall be entitled to submit to the Buyer, from
time to time between the date hereof and the Closing Date, written updates to
the Schedule of Exceptions to disclose any events or developments that occur
between the date of this Agreement and the Closing Date. The Sellers'
representations and warranties contained in this Agreement shall be construed
for all purposes of Section 5.1 and Article VII of this Agreement in accordance
with
66
the Schedule of Exceptions, as so updated; provided that the Buyer shall have
the right to terminate this Agreement as a result of any such update to the
Schedule of Exceptions to the extent provided in Section 6.1(c); and provided,
further, that no updates to the Schedule of Exceptions shall be taken into
account for purposes of Article VII unless, as a result of any particular update
or updates, the Buyer had but did not exercise a right to terminate this
Agreement pursuant to Section 6.1(c).
4.8 Title Insurance. The Buyer shall use reasonable commercial efforts to
obtain, as promptly as practicable following the date of this Agreement,
commitments for the Title Policies (the "Title Commitments") and the ALTA
surveys referred to in Section 5.1(h). The Buyer shall be solely responsible for
the costs and expenses of obtaining such Title Commitments and ALTA surveys. The
applicable Seller shall provide to the Buyer, promptly following a request by
the Buyer, an affidavit of title with respect to each piece of Owned Real
Property in a form reasonably satisfactory to the Title Company and such other
affidavits with respect to each piece of Owned Real Property as may be
reasonably requested by the Title Company. Unless the Buyer notifies Raytheon in
writing within 30 days after the date of this Agreement that a Title Policy
contains any exceptions (beyond those set forth in Section 2.9(a)) which are not
acceptable to the Buyer, the condition to Closing set forth in Section 5.1(h)
shall be deemed waived by the Buyer; provided, however, that if after the
expiration of such 30-day period but prior to Closing, a new title exception
(other than those set forth in Section 2.9(a)) appears of record which is not
reasonably acceptable to the Buyer, the Buyer shall be entitled to object to
such new title exception as not in conformity with the condition to Closing set
forth in Section 5.1(h).
67
4.9 Cooperation in Financing.
(a) From the date of this Agreement to the Closing Date, the Sellers
shall reasonably cooperate, and shall request their auditors,
PricewaterhouseCoopers LLP, to reasonably cooperate, on a timely basis with the
Buyer and the Buyer's auditors in their preparation of any audited financial
statements of the AIS Business that are required for SEC filings required to be
made by the Buyer in connection with the purchase of the AIS Business. The Buyer
anticipates requiring audited financial statements of the AIS Business for the
most recent three years, including statements of operations, cash flows and
investment equity for three years and two balance sheets. The cooperation
required of the Sellers shall include providing reasonable and customary
management and legal representations to PricewaterhouseCoopers LLP, and the
cooperation requested of the Sellers' auditors shall include providing consent
to the Buyer to include their audit reports on the AIS Business in the Buyer's
SEC filings.
(b) Without limitation of the foregoing paragraph (a), each of the
Sellers agrees to provide, and will request their respective accountants,
investment bankers, advisors, counsel and other representatives to provide,
reasonable cooperation in connection with the arrangement of financing by the
Buyer to be consummated prior to or at the Closing in respect of transactions
contemplated by this Agreement and the replacement of the Seller Guarantees.
Such cooperation shall include, to the extent reasonable and customary,
participation in meetings and due diligence sessions and assistance with the
preparation of offering memoranda, private placement memoranda, prospectuses and
similar documents. Notwithstanding the foregoing, the Parties acknowledge that
such cooperation is not intended to condition the Buyer's obligation to
consummate the transactions contemplated by this Agreement on the obtaining of
any financing,
68
and the Buyer may not assert a breach by the Sellers of this Section 4.9 as a
basis for its failure to consummate the transactions contemplated by this
Agreement.
4.10 Tax Certificates.
(a) Raytheon shall provide the Buyer with a certificate that complies
with Treasury Regulations Section 1.1445-2(b) that states that it is not a
foreign person. Raytheon Australia shall provide the Buyer with a statement that
complies with Treasury Regulations Section 1.1445-2(c)(3) that certifies that
the assets acquired from Raytheon Australia are not U.S. real property
interests. If either Raytheon or Raytheon Australia fails to deliver such
certificate or statement, as applicable, by the Closing Date, the Buyer shall be
entitled to withhold from any amounts payable to such Seller at the Closing all
applicable withholding taxes under Section 1445 of the Code.
(b) The Sellers shall provide to the Buyer, no later than the Closing,
a certificate on Raytheon letterhead providing all information reasonably
required by the Buyer relating to the base period research and experimental
expenses and any other information reasonably requested by the Buyer to allow
the Buyer to claim research and experimentation tax credits in accordance with
the Code and regulations promulgated thereunder.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions to Obligations of Buyer. The obligation of the Buyer to
consummate the transactions to be consummated at the Closing is subject to the
satisfaction (or waiver in writing by the Buyer) of the following conditions:
69
(a) the representations and warranties of the Sellers set forth in
Article II shall be true and correct as of the Closing Date as if made as of the
Closing Date, except (i) for those representations and warranties that address
matters only as of a particular date (which shall be true and correct as of such
date, subject to clause (ii) below), and (ii) where the failure of the
representations and warranties to be true and correct would not reasonably be
expected to result, in the aggregate, in an AIS Material Adverse Effect (it
being agreed that any materiality or AIS Material Adverse Effect qualification
in a representation and warranty shall be disregarded in determining whether any
such failure would reasonably be expected to result in an AIS Material Adverse
Effect for purposes of this clause (ii));
(b) each Seller shall have performed or complied with in all material
respects the agreements and covenants required to be performed or complied with
by it under this Agreement as of or prior to the Closing;
(c) no action, suit or proceeding shall be pending by or before any
Governmental Entity seeking to prevent consummation of the transactions
contemplated by this Agreement, and no judgment, order, decree, stipulation or
injunction enjoining, preventing or making illegal the consummation of any
substantial portion of the transactions contemplated by this Agreement shall be
in effect;
(d) Raytheon shall have delivered to the Buyer a certificate (the
"Raytheon Certificate") to the effect that each of the conditions specified in
clauses (a) through (c) (insofar as clause (c) relates to an action, suit or
proceeding involving, or a judgment, order, decree, stipulation or injunction
against, any Seller) of this Section 5.1 is satisfied;
70
(e) all applicable waiting periods (and any extensions thereof) under
the Xxxx-Xxxxx-Xxxxxx Act and applicable foreign antitrust or trade regulation
laws shall have expired or otherwise been terminated, except (in the case of
foreign antitrust or trade regulation laws) where the consummation of the
transactions contemplated by this Agreement before the expiration or other
termination of any such waiting period under applicable foreign antitrust or
trade regulation law would not reasonably be expected to result in an AIS
Material Adverse Effect or a Buyer Material Adverse Effect;
(f) the Sellers shall have obtained (or caused to be obtained) all of
the Third Party Consents and effected all of the Governmental Filings which are
required on the part of any Seller to consummate the transactions contemplated
by this Agreement, and which are listed in Schedule 5.1(f);
(g) since the Balance Sheet Date, there has not been any change, event
or development that, individually or in the aggregate, has had or would
reasonably be expected to result in an AIS Material Adverse Effect;
(h) the Buyer shall have received (i) an owner's policy of title
insurance (the "Title Policy") from Fidelity National Title Insurance Company or
another reputable title insurance company licensed in each jurisdiction where
the Owned Real Property is located (the "Title Company") with respect to each
parcel of Owned Real Property, in the standard form used in the jurisdiction
where such Owned Real Property is located, insuring as of the Closing Date, at
ordinary premium rates, that the Buyer owns fee simple title to such Owned Real
Property, subject only to the matters set forth in Section 2.9(a), and with such
endorsements, to the extent available in the state in which the Owned Real
Property is located, as may reasonably be
71
required by the Buyer or its lender, and (ii) an ALTA survey with respect to
each piece of Owned Real Property which shall not reflect any statement of facts
inconsistent in any material respect with the requirements of this Agreement and
which shall be in form and substance reasonably satisfactory to the Buyer; and
(i) the Buyer shall have received such other customary certificates
(such as certificates of good standing of the Sellers in their jurisdictions of
incorporation and certificates as to the incumbency of officers and the adoption
of authorizing resolutions) as it shall reasonably request in connection with
the Closing.
5.2 Conditions to Obligations of Sellers. The obligation of the Sellers to
consummate the transactions to be consummated at the Closing is subject to the
satisfaction (or waiver in writing by the Sellers) of the following conditions:
(a) the representations and warranties of the Buyer set forth in
Article III shall be true and correct as of the Closing Date as if made as of
the Closing Date, except (i) for those representations and warranties that
address matters only as of a particular date (which shall be true and correct as
of such date, subject to clause (ii) below), and (ii) where the failure of the
representations and warranties to be true and correct would not reasonably be
expected to result, in the aggregate, in a Buyer Material Adverse Effect (it
being agreed that any materiality or Buyer Material Adverse Effect qualification
in a representation and warranty shall be disregarded in determining whether any
such failure would reasonably be expected to result in a Buyer Material Adverse
Effect for purposes of this clause (ii));
72
(b) the Buyer shall have performed or complied with in all material
respects its agreements and covenants required to be performed or complied with
by it under this Agreement as of or prior to the Closing;
(c) no action, suit or proceeding shall be pending by or before any
Governmental Entity seeking to prevent consummation of the transactions
contemplated by this Agreement and no judgment, order, decree, stipulation or
injunction enjoining or preventing consummation of the transactions contemplated
by this Agreement shall be in effect;
(d) the Buyer shall have delivered to Raytheon a certificate (the
"Buyer Certificate") to the effect that each of the conditions specified in
clauses (a) through (c) (insofar as clause (c) relates to an action, suit or
proceeding involving, or a judgment, order, decree, stipulation or injunction
against, the Buyer) of this Section 5.2 is satisfied;
(e) for each Seller Guarantee, the Buyer shall have either (i)
effected replacement arrangements, in accordance with Section 4.2, reasonably
satisfactory to the Sellers, or (ii) delivered to Raytheon an irrevocable,
unconditional standby letter of credit in favor of Raytheon in an amount equal
to the amount of such Seller Guarantee, issued by a bank rated A or better by
Standard & Poor's, in form and substance reasonably satisfactory to Raytheon;
(f) the Buyer shall have delivered to Raytheon an irrevocable,
unconditional standby letter of credit in favor of Raytheon in the amount of
$10,000,000, issued by a bank in the United Kingdom rated A or better by
Standard & Poor's, in form and substance reasonably satisfactory to Raytheon,
providing for a draw-down in the event of a certification by Raytheon Systems
Limited that the Buyer has breached its obligations under the Subcontract
Agreement with Raytheon Systems Limited attached hereto as Exhibit M;
73
(g) all applicable waiting periods (and any extensions thereof) under
the Xxxx-Xxxxx-Xxxxxx Act and applicable foreign antitrust or trade regulation
laws shall have expired or otherwise been terminated, except (in the case of
foreign antitrust or trade regulation laws) where the consummation of the
transactions contemplated by this Agreement before the expiration or other
termination of any such waiting period under applicable foreign antitrust or
trade regulation law would not reasonably be expected to result in a material
adverse effect on the Sellers, taken as a whole;
(h) the Buyer shall have obtained (or caused to be obtained) all of
the Third Party Consents and effected all of the Governmental Filings which are
required on the part of the Buyer to consummate the transactions contemplated by
this Agreement, except for those Third Party Consents and Governmental Filings,
which, if not obtained or effected, would not in the aggregate reasonably be
expected to result in a material adverse effect on the Sellers, taken as a
whole; and
(i) Raytheon shall have received such other customary certificates
(such as a certificate of good standing of the Buyer in its jurisdiction of
incorporation and certificates as to the incumbency of officers and the adoption
of authorizing resolutions) as it shall reasonably request in connection with
the Closing.
ARTICLE VI
TERMINATION
6.1 Termination of Agreement. The Parties may terminate this Agreement
prior to the Closing as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
74
(b) the Buyer may terminate this Agreement by giving written notice to
Raytheon in the event any Seller is in breach of any representation, warranty,
covenant or agreement contained in this Agreement, and such breach, individually
or in combination with any other such breach, (i) would cause the conditions set
forth in Section 5.1(a) or Section 5.1(b) not to be satisfied and (ii) is not
cured within 30 days following delivery by the Buyer to Raytheon of written
notice of such breach;
(c) the Buyer may terminate this Agreement by giving written notice to
Raytheon, within 10 days following the end of the 30-day period referred to
below in this Section 6.1(c), in the event any Seller provides an update to the
Schedule of Exceptions pursuant to Section 4.7 which contains information that,
absent such disclosure and the provisions of Section 4.7 permitting the update
of representations and warranties, would have the effect of causing the
condition set forth in Section 5.1(a) not to be satisfied, and the Sellers fail
to cure the event or condition causing the failure of such condition within 30
days following delivery by the Buyer to Raytheon of written notice under this
Section 6.1(c);
(d) Raytheon may terminate this Agreement by giving written notice to
the Buyer in the event the Buyer is in breach of any representation, warranty,
covenant or agreement contained in this Agreement, and such breach, individually
or in combination with any other such breach, (i) would cause the conditions set
forth in Section 5.2(a) or Section 5.2(b) not to be satisfied and (ii) is not
cured within 30 days following delivery by Raytheon to the Buyer of written
notice of such breach;
(e) the Buyer may terminate this Agreement by giving written notice to
Raytheon if the Closing shall not have occurred on or before the date six months
after the date of
75
this Agreement by reason of the failure of any condition precedent under Section
5.1 (unless the failure results primarily from a breach by the Buyer of any
representation, warranty, covenant or agreement contained in this Agreement);
and
(f) Raytheon may terminate this Agreement by giving written notice to
the Buyer if the Closing shall not have occurred on or before the date six
months after the date of this Agreement by reason of the failure of any
condition precedent under Section 5.2 (unless the failure results primarily from
a breach by any Seller of any representation, warranty, covenant or agreement
contained in this Agreement).
6.2 Effect of Termination. If any Party terminates this Agreement pursuant
to Section 6.1, all obligations of the Parties hereunder shall terminate without
any liability of any Party to the other Parties. Notwithstanding the foregoing,
termination of this Agreement shall not relieve any Party from liability for any
breach by such Party, prior to the termination of this Agreement, of any
covenant or agreement (but not any representation or warranty) contained in this
Agreement or impair the right of any Party to obtain such remedies as may be
available to it in law or equity with respect to such a breach by any other
Party.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by Raytheon. Subject to the terms and conditions of
this Article VII, from and after the Closing, Raytheon shall indemnify the Buyer
in respect of, and hold the Buyer harmless against, any and all claims, losses,
liabilities, damages, fines, fees, penalties, costs and expenses (including
without limitation reasonable attorneys' and accountants' fees, disbursements
and expenses) (collectively, "Damages") incurred by the Buyer or any of its
76
directors, officers, employees, stockholders, Affiliates, representatives or
advisors resulting from, arising out of or constituting:
(a) any breach of any representation or warranty of the Sellers
contained in this Agreement or the Raytheon Certificate (other than Section
2.18);
(b) any failure by any Seller to perform any covenant or agreement
contained in this Agreement or the Ancillary Agreements;
(c) any Excluded Liabilities; or
(d) any Environmental Matters, but only to the extent the liability or
obligation relating thereto arises from conditions existing or events occurring
prior to the Closing, and provided that Raytheon's indemnity obligation under
this Section 7.1(d) shall be limited to 50% of the Damages covered by this
Section 7.1(d).
7.2 Indemnification by the Buyer. Subject to the terms and conditions of
this Article VII, from and after the Closing, the Buyer shall indemnify each
Seller in respect of, and hold each Seller harmless against, any and all Damages
incurred by any Seller or any of their respective directors, officers,
employees, stockholders, Affiliates, representatives or advisors resulting from,
arising out of, or constituting:
(a) any breach of any representation or warranty of the Buyer
contained in this Agreement or the Buyer Certificate;
(b) any failure by the Buyer to perform any covenant or agreement
contained in this Agreement or the Ancillary Agreements; or
(c) any Assumed Liabilities, except to the extent Raytheon is liable
therefor under Section 7.1(d).
77
7.3 Defense or Control of Third Party Actions and Environmental Claims.
(a) A person entitled to indemnification under this Article VII (an
"Indemnified Party") shall give prompt written notification to the person from
whom indemnification is sought (the "Indemnifying Party") of any claim, demand,
action, suit or proceeding commenced by a person or entity (other than a Party
or an Affiliate of a Party) for which indemnification may be sought under this
Article VII (a "Third Party Action"); provided that any claim, demand, action,
suit or proceeding covered by Section 7.3(b) shall not be considered a Third
Party Action and shall not be governed by this Section 7.3(a), other than as
expressly provided in Section 7.3(b). Such notification shall be given within 10
days after receipt by the Indemnified Party of notice of such Third Party
Action, and shall describe in reasonable detail (to the extent known by the
Indemnified Party) the facts constituting the basis for such Third Party Action
and the amount of the claimed damages; provided, however, that no delay or
failure on the part of the Indemnified Party in so notifying the Indemnifying
Party shall relieve the Indemnifying Party of any liability or obligation
hereunder except to the extent the Indemnifying Party is damaged or prejudiced
by such failure. Within 20 days after delivery of such notification, the
Indemnifying Party may, upon written notice thereof to the Indemnified Party,
assume control of the defense of such Third Party Action with counsel of its
choosing reasonably acceptable to the Indemnified Party. An Indemnifying Party's
decision to assume control of such defense shall not be an admission that the
Third Party Action is indemnifiable under this Article VII. If the Indemnifying
Party does not, or is not permitted under the terms hereof to, so assume control
of the defense of a Third Party Action, or thereafter abandons or fails to
diligently pursue the defense of a Third Party Action, the Indemnified Party
shall control
78
such defense. The party not controlling the defense of such Third Party Action
(the "Non-controlling Party") may participate in such defense at its own
expense, except as provided below. The party controlling the defense of such
Third Party Action (the "Controlling Party") shall keep the Non-controlling
Party advised of the status of such Third Party Action and the defense thereof
and shall consider in good faith recommendations made by the Non-controlling
Party with respect thereto. The Non-controlling Party shall furnish the
Controlling Party with such information as it may have with respect to such
Third Party Action (including copies of any summons, complaint or other pleading
which may have been served on such party and any written claim, demand, invoice,
billing or other document evidencing or asserting the same) and shall otherwise
cooperate with and assist the Controlling Party in the defense of such Third
Party Action. If the Indemnifying Party assumes control of the defense of a
Third Party Action, any fees and expenses of separate counsel to the Indemnified
Party with respect to such Third Party Action shall be considered Damages for
which the Indemnified Party may be entitled to indemnification under this
Article VII only if the Indemnified Party reasonably concludes, based on written
advice from counsel, that (i) the Indemnifying Party and the Indemnified Party
have conflicting interests with respect to such Third Party Action or (ii) there
are defenses available to such Indemnifying Party and the representation of both
parties by the same counsel would therefore be inappropriate, and the
Indemnified Party so notifies the Indemnifying Party in writing before incurring
such fees and expenses (provided that in such situation, the Indemnified Party
shall not be entitled to employ more than one law firm, plus one firm acting
solely as local counsel). The Indemnifying Party shall not agree to any
settlement or compromise of, or the entry of any judgment arising from, any
Third Party Action without the prior written consent of
79
the Indemnified Party; provided that the consent of the Indemnified Party shall
not be required if the Indemnifying Party agrees in writing to pay any amounts
payable pursuant to such settlement, compromise or judgment and such settlement,
compromise or judgment includes a complete written release of the Indemnified
Party from further liability and does not impose any injunctive relief or other
operational restrictions on the Indemnified Party. The Indemnified Party shall
not agree to any settlement of, or the entry of any judgment arising from, any
such Third Party Action without the prior written consent of the Indemnifying
Party (which consent shall not be unreasonably withheld or delayed).
(b) The Buyer shall give prompt written notice to Raytheon of (i) the
commencement of any claim, demand, action, suit or proceeding by a person or
entity (other than a Party) involving Environmental Matters for which
indemnification may be sought under Section 7.1 and (ii) the assertion of any
claim, commencement of any inquiry or receipt of any notice involving
Environmental Matters for which indemnification may be sought under Section 7.1
(collectively, an "Environmental Claim"). Such notification shall be given
within 10 days after receipt by the Buyer of notice of such Environmental Claim,
and shall describe in reasonable detail (to the extent known by the Buyer) the
facts constituting the basis for such Environmental Claim and the amount of the
claimed Damages; provided, however, that no delay or failure on the part of the
Buyer in so notifying Raytheon shall relieve Raytheon of any liability or
obligation hereunder except to the extent Raytheon is damaged or prejudiced by
such failure. Except for Off-Site Liabilities, the defense of which shall be
controlled by Raytheon, Buyer, shall control the defense of such Environmental
Claim (with counsel of its choosing reasonably acceptable to Raytheon), and
manage, direct and perform any related environmental assessment
80
or remediation on any affected AIS Property ("Environmental Response
Activities"). If the Buyer has conducted any Environmental Response Activities
on the affected AIS Property prior to notifying Raytheon, Raytheon shall have no
responsibility or liability for the costs of such activities conducted more than
10 days prior to such notice. The Buyer hereby grants Raytheon and its
employees, agents, servants, consultants and contractors a license, subject to
security requirements, including entry by only U.S. citizens, to enter upon the
affected AIS Property for purposes related to overseeing its obligations under
this Agreement, subject to the following conditions:
(i) Raytheon shall have reasonable access at reasonable times
pre-arranged at least 48 hours in advance where practical, unless Raytheon
received less than five business days advance notice of an activity it
reasonably wishes to oversee;
(ii) Raytheon shall hold harmless and indemnify the Buyer from any
claims, demands, actions, suits or proceedings for injuries to persons or
damages to property caused by Raytheon or its agents, servants, consultants and
contractors while on the affected AIS Property overseeing Environmental Response
Activities pursuant to the license granted by this Section 7.3(b);
(iii) Raytheon assumes no responsibility for notification, removal or
remediation of contaminants which may be in, on, under or at the affected AIS
Property as a result of the actions or operations of (A) the Buyer or its
employees, agents, servants, consultants and contractors or (B) third parties or
their respective employees, agents, servants, consultants and contractors after
the Closing;
81
(iv) the Buyer shall hold harmless and indemnify the Sellers (and
their agents) from any claims, demands or actions for injuries to persons or
damages to property caused by the Buyer or its agents, servants, consultants and
contractors while on the affected AIS Property managing, directing or performing
Environmental Response Activities; provided that the required procedures and
conditions for indemnification set forth in this Article VII shall apply with
respect to any indemnification by the Buyer pursuant to this Section 7.3(b)(iv);
(v) the Buyer shall cause this license to survive any transfer of
ownership or operational control of an AIS Property to a third party, and to be
binding upon such third party;
(vi) if the Buyer, or any successor owner, occupant or operator of any
property subject to said license, defaults under this Section 7.3(b) or
terminates the license granted hereunder for any reason, Raytheon's obligations
to conduct the Environmental Response Activities (or to indemnify the Buyer for
Damages relating thereto) shall cease;
(vii) Buyer shall use consultants and counsel reasonably acceptable to
Raytheon; and
(viii) Buyer shall provide Raytheon with copies of all reports and
correspondence relating to the indemnified matter, and, if practicable, provide
Raytheon with an opportunity to comment upon all submissions to a regulatory
agency at least five business days prior to submission. Buyer shall incorporate
reasonable, timely comments, unless in Buyer's opinion, such comments: (1) are
more likely to increase the cost of Buyer's obligations; or (2) are not
consistent with Buyer's obligations hereunder, provided, however, that Buyer's
decision not to include comments proposed by Raytheon shall not alter the
limitations on Raytheon's
82
indemnity obligation set out in this Section VII. If Raytheon agrees in writing
and without qualification to pay all increased costs identified by Buyer under
subpart (1) of the preceding sentence, Buyer will incorporate Raytheon's
reasonable comments.
7.4 Claims for Indemnification.
(a) In order to seek indemnification under this Article VII, an
Indemnified Party shall deliver to the Indemnifying Party a written notification
(a "Claim Notice") which contains (i) a description of the Damages incurred by
the Indemnified Party and the amount (the "Claimed Amount") of such Damages,
(ii) a statement that the Indemnified Party is entitled to indemnification under
this Article VII for such Damages and a reasonable explanation of the basis
therefor, and (iii) a demand for payment in the amount of such Damages.
(b) Within 30 days after delivery of a Claim Notice, the Indemnifying
Party shall deliver to the Indemnified Party a written response (the "Response")
in which the Indemnifying Party shall: (i) agree that the Indemnified Party is
entitled to receive all of the Claimed Amount (in which case the Response shall
be accompanied by a payment by the Indemnifying Party to the Indemnified Party
of the Claimed Amount, by check or by wire transfer), (ii) agree that the
Indemnified Party is entitled to receive some, but not all (the "Agreed Amount")
of the Claimed Amount (in which case the Response shall be accompanied by a
payment by the Indemnifying Party to the Indemnified Party of the Agreed Amount,
by check or by wire transfer) or (iii) dispute that the Indemnified Party is
entitled to receive any of the Claimed Amount.
(c) During the 30-day period following the delivery of a Response that
disputes the Indemnified Party's right to receive some or all of the Claimed
Amount (a
83
"Dispute"), the Indemnifying Party and the Indemnified Party shall use good
faith efforts to resolve the Dispute. If the Dispute is not resolved within such
30-day period, then the Dispute shall be resolved by binding arbitration in
Boston, Massachusetts (if initiated by the Buyer) or New York, New York (if
initiated by a Seller) conducted by a single independent arbitrator (the
"Arbitrator") in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (the "AAA") in effect from time to time (the
"AAA Rules"). Either the Indemnifying Party or the Indemnified Party may submit
such Dispute to arbitration by submitting to the AAA a Demand for Arbitration in
accordance with the AAA Rules. If such Dispute is not submitted to arbitration
as provided in this Section 7.4(c) within 60 days following the expiration of
the 30-day period referred to in this Section 7.4(c), then the indemnification
claim which is the subject of such Dispute (but only to the extent it is subject
to such Dispute) shall be deemed waived by the Indemnified Party for all
purposes and the Indemnified Party shall not be entitled to recover from the
Indemnifying Party the portion of the Claimed Amount which is subject to such
Dispute. Arbitration in accordance with the terms of this Section 7.4 shall be
the exclusive means of resolving such Dispute, and neither the Indemnifying
Party nor the Indemnified Party may commence litigation for damages with respect
to such Dispute.
(d) The Arbitrator shall have no power or authority, under the AAA
Rules or otherwise, to (i) modify or disregard any provision of this Agreement,
including those set forth in Section 7.6, (ii) address or resolve any issue
other than the Dispute submitted to such arbitration in accordance with this
Section 7.4, (iii) make an award of Damages in excess of the portion of the
Claimed Amount that is subject to such Dispute or (iv) grant injunctive relief,
specific performance or other equitable relief. The Indemnifying Party and the
Indemnified Party shall
84
request that the Arbitrator prepare and distribute to such Parties, as promptly
as is practicable, a written decision setting forth the Arbitrator's decision
with respect to such Dispute and the Arbitrator's reasons therefor (the
"Arbitration Award"). The Arbitration Award shall be final, conclusive and
binding upon the Indemnifying Party and the Indemnified Party, and judgment
thereon may be entered and enforced in any court of competent jurisdiction (as
provided in Section 11.11).
(e) The Indemnifying Party and the Indemnified Party shall each bear
its own costs and expenses in connection with the arbitration, and shall share
equally the fees and expenses of the Arbitrator and AAA.
7.5 Survival. All representations and warranties contained in this
Agreement, the Raytheon Certificate and the Buyer Certificate shall survive the
Closing and shall expire on the date 15 months following the Closing Date,
except that the representations and warranties set forth in Section 2.11 (and
the portion of the Raytheon Certificate relating thereto) shall survive until
the second anniversary of the Closing Date, the representations and warranties
set forth in Section 2.7 (and the portion of the Raytheon Certificate relating
thereto) shall survive until 60 days following expiration of the applicable
statute of limitations, the representations and warranties set forth in Section
2.18 (and the portion of the Raytheon Certificate relating thereto) shall expire
at the Closing, and the representations and warranties set forth in Sections
2.1, 2.2, 3.1 and 3.2 (and the portion of the Raytheon Certificate or the Buyer
Certificate relating thereto) shall survive the Closing without limitation. All
covenants and other agreements contained in this Agreement and the Ancillary
Agreements shall survive the Closing in accordance with their terms. No claim
for indemnification under Section 7.1(a) or Section 7.2(a) may be made under
85
this Agreement after the expiration of the survival period for such
representation or warranty. Any investigations by or on behalf of a Party shall
not constitute a waiver of such Party's right to enforce a representation or
warranty of any other Party contained herein or in the Ancillary Agreements.
Notwithstanding the foregoing, if an indemnification claim is properly asserted
in writing pursuant to Section 7.4 prior to the expiration as provided in this
Section 7.5 of the representation or warranty that is the basis for such claim,
then such representation or warranty shall survive until, but only for the
purpose of, the resolution of such claim.
7.6 Limitations.
(a) Notwithstanding anything to the contrary contained in this
Agreement, the following limitations shall apply to indemnification claims under
this Article VII:
(i) Raytheon shall be liable with respect to claims under Section
7.1(a) for only that portion of the aggregate Damages related to such claims
which exceeds 2% of the Adjusted Purchase Price; and
(ii) the Buyer shall be liable with respect to claims under
Section 7.2(a) for only that portion of the aggregate Damages related to such
claims which exceeds 2% of the Adjusted Purchase Price;
(iii) the aggregate liability of Raytheon for all Damages under
Section 7.1(a) and Section 7.1(d) shall not exceed an amount equal to 15% of the
Adjusted Purchase Price; and
(iv) the aggregate liability of the Buyer for all Damages under
Section 7.2(a) shall not exceed an amount equal to 15% of the Adjusted Purchase
Price.
86
(b) No Party shall be entitled to make any claim for indemnification
with respect to any matter to the extent the Purchase Price has been adjusted to
reflect such matter pursuant to Section 1.4. The amount of Damages for which the
Buyer is entitled to indemnification under Section 7.1(a) shall be calculated
net of any accruals, reserves or provisions therefor reflected in the Final
Closing Statement.
(c) In no event shall any Indemnifying Party be responsible or liable
for any Damages or other amounts under this Article VII that are incidental,
consequential, in the nature of lost profits, special, multiple or punitive or
any equitable equivalent thereof or substitute therefor (collectively, "Special
Damages") based upon, or arising out of, this Agreement or any Ancillary
Agreements or any course of conduct, course of dealing, statements or actions of
any Party relating thereto; provided, however, that Special Damages shall be
indemnifiable under this Article VII to the extent owed by a Party to a third
party.
(d) The amount of Damages recoverable by an Indemnified Party under
this Article VII with respect to an indemnity claim shall be reduced by the
amount of any payment received by such Indemnified Party (or an Affiliate
thereof), with respect to the Damages to which such indemnity claim relates,
from an insurance carrier, net of any retroactive premium increase payable by
such Indemnified Party (or an Affiliate thereof) as a result of such insurance
payment; provided, however, that no Indemnified Party shall be required to
provide notice of or pursue recovery in respect of any claim under the
Indemnified Party's insurance policies where the Indemnified Party determines in
its reasonable discretion that such notice or pursuit is likely to invalidate
any portion of the coverage available under such policy or result in the
imposition of retroactive premiums or material prospective premium increases;
and, provided, further, that if
87
an Indemnified Party makes such a determination after it has notified its
insurer, it shall be entitled to retract such notice. An Indemnified Party shall
use reasonable commercial efforts to pursue, and to cause its Affiliates to
pursue, all insurance claims to which it may be entitled in connection with any
Damages it incurs, and the Parties shall cooperate with each other in pursuing
insurance claims with respect to any Damages or any indemnification obligations
with respect to Damages. If an Indemnified Party (or an Affiliate) receives any
insurance payment in connection with any claim for Damages for which it has
already received an indemnification payment from the Indemnifying Party, it
shall pay to the Indemnifying Party, within 60 days of receiving such insurance
payment, an amount equal to the excess of (A) the amount previously received by
the Indemnified Party under this Article VII with respect to such claim plus the
amount of the insurance payments received (net of the offsets described in the
first sentence of this Section 7.6(d)), over (B) the amount of Damages with
respect to such claim which the Indemnified Party has become entitled to receive
under this Article VII.
(e) Each Party agrees that (i) it shall not offset any payment it is
entitled to receive (or it claims it is entitled to receive) from an
Indemnifying Party under this Article VII against any other payment or other
obligation it owes to such Indemnifying Party (or any Affiliate thereof) under
this Agreement or otherwise (other than payments or obligations owed pursuant to
this Article VII) and (ii) it shall not offset any payment it is obligated to
make to an Indemnified Party under this Article VII against any other payment or
other obligation it is entitled to receive (or it claims it is entitled to
receive) from such Indemnified Party (or any Affiliate thereof) under this
Agreement or otherwise (other than payments or obligations owed pursuant to this
Article VII).
88
(f) If the Buyer incurs any Damages resulting from, arising out of, or
constituting Environmental Matters and arising from conditions existing or
events occurring prior to the Closing, Raytheon shall use reasonable commercial
efforts to pursue any indemnity claim it may have under the Chrysler Agreement
with respect to such Damages. Any payment Raytheon receives pursuant to such
indemnity claim, net of any costs incurred by Raytheon in pursuing such
indemnity claim, shall be promptly remitted to the Buyer, and the amount of such
payment to the Buyer shall reduce the amount of Damages to which Raytheon's
obligation under Section 7.1(d) (covering 50% of such Damages) shall apply.
(g) Except with respect to claims for equitable relief, including
specific performance, made with respect to breaches of any covenant or agreement
contained in this Agreement or the Ancillary Agreements, the rights of the
Parties under this Article VII, from and after the Closing, shall (in the
absence of fraud) be the sole and exclusive remedies of the Parties and their
respective Affiliates with respect to claims covered by Section 7.1 or Section
7.2 or otherwise relating to the transactions that are the subject of this
Agreement. Without limiting the generality of the foregoing, in no event shall
any Party, its successors or permitted assigns be entitled to claim or seek
rescission of the transactions consummated by this Agreement.
(h) Notwithstanding anything to the contrary in this Agreement:
(i) In the event Raytheon becomes obligated pursuant to Section
7.1 to indemnify the Buyer for any Damages involving Environmental Matters,
Raytheon's obligations hereunder shall be satisfied by and limited to
indemnifying Buyer for 50% of those costs of investigation or remediation of
Materials of Environmental Concern at such AIS Property to (unless otherwise
required under Environmental Law) the less expensive of either the
89
(A) levels of contamination consistent with applicable industrial or commercial
risk-based cleanup standards based upon future commercial or industrial use of
such property or (B) the highest residual levels of contamination acceptable to
the jurisdictional government environmental agency (including the right to
perform a risk-based remediation to commercial or industrial standards).
Raytheon shall not be required to do, or to indemnify Buyer for doing, more.
(ii) Raytheon shall have no liability under Section 7.1 for any
Damages in connection with an Environmental Matter in any way arising out of or
related to any actual or proposed (A) movement, excavation or grading of land,
or construction, reconstruction, refurbishment, renovation, modification,
restoration, conversion, structural alteration or relocation of any structure,
except to the extent reasonably necessary to repair or replace any building or
structure or utilities, facilities and appurtenances related thereto;
enlargement of any building or structure; change in use of any building or land
or any change in zoning or government land use approval, or (B) change of any
use of land at an AIS Property to the extent the change increases the cost of
any Environmental Response Activities.
(iii) The Buyer shall not be entitled to indemnification under
Section 7.1 for Damages in connection with an Environmental Matter directly
arising as a result of the Buyer's voluntary disclosure to a third party (other
than an Affiliate of the Buyer) of information or data, except to the extent
that it would be unlawful not to provide such information to such third party.
Nothing in this paragraph shall preclude the Buyer from being indemnified for
50% of the costs incurred in addressing circumstances it reasonably determines
constitute a condition
90
of ongoing noncompliance in connection with the AIS Business, to the extent
indemnification for such costs otherwise is available under this Article VII.
(iv) The Buyer shall only be entitled to indemnification under
Section 7.1(d) for such Damages that result directly (A) from a determination
(whether by judgment, order or other legal directive) in a judicial or
administrative Third Party Action that the AIS Business has an obligation to
investigate, remediate or pay Damages on account of an Environmental Matter
incurred in connection with the AIS Business prior to the Closing Date or (B)
from the settlement (with the consent of the Seller) of such a Third Party
Action. Nothing in this paragraph shall preclude the Buyer from being
indemnified for 50% of the costs incurred in addressing circumstances it
reasonably determines constitute a condition of ongoing noncompliance in
connection with the AIS Business, to the extent indemnification for such costs
otherwise is available under this Article VII.
(v) Without limiting the generality of Section 7.6(g), this
Article VII shall be the sole and exclusive remedy of (i) the Buyer and its
Affiliates against the Sellers or any of their respective Affiliates, and their
respective present or former officers, directors and employees, agents,
attorneys or contractors, and (ii) the Sellers and their respective Affiliates
against the Buyer or any of its Affiliates, and their respective present or
former officers, directors and employees, agents, attorneys or contractors, for
any and all claims, Damages or other matters related directly or indirectly to
the AIS Business and arising at any time under Environmental Laws or under any
common law with respect to Materials of Environmental Concern. The Buyer, on the
one hand, and the Sellers, on the other hand, hereby waive (on behalf of
themselves and their respective Affiliates, successors and assigns) any right to
seek contribution
91
or other recovery from each other or their respective Affiliates or any present
or former officer, director or employee, agent, attorney or contractor of the
Buyer, the Sellers or any of their respective Affiliates with respect to events
related directly or indirectly to the AIS Business that any of them may now or
in the future have under any Environmental Law or any common law providing for
any remedy or right of recovery with respect to Environmental Matters or
Materials of Environmental Concern other than as expressly provided for in this
Article VII. In the absence of fraud, the Buyer, on the one hand, and the
Sellers, on the other hand, hereby release (on behalf of themselves and their
respective Affiliates, successors and assigns) each other, such Party's
Affiliates, and their respective present or former officers, directors and
employees, agents, attorneys and contractors from any and all such claims,
demands and causes of action.
7.7 Treatment of Indemnification Payments. All indemnification payments
made under this Agreement shall be treated by the Parties as an adjustment to
the Adjusted Purchase Price.
ARTICLE VIII
TAX MATTERS
8.1 Responsibility for Taxes and Filing of Tax Returns.
(a) Except as provided in Section 8.1(d) below, the Sellers shall
remain responsible, and indemnify and hold harmless the Buyer, for all Taxes
payable in connection with the operation of the AIS Business for all periods
through the Closing, and shall be responsible for the filing of all related Tax
Returns.
92
(b) The Buyer shall be responsible, and indemnify and hold harmless
the Sellers, for all Taxes payable in connection with the operation of the AIS
Business from and after the Closing, and shall be responsible for the filing of
all related Tax Returns.
(c) Notwithstanding Section 8.1(a) to the contrary, any Tax Return
that pertains to both Taxes for which the Sellers are responsible pursuant to
Section 8.1(a) and Taxes for which the Buyer is responsible pursuant to Section
8.1(b) shall be prepared by the Buyer on a basis consistent with the applicable
Seller's last previous similar Tax Return, and the Buyer shall consult with the
Sellers concerning each such Tax Return and report all items relating to the
Taxes for which the Sellers are responsible in accordance with the instructions
of the Sellers; provided, however, that if the Buyer is advised by counsel that
the filing of any Tax Return and the reporting on such Tax Return of any item in
accordance with the instructions of the Sellers reasonably could subject the
Buyer to penalties or fines, the Buyer may file such Tax Return without regard
to the Sellers' instructions relating to such item. The Buyer shall provide the
Sellers with a copy of each proposed Tax Return the preparation of which is
governed by this Section 8.1(c) (and such additional information regarding such
Tax Return as may reasonably be requested by the Sellers) at least 20 days prior
to the filing of such Tax Return. The cost of preparing Tax Returns, the
preparation of which is governed by this Section 8.1(c), shall be borne equally
by the Buyer, on the one hand, and the Sellers, on the other.
(d) The Buyer, on the one hand, and the Sellers, on the other, shall
each be responsible for the payment of 50% of any transfer, sales, use, stamp,
conveyance, value added, recording, registration, documentary, filing and other
non-income Taxes (including any stamp
93
duty or goods and services tax payable in Australia) arising in connection with
the consummation of the transactions contemplated by this Agreement.
8.2 Allocation of Taxes.
(a) For purposes of this Agreement, Taxes shall be allocated between
the period ending at the Closing and the period that begins immediately
following the Closing based upon the actual operations and transactions of the
AIS Business during such periods.
(b) Notwithstanding Section 8.2(a) to the contrary, in the case of any
ad valorem Taxes, real estate Taxes, property Taxes, and other similar Taxes
imposed with respect to the ownership or use of property and assessed with
respect to a taxable period that commences before the Closing and that ends
after the Closing, such Taxes shall be allocated between the portion of such
period that ends on the Closing and the portion of such period that begins
immediately following the Closing based upon the respective number of days
during such portions of the taxable period (with the day of the Closing deemed
to be in the period following the Closing); provided, however, that appropriate
adjustment shall be made for acquisitions and dispositions of property during
such period.
8.3 Refunds and Credits.
(a) The Sellers and/or their Affiliates, as the case may be, shall be
entitled to any Tax refunds (including any interest paid thereon) or credits to
the extent such refunds or credits relate to any Taxes for which the Sellers are
responsible pursuant to Section 8.1.
(b) The Buyer and/or its Affiliates, as the case may be, shall be
entitled to any Tax refunds (including any interest paid thereon) or credits to
the extent such refunds or credits relate to any Taxes for which the Buyer is
responsible pursuant to Section 8.1.
94
8.4 Allowable Taxes.
(a) For purposes of this Agreement, "Allowable Tax" means the
allocable share of any Tax of any Seller or any of the Sellers' Affiliates which
is an allowable cost under the Federal Acquisition Regulation, 48 CFR Chapter 1,
and associated regulations and agreements between any Seller and any U.S.
Governmental Entity, allocated based on the Seller's existing finance policy (as
it is in effect on the date hereof).
(b) If any Seller or any of its Affiliates has paid or reimbursed the
Buyer for any Allowable Tax for which the Sellers are responsible pursuant to
Section 8.1(a), the Buyer agrees to repay to the Sellers promptly upon receipt
any portion of such Allowable Tax that the Buyer or any of its Affiliates is
ultimately able to recover from a U.S. Governmental Entity.
(c) If the Buyer or any of its Affiliates receives a refund with
respect to an Allowable Tax for which the Sellers are responsible pursuant to
Section 8.1(a), the Buyer shall pay to the Sellers the amount of such refund
reduced by the amount, if any, that the Buyer will be required to pay to a U.S.
Governmental Entity or suffer by reason of offset in accordance with the Federal
Acquisition Regulation, 48 CFR Chapter 1, and associated regulations and
agreements between any Seller and any U.S. Governmental Entity. If any Seller
receives a refund after the Closing Date with respect to an Allowable Tax for
which the Sellers are responsible pursuant to Section 8.1(a), the Sellers will
pay to the Buyer the amount, if any, which the Buyer will be required to pay to
a U.S. Governmental Entity or suffer by reason of an offset in accordance with
the foregoing regulations and agreements.
(d) The Sellers and the Buyer agree to cooperate with respect to the
calculation of any amounts payable pursuant to this Section 8.4 and to give each
other written
95
notice of events reasonably likely to result in the increase or decrease of any
Allowable Tax for which the Sellers are responsible pursuant to Section 8.1(a).
8.5 Cooperation on Tax Matters; Tax Audits.
(a) The Buyer and the Sellers shall (and shall cause their respective
Affiliates to) cooperate in (A) the preparation of all Tax Returns (including
amended Tax Returns), (B) the preparation and pursuit of any claims for refunds
of Taxes, (C) the defense or administration of any audit, dispute, or similar
proceeding with or by any Governmental Entity responsible for the imposition of
any Tax (a "Taxing Authority") and (D) any proceeding with any U.S. Governmental
Entity relating to refunds or reimbursements for any Allowable Tax, in each
case, to the extent attributable to any Tax period for which one Party could
reasonably require the assistance of another Party in obtaining necessary
information. Such cooperation shall include, without limitation:
(i) providing all relevant information in the Party's possession
including financial data, copies of prior-period Tax Returns (together with all
related schedules and work papers), copies of prior-period Tax preparation
packages, and copies of any notices, rulings, determinations, or reports from
any Taxing Authority to the extent they pertain to the Tax and Tax period for
which the other Party requires assistance;
(ii) the preparation by employees of Buyer or its Affiliates who
were previously employed by the Sellers in the AIS Business, to the extent they
have done so in the past, of drafts of all or any portion of any Tax Returns
and/or Tax preparation packages with respect to Tax Returns for which the
Sellers are responsible pursuant to Section 8.1(a) (such Tax Returns and Tax
preparation packages to be prepared on a basis consistent with past practice);
96
(iii) making the Parties' respective employees and facilities
available on a mutually convenient basis to provide the other Party access to,
or an explanation of, information and documents and to participate in any
proceedings with any Tax Authority or (with respect to refunds and
reimbursements attributable to Allowable Taxes) with any U. S. Governmental
Entity, including, without limitation, the Buyer making available Mr. Xxxxxx
Post to the extent that a Seller determines (in its reasonable discretion) that
Mr. Post's participation is necessary or appropriate in connection with any
proceeding relating to sales Taxes in the state of Texas (and any related claim
by or against a U.S. Governmental Entity to the extent such sales Taxes are, or
affect the amount of, Allowable Taxes); and
(iv) promptly forwarding copies of notices, forms, and other
communications received from or sent to any Tax Authority to the extent such
items relate to (or may impact) Taxes for which the other Party is responsible
under Section 8.1.
(b) The Buyer and each Seller shall maintain all records pertaining to
Taxes associated with the operation of the AIS Business through the Closing for
a period of ten years following the Closing or, if later, until the expiration
of the statute of limitations for collection of the Tax to which such record
relates. Prior to discarding or destroying such records, the Party holding such
records shall notify the other Party or Parties of its intention to so discard
or destroy the records. If the Party receiving such notice so requests, the
Party holding such records shall deliver them to the requesting Party.
(c) In the event that any Tax is assessed or any refund of Tax is
denied, and it is determined that a substantial reason for such additional Tax
or the failure to receive the refund was another Party's failure to maintain or
deliver the records specified in Section 8.5(b), or its
97
failure to fully or timely cooperate in accordance with Section 8.5(a), then
such other Party shall pay the amount of such assessed Tax or the amount of such
disallowed Tax refund to the Party with respect to which the Tax was assessed or
the refund was denied together with such additional amount as may be necessary
to pay any Taxes that may be attributable to payments under this Section 8.5(c).
If the Parties cannot agree as to whether a failure to maintain or deliver
records or to cooperate constituted a "substantial reason" for the assessment of
the additional Tax or the denial of the Tax refund, such determination shall be
made by the Neutral Accountant in accordance with the procedure set forth in
Section 1.4(d).
8.6 Scope of Article VIII. Any claim by any Party relating to a breach by
another Party of their obligations under this Article VIII shall be pursued in
accordance with the procedures for indemnification claims, and shall otherwise
be subject to the terms and conditions, set forth in Article VII.
Notwithstanding the foregoing or any other term or condition of Article VII, (i)
claims for a breach of an obligation under this Article VIII may be made by a
Party any time prior to the 60th day after the expiration of the statute of
limitations applicable to the Tax matter to which the claim relates and (ii) to
the extent there is any inconsistency between the terms of Article VII and this
Article VIII with respect to the allocation of responsibility between the
Sellers and the Buyer for Taxes relating to the AIS Business, the provisions of
this Article VIII shall govern.
ARTICLE IX
EMPLOYEE MATTERS
9.1 Pre-Closing Conduct; Other Liabilities. For purposes of this Agreement,
"AIS Employees" means those employees engaged exclusively or primarily in the
AIS Business as of
98
the Closing Date, including BBJ Employees (as defined in Section 9.2(b)), but
excluding those employees listed on Schedule 9.1. None of the Sellers shall be
under any obligation to terminate the employment of any AIS Employee prior to
the Closing Date. The Sellers shall be liable, and shall hold the Buyer
harmless, for all amounts to which any AIS Employee becomes entitled under any
Employee Benefit Plan that exists or arises (or may be deemed to exist or arise)
under any applicable law or otherwise, as a result of, or in connection with,
(i) the employment of any AIS Employee by a Seller prior to the Closing Date,
(ii) the termination of employment of any AIS Employee prior to the Closing
Date, (iii) the termination of employment of any AIS Employee on or after the
Closing Date that is a result of any such AIS Employee's failure to accept an
offer of employment made by the Buyer in accordance with Section 9.2(a), and
(iv) the termination of employment of any LTD AIS Employee (as defined in
Section 9.2(a)) on or after the Closing Date. Except as set forth in the
immediately preceding sentence, the Buyer shall be liable, and shall hold the
Sellers harmless, for any amounts to which any AIS Employee becomes entitled
under any Employee Benefit Plan that exists or arises (or may be deemed to exist
or arise) under any applicable law or otherwise, as a result of, or in
connection with, (i) the employment of any AIS Employee by the Buyer on or after
the Closing Date and (ii) the termination of employment of any AIS Employee on
or after the Closing Date. Notwithstanding anything in this Agreement or the
Assumption Agreement to the contrary, the Sellers shall be responsible for the
payment of retention bonuses under the "stay pay" agreements listed on Schedule
2.12 that become payable as a result of the Closing and for any obligations
referred to in such agreements relating to Raytheon stock options, and the Buyer
shall be responsible for the
99
payment obligations under such "stay pay" agreements that become payable upon
the completion of specified employment periods following the Closing.
9.2 Offer of Employment; Continuation of Employment.
(a) The Parties hereto intend that there shall be continuity of
employment with respect to all AIS Employees (including those employees who are,
as of the Closing Date, on vacation, leave of absence or short-term disability,
but excluding those employees who are, as of the Closing Date, on long-term
disability or layoff). The Buyer shall offer employment commencing on the
Closing Date to all such AIS Employees, on the terms set forth in Section 9.5.
Notwithstanding the preceding sentences, the Buyer shall offer employment to any
AIS Employee on long-term disability who becomes able to return to work within
two years after the Closing Date only in the event and to the extent that a
position comparable to the position such AIS Employee held prior to such
long-term disability is available at the time such AIS Employee becomes able to
return to work or subsequently becomes available during such two-year period. In
addition, if the Buyer increases employment, the Buyer shall first offer
employment to individuals on layoff and shall comply with all applicable
provisions regarding returning to work after layoff in any applicable collective
bargaining agreement. Those persons who accept the Buyer's offer of employment
shall hereafter be referred to as "Transferred Employees." Those AIS Employees
on long-term disability who become able to return to work within two years after
the Closing Date but for whom the Buyer has no comparable position (as described
above) are defined as "LTD AIS Employees".
(b) For purposes of this Agreement, "BBJ Employees" means those
employees listed on Schedule 9.2(b). The Buyer shall use reasonable commercial
efforts to
100
retain the services of the BBJ Employees to the extent necessary to perform the
Buyer's obligations under Section 10.10 and the Business Jet Services Agreement.
Raytheon agrees to reimburse the Buyer for the amount of any severance costs,
determined in accordance with the Employee Benefit Plans of the Sellers
applicable to AIS Employees as of the date of this Agreement, relating to the
termination within one year following the Closing Date by the Buyer of any BBJ
Employees.
9.3 Savings Plan. Effective as of the Closing Date, the Sellers shall
take such action, if any, as may be necessary (i) to cause the active
participation of the Transferred Employees under the Raytheon Savings and
Investment Plan (the "Savings Plan") to cease as of the Closing Date, and (ii)
to permit Transferred Employees to elect to take distributions (subject to
applicable law) of their entire accounts thereunder and, if such Transferred
Employees so elect, to roll them over, directly or otherwise, in accordance with
applicable law and regulations, to an individual retirement account or to one or
more defined contribution retirement plans qualified under Section 401(a) of the
Code and maintained by the Buyer or one of its subsidiaries (the "Buyer Defined
Contribution Plans"), and the Buyer Defined Contribution Plans shall, to the
extent such distributions are in cash or plan loans, accept such rollovers.
9.4 Defined Benefit Plans. The Sellers shall retain all liability and
responsibility for the defined benefit pension plans maintained by the Sellers
in which Transferred Employees participate as of the Closing ("Sellers' Pension
Plans"), with respect to those AIS Employees (or their beneficiaries) who, as of
the Closing Date, are participants in the Sellers' Pension Plans. The Buyer
shall establish, effective as of the Closing Date, defined benefit pension plans
(the "Buyer Pension Plans") identical in all respects to the Retirement Plan for
Hourly Employees of
101
the Greenville Division (the "Union Pension Plan") and those Sellers' Pension
Plans in which AIS Employees participate , except benefits accrued under the
Buyer's Plans shall be offset by the benefits accrued under the respective
Seller's Plans. The Buyer Pension Plan covering AIS Employees who participated
in the Union Pension Plan shall be maintained in effect without change (except
for changes agreed to by the Union representing the plan participants or as are
otherwise permitted or required under the applicable collective bargaining
agreement or applicable law) until August 21, 2004, or such later date to which
the collective bargaining agreement may be extended. All of the other Buyer
Pension Plans (the "Buyer Non-Union Plans") shall be maintained in effect for at
least 15 months after the Closing Date without substantive change (other than as
may be required by applicable law). Without limiting the generality of this
Section 9.4, at all times during the period beginning on the Closing Date and
ending on the date 15 months after the Closing Date, the total benefits payable
to any Transferred Employee participating under the Buyer Pension Plans, when
combined with the total benefits payable under the Sellers' Pension Plans, shall
be no less than the total benefits which would have been payable to such
Transferred Employee under the provisions of the Sellers' Pension Plans as in
effect as of the Closing Date if such Transferred Employee had continued to be
employed by the Sellers.
9.5 Compensation; Employee Benefits; Severance Plans. Except as otherwise
provided in this Article IX or as otherwise required by applicable law, the
Transferred Employees shall cease to participate in or accrue further benefits
under the AIS Benefit Plans immediately prior to the Closing. Beginning at the
Closing, the Buyer shall, for a period ending on the date 15 months after the
Closing Date, (a) provide each Transferred Employee who is not
102
a member of a unit of employees covered by the Collective Bargaining Agreement
with total cash compensation (defined as base salary and bonus opportunity at
least equal to those in effect on the date hereof) that is no less favorable in
the aggregate than such Transferred Employee's total cash compensation (as
defined above) immediately prior to the Closing Date, (b) maintain (or cause its
subsidiaries to maintain) Employee Benefit Plans (including without limitation,
defined benefit plans, defined contribution plans and excess plans, but
excluding stock-based plans), for the benefit of each Transferred Employee that
are no less favorable in the aggregate than the Employee Benefit Plans in effect
immediately prior to the Closing Date with respect to employees of the Buyer
("Buyer Plans"), (c) maintain (or cause its subsidiaries to maintain) a
Severance Pay Plan, program or practice for the benefit of each Transferred
Employee that is no less favorable than the plan, program or practice in effect
immediately prior to the Closing Date with respect to such Transferred Employee,
and (d) provide the Transferred Employee company-paid retiree medical benefits
that are substantially comparable in value to such benefits as are provided to
the Transferred Employees immediately prior to the Closing and continue such
company-paid retiree medical benefits for as long as retiree medical benefits
are provided generally to other employees of the Buyer, its successors and its
Subsidiaries during such 15-month period. Subsequent to the Closing Date, the
Sellers shall retain no liability for provision of retiree medical benefits to
the Transferred Employees, all of such liability, if any, having been assumed by
the Buyer. The Buyer shall cause each Buyer Plan to recognize all credited
service for purposes of eligibility and vesting and level of benefits
(including, to the extent required to meet the Buyer's obligations under Section
9.4, accrual of benefits under any defined benefit plan); provided, however,
that the Buyer shall not be required to provide any of the Transferred
103
Employees with any stock-based plans relating to equity securities (or their
equivalent, such as phantom stock plans or SAR's ). Nothing herein shall
preclude the Sellers from continuing to administer stock-based and incentive
plans for service by the Transferred Employees with the Sellers through the
Closing Date.
9.6 Welfare Plans. With respect to any Buyer Plan that is a "welfare
benefit plan" (as defined in Section 3(1) of ERISA) or any Buyer Plan that would
be a "welfare benefit plan" (as defined in Section 3(1) of ERISA) if it were
subject to ERISA, the Buyer shall (i) cause to be waived any pre-existing
condition limitations, and (ii) give effect, in determining any deductible and
maximum out-of-pocket limitations, to claims incurred and amounts paid by, and
amounts reimbursed to, such employees with respect to similar plans maintained
by any Seller immediately prior to the Closing Date. The Buyer shall cooperate
with the Sellers, which shall make appropriate arrangements to allow the use by
Transferred Employees of any accrued benefits under any cafeteria plan (as
defined in Section 125 of the Code for the plan year in which the Closing Date
occurs) which was maintained by the Sellers or any of their Affiliates for such
Transferred Employees.
9.7 Accrued Paid Time Off. With respect to any accrued but unused paid time
off to which any Transferred Employee is entitled pursuant to the Sellers' paid
time off policies applicable to such Transferred Employee immediately prior to
the Closing Date (the "PTO Policies"), the Buyer shall assume the liability for
such accrued paid time off and allow such Transferred Employee to use such
accrued paid time off; provided, however, that if the Buyer deems it necessary
to disallow such Transferred Employee from taking such accrued paid time off,
the Buyer shall permit each such Transferred Employee to carry over paid time
off in
104
accordance with the terms of the PTO Policies; and provided, further, that the
Buyer shall be liable for and pay in cash an amount equal to such accrued paid
time off to any Transferred Employee whose employment terminates for any reason
subsequent to the Closing Date. The Sellers shall be liable for and pay in cash
to the Buyer, within ten Business Days after receipt from the Buyer of written
notice thereof accompanied by reasonable supporting documentation, the amount of
any accrued but unused paid time off, which is not accounted for on the Final
Closing Statement, to which any such Transferred Employees are entitled pursuant
to the Sellers' paid time off policies applicable to such Transferred Employees.
9.8 WARN Act. The Buyer agrees to provide any required notice under the
Worker Adjustment and Retraining Notification Act ("WARN") and any other
applicable similar state or local law and to otherwise comply with any
applicable statute with respect to any "plant closing" or "mass layoff' (as
defined in WARN or other applicable state or local statutes) or similar event
affecting employees and occurring on or after the Closing Date or arising as a
result of the transactions contemplated hereby. The Buyer shall assume sole
responsibility for any liabilities or obligations arising under WARN or other
applicable law resulting from the actions (or inactions) of the Buyer or its
Affiliates on or after the Closing Date or from the transactions contemplated
hereby. The Sellers agree to provide any required notice under WARN and any
other applicable law and to otherwise comply with any such statute with respect
to any "plant closing" or "mass layoff" (as defined in WARN) or similar event
affecting employees and occurring prior to the Closing Date. The Sellers shall
assume sole responsibility for any liabilities or obligations arising under WARN
or other applicable law resulting from the actions (or inactions) of the Sellers
or their Affiliates prior to the Closing Date.
105
9.9 COBRA. The Buyer agrees to provide any required notice under the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA") and any other
applicable law on or after the Closing Date related to Transferred Employees who
are entitled to such notices after the Closing Date. The Buyer shall assume sole
responsibility for any liabilities or obligations arising under COBRA or other
applicable law related to Transferred Employees who are entitled to such notices
after the Closing Date which result from the actions (or inactions) of the Buyer
or its Affiliates on or after the Closing Date or from the transactions
contemplated hereby.
ARTICLE X
OTHER POST-CLOSING COVENANTS
10.1 Access to Information; Record Retention; Cooperation.
(a) Access to Information. Subject to compliance with contractual
obligations and applicable laws and regulations regarding classified information
and security clearance, following the Closing, each Party shall afford to each
other Party and to such other Party's authorized accountants, counsel and other
designated representatives, during normal business hours in a manner so as to
not unreasonably interfere with the conduct of business, (i) reasonable access
and duplicating rights to all non-privileged records, books, contracts,
instruments, documents, correspondence, computer data and other data and
information (collectively, "Information") within the possession or control of
such Party relating to the AIS Business, and (ii) reasonable access to the
personnel of such Party. Requests may be made under this Section 10.1(a) for
financial reporting and accounting matters, preparing financial statements,
preparing, reviewing and analyzing the Closing Statement, resolving any
differences between the Parties
106
with respect to the Closing Statement, preparing and filing of any Tax Returns,
prosecuting any claims for refund, defending any Tax claims or assessment,
preparing securities law or securities exchange filings, prosecuting, defending
or settling any litigation, Environmental Matter or insurance claim, performing
obligations under this Agreement and the Ancillary Agreements, and all other
proper business purposes.
(b) Preparation of Seller Financial Statements. Without limiting the
generality of Section 10.1(a), from and after the Closing, the Buyer shall, and
shall request its auditors to, reasonably cooperate on a timely basis with the
Sellers and their auditors in connection with the preparation by Raytheon of the
(i) Closing Statement and (ii) financial statements of Raytheon and its
Affiliates. In connection with the preparation of (i) the Closing Statement and
(ii) such financial statements, the Buyer shall provide Raytheon (and its
auditors) with reasonable access to the AIS Business, its financial management,
and any accountant's work papers in the possession of the Buyer (and shall
request that the Buyer's auditors provide access to their work papers), and all
financial books, accounts and records relating to the AIS Business.
(c) Preparation of Buyer Financial Statements. Without limiting the
generality of Section 10.1(a), from and after the Closing, each of the Sellers
agrees that it shall, and shall request PricewaterhouseCoopers LLP to,
reasonably cooperate on a timely basis with the Buyer and the Buyer's auditors
to prepare audited financial statements of the AIS Business that are required
for SEC filings required to be made by the Buyer and take any further actions in
connection therewith as set forth in Section 4.9(a).
107
(d) Cooperation in Litigation. Without limiting the generality of
Section 10.1(a), from and after the Closing, the Buyer shall provide such
cooperation as the Sellers shall reasonably request in connection with the
Bombardier Litigation. Such cooperation shall include providing the Sellers and
their counsel and other designated representatives access to such Information
and personnel as the Sellers may reasonably request. The Parties also agree
specifically that all Information concerning the Sustained Readiness Program for
modification and refurbishment of X-0 Xxxxx Xxxxxxxx xxx xxx Xxxxxx Xxxxxx Navy
(the "P-3 SRP Program") shall be stored in the same manner as at the time of the
Closing at a location to which the Seller will have full access upon seven days
advance written notification to the Buyer. The Buyer will not destroy or dispose
of any P-3 SRP Program Information without 30 days prior written notice to
Raytheon. Upon receipt of such notice, Raytheon may require that all or part of
the P-3 SRP Program Information be delivered to it.
(e) Reimbursement. A Party making Information or personnel available
to another Party under Section 10.1 shall be entitled to receive from such other
Party, upon the presentation of invoices therefor, payments for such amounts,
relating to supplies, disbursements and other out-of-pocket expenses, as may
reasonably be incurred in making such Information or personnel available;
provided, however, that no such reimbursements shall be required for the salary
or cost of fringe benefits or similar expenses pertaining to employees of the
providing Party.
(f) Retention of Records. Except as may otherwise be required by law
or agreed to in writing by the Parties, and except as provided in Section 8.5
with respect to Tax records, each Party shall each use reasonable commercial
efforts to preserve, until the date six
108
years after the Closing Date, all Information in its possession pertaining to
the AIS Business prior to the Closing. Notwithstanding the foregoing, in lieu of
retaining any specific Information, any Party may offer in writing to the other
Party or Parties to deliver such Information to the other Party or Parties and,
if such offer is not accepted within 90 days, the offered Information may be
disposed of at any time.
(g) Confidentiality. Each Party shall hold, and shall use reasonable
commercial efforts to cause their respective Affiliates, consultants, advisors,
agents and representatives to hold, in strict confidence all Information
concerning the other furnished to it by the other Party or Parties or their
representatives pursuant to this Section 10.1 (except to the extent that such
Information (i) is or becomes generally available to the public other than as a
result of any action or inaction by the receiving Party, (ii) was within the
possession of the receiving Party prior to it being furnished to the receiving
Party by or on behalf of the disclosing Party pursuant hereto, provided that the
source of such information was not bound by a confidentiality agreement with or
other contractual, legal or fiduciary obligation of confidentiality to any
person or entity with respect to such information), or (iii) is or becomes
available on a non-confidential basis to the receiving Party from a source other
than the disclosing Party, provided that the source of such information was not
bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to any person or entity with respect to
such information), and each Party shall not release or disclose such Information
to any other person, except its auditors, attorneys, financial advisors, bankers
and other consultants and advisors, unless compelled to disclose such
Information by judicial or administrative process or by other requirements of
law or so as not to violate the rules of any
109
stock exchange; provided, however, that in the case of disclosure compelled by
judicial or administrative process, the receiving Party shall (to the extent
permitted by applicable law) notify the disclosing Party promptly of the request
and the documents requested thereby so that the disclosing Party may seek an
appropriate protective order or other appropriate remedy. If, in the absence of
a protective order or other remedy or the receipt of a waiver hereunder, a Party
is, in the written opinion of its counsel, compelled to disclose any Information
to any tribunal or other entity or else stand liable for contempt or suffer
other censure or penalty, such Party may so disclose the Information without
liability hereunder; provided, however, that, such Party gives written notice to
the other Party or Parties of the information to be disclosed (including copies
of the relevant portions of the relevant documents) as far in advance of its
disclosure as is practicable, uses all reasonable efforts to limit any such
disclosure to the precise terms of such requirement and cooperates with the
disclosing Party to obtain an appropriate protective order or other reliable
assurance that confidential treatment will be accorded to such information by
the tribunal or other entity.
10.2 Covenant Not to Compete. During the period commencing on the Closing
Date and continuing until the fourth anniversary of the Closing Date (the
"Noncompetition Period"), Raytheon shall not (and shall cause each Raytheon
Subsidiary (as defined below) not to), directly or indirectly, engage in any of
the following (the "Restricted Business"):
(i) aircraft modification (i.e., alterations to an aircraft that
permit the integration of electronic equipment such as sensors, consoles and
communications suites) and maintenance as related to the modification or
refurbishment of aircraft owned and/or operated by
110
the U.S. and foreign governments and associated with U.S. and foreign
Intelligence, Surveillance and Reconnaissance (ISR);
(ii) aircraft modification (i.e., alterations to an aircraft that
permit the integration of electronic equipment such as sensors, consoles and
communications suites) and refurbishment, life extension and special mission
aircraft management;
(iii) development and integration of complex mechanical and
electromechanical systems for mission critical aircraft operations;
(iv) integrated airborne SIGINT platforms, exclusive of the
development, integration and production of SIGINT sensors performed by Raytheon
or Raytheon Subsidiaries; and
(v) maintenance, repair, modification, fabrication, prototyping
and manufacturing, and logistics support that is currently performed by the AIS
Business Joint Operations Group, for Special Operations Forces Equipment.
For purposes of this Agreement, "Raytheon Subsidiary" means any corporation,
partnership, limited liability company or other non-corporate business
enterprise in which Raytheon (or another Raytheon Subsidiary) holds stock or
other ownership interests representing more than 50% of the voting power of all
outstanding stock or ownership interests of such entity. Notwithstanding the
foregoing, neither Raytheon nor any Raytheon Subsidiary shall be prohibited
from:
(a) continuing to engage in any type of business conducted by Raytheon
or any Raytheon Subsidiary as of the date hereof which is not part of the AIS
Business or which is part of the Boeing Business Jet Division (as such business
exists as of the date of this
111
Agreement), or selling products or services that are under development by
Raytheon or any Raytheon Subsidiary as of the date hereof which are not part of
the AIS Business (it being agreed that the type of business conducted by
Raytheon or any Raytheon Subsidiary shall include any type of business that is
either expressly addressed in a bid or contract of Raytheon or any Raytheon
Subsidiary existing as of the date hereof or that is a logical follow-on to
business that is expressly addressed in such an existing bid or contract);
(b) purchasing products or services from, or selling products or
services to, or otherwise engaging in a commercial relationship with, an entity
which is engaged in the Restricted Business;
(c) acquiring or owning less than 5% (by voting power) of the
outstanding capital stock of any publicly-traded company which is engaged in the
Restricted Business;
(d) performing its obligations under this Agreement and the Ancillary
Agreements or otherwise taking actions
in connection with the winding up of the AIS Business; or
(e) acquiring any entity which is engaged in the Restricted Business
if either:
(i) in its last full fiscal year prior to such acquisition, the
consolidated revenues of such entity from the Restricted Business constituted
less than 25% of the total revenues of such entity; or
(ii) Raytheon or the applicable Raytheon Subsidiary thereafter
uses, until the earlier to occur of the expiration of the Noncompetition Period
and 12 months after such acquisition, reasonable commercial efforts to sell that
portion of the business of such entity as
112
constitutes the Restricted Business, upon terms and conditions and at a price
deemed acceptable by Raytheon.
10.3 Novation of Government Contracts.
(a) As soon as practicable following the Closing, the applicable
Seller shall prepare (with the Buyer's assistance, which will include
preparation of all information and documents required of the transferee for such
requests), in accordance with Federal Acquisition Regulations, 48 CFR ss.42.12,
and any applicable agency regulations or policies, a written request meeting the
requirements of the Federal Acquisition Regulations Part 42, as reasonably
interpreted by the Responsible Contracting Officer (as such term is defined in
Federal Acquisition Regulations Part 42), which shall be submitted by such
Seller to each Responsible Contracting Officer, for the applicable U.S.
Governmental Entity (i) to recognize the Buyer as such Seller's
successor-in-interest to each Government Contract and (ii) to enter into a
novation agreement (a "Novation Agreement"), in form and substance reasonably
satisfactory to the Buyer and such Seller, pursuant to which, subject to the
requirements of the Federal Acquisition Regulations Part 42, all of such
Seller's right, title and interest in and to, and all of such Seller's
obligations and liabilities under, such Government Contract shall be validly
conveyed, transferred and assigned and novated to the Buyer by all parties
thereto. The Sellers and the Buyer shall each use all reasonable efforts to
obtain all consents, approvals and waivers required for the purpose of
processing, entering into and completing the Novation Agreements with regard to
any such Government Contracts, including responding to any requests for
information by a U.S. Governmental Entity with regard to such Novation
Agreements. The Sellers and the Buyer shall promptly provide to each other (or
to the requesting U.S. Governmental Entity) any
113
information with respect to such Party required in connection with any such
request for information.
(b) The Parties acknowledge that the transfer or assignment of a
Government Contract is subject to the contracting agency's approval of a
Novation Agreement recognizing the Buyer as the successor-in-interest to the
applicable Seller. Unless and until the contracting agency recognizes the Buyer
as the successor-in-interest to the applicable Seller under any Government
Contract, then the applicable Seller shall subcontract, sublease or lease to the
Buyer all of such Seller's rights and obligations under such Government Contract
and appoint the Buyer as the agent of the applicable Seller for purposes of such
Government Contract, or otherwise cooperate in any reasonable arrangement
designed to provide the benefits of such Government Contract to the Buyer
(provided the Buyer also discharges the applicable Seller's obligations under
such Government Contract), in each case to the maximum extent permissible under
law. In connection therewith, the Buyer shall perform on behalf of such Seller
all of such Seller's obligations under such Government Contract, and such Seller
shall remit to the Buyer all payments it receives under such Government Contract
with respect to obligations performed by the Buyer (less any additional costs
incurred by such Seller in connection therewith).
(c) In connection with obtaining the consents or approvals
contemplated in Sections 10.3(a) and 10.3(b), none of the Sellers shall consent
to any modification of any Government Contract which would adversely affect the
rights of the Buyer under such Government Contract without the prior written
consent of the Buyer (which shall not be withheld or delayed if such
modification is not material).
114
10.4 Seller Guarantees. In the event that after the Closing Date any Seller
or an Affiliate is required to reimburse a letter of credit issuer for any
drawing under a Seller Guarantee, or is required to make any payment under a
Seller Guarantee (other than carrying costs), then the Buyer shall reimburse
such Seller or Affiliate within 20 days after demand for the payment of such
amount. The Buyer's payment obligation under this Section 10.4 shall not be
subject to any right of set-off or defense to payment otherwise available to the
Buyer. However, the payment by the Buyer of any such payment obligation will not
constitute a waiver by the Buyer of any of its rights to make a subsequent claim
under Article VII, to the extent applicable.
10.5 Outstanding Bid Proposals.
(a) In the event that, as of the Closing Date, the AIS Business has
furnished any proposals to another business unit of Raytheon to provide products
and services to such other business unit in connection with a Bid Proposal (as
defined below) by such other business unit, the Buyer agrees that if such Bid
Proposal is accepted, the Buyer will honor such proposal by the AIS Business in
accordance with its terms, which will be performed pursuant to the terms of the
applicable Supply Agreement, or if no Supply Agreement applies to the applicable
scope of work, pursuant to a new supply agreement in a form and with terms
substantially equivalent to the Supply Agreements; provided, however, that (i)
with respect to proposals by the AIS Business to another business unit of
Raytheon in connection with a fixed-price Bid Proposal, the Buyer hereby waives
any right to claim or otherwise collect Statistical Profit under such proposals,
and (ii) with respect to proposals by the AIS Business to another business unit
of Raytheon in connection with a cost-plus Bid Proposal, the profit margin for
such proposals that
115
include cost-plus pricing with a Statistical Profit, or no provision for profit,
shall be paid by such business unit of Raytheon to the Buyer in a percentage
equal to the fee percentage in the prime or higher tier contract for the
applicable cost-plus Bid Proposal. For purposes of this Agreement, "Bid
Proposal" means a proposal that has been submitted to a customer of Raytheon, a
Raytheon Subsidiary or the AIS Business. The Buyer's obligations under this
Section 10.5(a) shall apply only to Bid Proposals that are listed on Schedule
10.5(a) and are (i) outstanding on the date of this Agreement or (ii) become
outstanding prior to the Closing with the consent of the Buyer. For purposes of
this Agreement, "Statistical Profit" means, with respect to proposals furnished
by one party to another party to provide products or services in connection with
a Bid Proposal by such other party, an amount equal to the fee uplift
constituting the profit which would have been recorded by the party supplying
such products or services for financial reporting purposes internal to the
Sellers pursuant to Raytheon General Policies and Procedures 00-0000-000, but
which the party receiving such products or services would not have paid to the
supplying party, if the Buyer and the Sellers had remained Affiliates.
(b) In the event that, as of the Closing Date, Raytheon or a Raytheon
Subsidiary has furnished any proposals to the AIS Business to provide products
and services to the AIS Business in connection with a Bid Proposal by the AIS
Business, Raytheon agrees that if such Bid Proposal is accepted, Raytheon will,
or will cause the applicable Raytheon Subsidiary to, honor such proposal in
accordance with its terms, which will be performed pursuant to the terms of the
applicable Supply Agreement or if no Supply Agreement applies to the applicable
scope of work, pursuant to a new supply agreement in a form and with terms
substantially equivalent to the Supply Agreements; provided, however, that (i)
with respect to proposals by
116
Raytheon or a Raytheon Subsidiary to the AIS Business in connection with a
fixed-price Bid Proposal, Raytheon hereby waives, or will cause its Raytheon
Subsidiary to waive, any right to claim or otherwise collect Statistical Profit
under such proposals, and (ii) with respect to proposals by Raytheon or a
Raytheon Subsidiary to the AIS Business in connection with a cost-plus Bid
Proposal, the profit margin for such proposals that include cost-plus pricing
with fiscal or statistical profit, or no provision for profit, shall be paid by
the Buyer to Raytheon or the Raytheon Subsidiary, as applicable, in a percentage
equal to the fee percentage in the prime or higher tier contract for the
applicable cost-plus Bid Proposal. Raytheon's obligations under this Section
10.5(b) shall apply only to Bid Proposals which are listed on Schedule 10.5(b)
and (i) are outstanding on the date of this Agreement or (ii) become outstanding
prior to the Closing with the consent of Raytheon.
10.6 Use of Raytheon Name in Transferred Technology. The Sellers and the
Buyer will cooperate and use reasonable commercial efforts to provide to the
Buyer for inclusion in its web site, as promptly as practicable following the
Closing, all text, images and other content contained in all web sites relating
exclusively or primarily to the AIS Business maintained by the Sellers (or their
Affiliates). Prior to including any such text, images or other content in its
web site, the Buyer shall remove all references to the "Raytheon" and
"E-Systems" names from any such text, images or other content, except that the
Buyer may use such names in a non-trademark sense to describe the historical
affiliation of the AIS Business. The Sellers (or their Affiliates) shall retain
ownership of all domain names employing the name Raytheon or E-Systems and
neither the Buyer nor any of its Affiliates shall have any right or license to
any such domain name. To the extent the AIS Business utilized any internet
protocol address space allocated to
117
the Sellers, such internet protocol address space shall remain the property of
the Sellers, and no rights or licenses are granted to the Buyer with respect
thereto. Except as may be provided in this Section 10.6 or the Transition
Services Agreement, the Buyer shall have no right to continued access to the
Raytheon telephone network, Raytheon internet mail, or any other Raytheon
computer network.
10.7 Collection of Accounts Receivable. Each Seller agrees that it shall
forward promptly to the Buyer any monies, checks or instruments received by such
Seller after the Closing with respect to the accounts receivable purchased by
the Buyer from the Sellers pursuant to this Agreement. Each Seller hereby
authorizes the Buyer to endorse and cash any checks or instruments payable or
endorsed to such Seller or its order which are received by the Buyer and which
relate to accounts receivable purchased by the Buyer from the Sellers.
10.8 Payment of Assumed Liabilities. In the event that any Seller (or an
Affiliate thereof) inadvertently pays or discharges, after the Closing, any
Assumed Liabilities, the Buyer shall reimburse such Seller or Affiliate for the
amount so paid or discharged within 45 days of being presented with written
evidence of such payment or discharge. In the event that the Buyer (or an
Affiliate thereof) inadvertently pays or discharges, after the Closing, any
Excluded Liabilities, the applicable Seller shall reimburse the Buyer or such
Affiliate for the amount so paid or discharged within 45 days of being presented
with written evidence of such payment or discharge.
10.9 Access to Facility. In order to permit the Sellers to continue to
conduct Raytheon's operations relating to payroll processing, PeopleSoft
support, Enterprise IT SAP support and CSC support services located at
Raytheon's Greenville, Texas facilities (which
118
facilities are covered by one of the Real Estate Leases being assigned to the
Buyer), the Buyer shall, for a period of one year following the Closing (or such
shorter period of time as the Sellers shall elect with respect to all or any
portion of the space so occupied), permit the Sellers to continue to occupy the
amount of space at the Greenville facilities currently occupied by the Raytheon
operations described above, and permit the Sellers' employees, agents and
contractors to have access both to such portion of such facilities as is
reasonably necessary to operate such functions in the manner in which they are
currently operated and to such services, equipment and systems as are currently
utilized by them in such operations. The Sellers shall make all reasonable
efforts to avoid and mitigate any interruption or interference with the Buyer's
business activities. As consideration for the access permitted by the Buyer
under this Section 10.9, the Seller shall pay to the Buyer a pro rata portion
(based on the portion of the Greenville facilities occupied by the Sellers) of
(i) the payments owed by the Buyer under such Real Estate Lease and (ii) any
other costs reasonably incurred by the Buyer in operating and maintaining such
facilities and providing support for the occupants thereof, for the period of
time during which the Sellers occupy such facilities. The Seller shall indemnify
the Buyer for any Damages incurred by the Buyer if the arrangement contemplated
by this Section 10.9 constitutes a violation of such Real Estate Lease.
10.10 Boeing Business Jet Operations.
(a) Raytheon is obligated to design, manufacture and deliver a VIP
interior in (i) a Boeing B777-200 Increased Gross Weight (IGW) aircraft under
Completion Agreement Number 98-RESY-W-1057 between Raytheon (as successor to
Raytheon E-Systems, Inc.) and Alfa Sierra, Inc. dated June 5, 1998 and (ii) a
Boeing X000-000 XXX aircraft under Completion
119
Agreement Number 99-RSC-W-1085 between Raytheon (as successor to Raytheon
E-Systems, Inc.) and Funair, Inc. dated April 24, 1999 and Completion
Specification, Change dated January 24, 2000, as revised by Work Change
Requests. Such aircrafts are referred to herein as the "777 Aircraft" and such
contracts (as supplemented or modified) are referred to herein as the "777
Contracts." The Buyer agrees that, at the request of Raytheon, it shall perform
such work as is reasonably necessary to complete the 777 Aircraft and prepare
them for delivery in accordance with the terms of the 777 Contracts. Raytheon
shall pay the Buyer for such work at a rate equal to the Buyer's Actual Cost for
the first 15,000 man hours of such work, and at a rate equal to the Buyer's
Actual Cost plus 8% for any work in excess of 15,000 man hours. For purposes of
this Agreement, "Actual Cost" shall mean the Buyer's actual costs (including
labor and fringes, overhead and general and administrative costs, plus the
actual cost to the Buyer of materials used and applicable material handling
rates and any other direct costs) determined in accordance with the standards
and practices under the Raytheon Company Aircraft Integration Systems Segment
Cost Accounting Standards Board Disclosure Statement (or any successor thereto)
in effect at the time the work is performed, subject to any limitations agreed
to by Raytheon and the Buyer. The Buyer shall perform such work in accordance
with customary standards of quality in the industry and in accordance with the
standards required under the 777 Contracts.
(b) Raytheon owns supplemental type certificates and data identified
on the applicable Master Drawing List associated with Boeing Business Jet Model
737-700 aircraft and one Boeing Model 777-200 and excess materials, as described
in more detail on Schedule 10.10(b) (the "Consigned Assets"). The Consigned
Assets are located at Raytheon's Waco, Texas facility and are not part of the
Acquired Assets. The Buyer agrees to store the Consigned
120
Assets for the benefit of Raytheon. The Buyer further agrees to use reasonable
commercial efforts to find a buyer for the Consigned Assets and agrees that
Xxxxxx Xxxxxx shall (for so long as he remains employed by the Buyer or an
Affiliate) be responsible for the Buyer's efforts to find such buyer (it being
agreed that the foregoing shall not require Buyer to retain Xx. Xxxxxx as an
employee). Raytheon, as owner of the Consigned Assets, shall have the authority
to accept or reject any proposed sale of the Consigned Assets. Upon the
consummation of any sale of some or all of the Consigned Assets, Raytheon shall
pay to the Buyer 40% of the proceeds received by Raytheon for such sale.
10.11 Insurance. The Sellers shall provide reasonable cooperation to the
Buyer in order to afford the Buyer the right to receive payment, after the
Closing, under any insurance policies of the Sellers covering the AIS Business
or the Acquired Assets prior to the Closing with respect to any claim or loss
covered by such policies that relates to any of the Acquired Assets or
constitutes an Assumed Liability. The Buyer shall promptly notify the Sellers of
the occurrence of any events that might form the basis of such an insurance
claim and the amount of such claim. Any such rights of the Buyer to receive
payment on any such insurance claim shall be subject to any deductibles,
self-insured retentions, retained amounts, retentions or exclusions, to the
Buyer's payment of any retrospectively rated premiums that become due and
payable after the Closing, and to the other terms of the applicable insurance
policy. If so requested by Raytheon, the Buyer shall, as a condition to
receiving payment on any such insurance claim, make arrangements reasonably
satisfactory to Raytheon for the payment directly to the applicable insurance
carrier of any amounts which are the responsibility of the Buyer in accordance
with the immediately preceding sentence. This Section 10.11 shall not require
any Seller to convert any
121
"claims made" policy to an "occurrence based" policy and shall not obligate any
Seller to maintain any insurance policy in effect such that it covers claims
made or events occurring after the Closing.
10.12 Non-Solicitation. From the date hereof to the second anniversary of
the Closing Date, none of the Sellers shall, directly or indirectly (including
through Subsidiaries), solicit or encourage any of the officers and employees
listed on Schedule 10.12 hereto to leave the employ of the Buyer or any of its
Subsidiaries; provided, that nothing contained in this sentence shall prevent or
restrict a Seller from employing any individual who responds to a general
solicitation for employment made by or on behalf of any Seller that is not
specifically directed at employees or officers of the Buyer or any of its
Subsidiaries, or any individual who, after the Closing, initiates contact with a
Seller for purposes of seeking employment.
10.13 Record Keeping. Within six months after the Closing, the Sellers
shall deliver to the Buyer all data relating primarily or exclusively to the
Acquired Assets to the extent such transfer is permitted by applicable law and
such data has not be transferred to an AIS Business facility prior to Closing.
Such data includes, but it not limited to, data relating to financial
accounting, real estate leases, human resources, contracts, insurance,
intellectual property, legal matters, novation agreements and assignment
agreements. The costs incurred in connection with the delivery of such data to
the Buyer shall be borne by the Sellers.
10.14 Compliance with Agreement. The Buyer shall forbear (and shall cause
its Affiliates and any other person or entity under its control to forbear) from
taking any action with respect to any AIS Property that, if taken by Raytheon
(as successor to Raytheon E-Systems, Inc.), would (i) represent a breach of a
covenant of the Seller to Chrysler under the April 4, 1996
122
Stock Purchase Agreement by and among Chrysler Technologies Corporation, Cisa
Financial Services, S.A. and E-Systems, Inc. (the "Chrysler Agreement") or (ii)
reduce or result in the loss of any indemnity claim or right of Raytheon
pursuant to such Agreement.
10.15 Proprietary Information; Marketing and Sales Restriction. The Buyer
acknowledges that the AIS Business possesses, and, after the Closing the Buyer
will possess, significant information about non-AIS Business technology,
marketing, and sales that is confidential and trade secret to the Sellers
("Non-AIS Information"), including, without limitation, Non-AIS Information
regarding the operations of the Sellers at the locations identified in the
definition of the AIS Business set forth in the Introduction to this Agreement.
The Buyer will not, directly or indirectly, use or disclose any Non-AIS
Information for any purpose, specifically including, without limitation,
research, development, marketing or sales efforts in competition with the
Sellers.
10.16 Confidentiality Obligations of the Sellers. The Sellers shall hold,
and shall use reasonable commercial efforts to cause their respective
Affiliates, consultants, advisors, agents and representatives to hold, in strict
confidence all confidential or trade secret information relating exclusively or
primarily to the AIS Business, except as required by law or administrative
process and except for information that is available to the public on the
Closing Date, or thereafter becomes available to the public other than as a
result of a breach of this Section 10.16.
10.17 Environmental Response Activities. In performing Environmental
Response Activities for which it seeks indemnification under Article VII of this
Agreement, Buyer will select the remedy which most cost effectively achieves the
level of cleanup with respect to which Raytheon owes an indemnity obligation
pursuant to Section 7.1(d).
123
ARTICLE XI
MISCELLANEOUS
11.1 Press Releases and Announcements. Immediately after the execution and
delivery of this Agreement, the Parties will issue a joint press release
announcing the execution and delivery of this Agreement, substantially in the
form previously delivered to each other. Prior to the Closing, no Party shall
issue (and each Party shall cause its Affiliates not to issue) any other press
release or public disclosure relating to the subject matter of this Agreement
without the prior written approval of the other Party or Parties (which shall
not be unreasonably withheld or delayed); provided, however, that any Party may
make any public disclosure it believes in good faith is required by law,
regulation or stock exchange rule (in which case the disclosing Party shall
advise the other Party or Parties and the other Party or Parties shall, if
practicable, have the right to review such press release or announcement prior
to its publication).
11.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns and, to the extent specified herein, their
respective Affiliates.
11.3 Entire Agreement. This Agreement (including the documents referred to
herein) and the Confidentiality Agreement constitute the entire agreement among
the Buyer, on the one hand, and the Sellers, on the other hand. This Agreement
supersedes any prior agreements or understandings among the Buyer, on the one
hand, and the Sellers, on the other hand, and any representations or statements
made by or on behalf of any Seller or any of their respective Affiliates to the
Buyer, whether written or oral, with respect to the subject matter hereof, other
than the Confidentiality Agreement.
124
11.4 Succession and Assignment. No Party may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior
written approval of Raytheon (in the case of an assignment by the Buyer) or the
Buyer (in the case of an assignment by any Seller), which written approval shall
not be unreasonably withheld or delayed. Notwithstanding the foregoing, this
Agreement, and all rights, interests and obligations hereunder, may be assigned,
without such consent, to any entity that acquires all or substantially all of a
Party's business or assets, and the Buyer may assign without the Sellers'
consent all or part of its rights, interests or obligations hereunder to one or
more subsidiaries of the Buyer (provided that no such assignment shall relieve
the Buyer of its obligations to the Sellers hereunder). This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns.
11.5 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered four
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent for next
business day delivery via a reputable nationwide overnight courier service, in
each case to the intended recipient as set forth below:
125
If to any or all Sellers: Copy to:
Raytheon Company Xxxx and Xxxx LLP
000 Xxxxxx Xxxxxx 00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000 Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, Esq. Attn: Xxxx X. Xxxxxx, Esq.
Senior Vice President and
General Counsel
If to the Buyer: Copy to:
L-3 Communications Corporation Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxxxx, Esq. Attn: Xxxxxxx X. Xxxxxx, Esq.
Senior Vice President, Secretary
and General Counsel
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the party for
whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
11.6 Amendments and Waivers. The Parties may mutually amend or waive any
provision of this Agreement at any time. No amendment or waiver of any provision
of this Agreement, including this Section 11.6, shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any
126
prior or subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
11.7 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the body making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified.
11.8 Expenses. Except as otherwise specifically provided to the contrary in
this Agreement, each of the Parties shall bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
11.9 Specific Performance. Each Party acknowledges and agrees that the
other Party or Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each Party agrees that the other
Party or Parties may be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter.
127
11.10 Governing Law. This Agreement and any disputes hereunder (including
any arbitration proceeding pursuant to Section 7.4) shall be governed by and
construed in accordance with the internal laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
laws of any jurisdiction other than those of the State of Delaware.
11.11 Submission to Jurisdiction. Except as otherwise provided in Section
7.4 with respect to arbitration of Disputes, each Party (a) submits to the
exclusive jurisdiction of any state or federal court sitting in the State of
Delaware in any action or proceeding arising out of or relating to this
Agreement, (b) agrees that all claims in respect of such action or proceeding
may be heard and determined only in any such court, (c) waives any claim of
inconvenient forum or other challenge to venue in such court, and (d) agrees not
to bring any action or proceeding arising out of or relating to this Agreement
in any other court. Each Party agrees to accept service of any summons,
complaint or other initial pleading made in the manner provided for the giving
of notices in Section 11.5. Nothing in this Section 11.11, however, shall affect
the right of any Party to serve such summons, complaint or initial pleading in
any other manner permitted by law.
11.12 Construction.
(a) The language used in this Agreement shall be deemed to be the
language chosen by the Parties to express their mutual intent, and no rule of
strict construction shall be applied against any Party.
128
(b) Any reference to any federal, state, local, or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
(c) The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
(d) Any reference herein to an Article, section or clause shall be
deemed to refer to an Article, section or clause of this Agreement, unless the
context clearly indicates otherwise.
(e) All references to "$", "Dollars" or "US$" refer to currency of the
United States of America.
11.13 Counterparts and Facsimile Signature. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument. This Agreement
may be executed by facsimile signature.
[Remainder of page intentionally left blank]
129
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
RAYTHEON COMPANY
By:_______________________________
Name:_____________________________
Title:____________________________
RAYTHEON AUSTRALIA PTY LTD.
By:_______________________________
Name:_____________________________
Title:____________________________
L-3 COMMUNICATIONS CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
130
