Exhibit 10.61
ASSET SALE AGREEMENT
Dated as of November 22, 1996
by and among
ROCKWELL ▇▇▇▇▇▇▇, INC.
and
AMERICAN MOBILE SATELLITE CORPORATION
and
AMSC SUBSIDIARY CORPORATION
TABLE OF CONTENTS
Section Page
1. Assets to Be Acquired.............................................. 2
2. Liabilities to Be Assumed.......................................... 12
3. Closing Consideration.............................................. 15
4. Closing............................................................ 15
5. Representations and Warranties of Seller........................... 16
(a) Corporate Organization.................................... 16
(b) Corporate Authorization................................... 16
(c) No Violation or Conflict.................................. 17
(d) Consents, Approvals or Authorizations..................... 18
(e) Title..................................................... 19
(f) Contracts................................................. 19
(g) Compliance with Laws...................................... 20
(h) Permits................................................... 24
(i) Litigation................................................ 25
(j) Intellectual Property..................................... 25
(k) Conduct of Business Since October 1, 1996................. 26
(l) Employees................................................. 26
(m) Employee Benefit Plans.................................... 26
(n) Sufficiency of Assets..................................... 26
(o) Absence of Changes........................................ 27
(p) Statement of Assets and Liabilities and Related
Matters................................................... 27
6. Representations and Warranties of Buyer and Parent................. 29
(a) Corporate Organization.................................... 29
(b) Corporate Authorization................................... 29
(c) No Violation or Conflict.................................. 30
(d) Consents, Approvals or Authorizations..................... 31
(e) Litigation................................................ 31
(f) Information............................................... 32
(g) Losses.................................................... 32
7. Investigation by Buyer; Confidentiality............................ 32
8. Covenants.......................................................... 33
(a) Conduct of Business Prior to the Closing Date............. 33
(b) Transfer Taxes............................................ 34
(c) Further Assurances........................................ 34
(d) Post-Closing Access; Preservation of Records.............. 35
(e) Reasonable Best Efforts................................... 38
(f) Allocation of Consideration............................... 38
(g) Interim Use of Seller's Trademark,
Trade Name and Corporate Symbol........................... 39
(h) Performance by Buyer of Obligations
under Contracts........................................... 41
(i) Insurance................................................. 42
(j) Cash Management........................................... 43
(k) Consents.................................................. 44
(l) Inventory................................................. 45
(m) Discounted Satellite Usage Fees........................... 48
(n) On-Board Computing........................................ 48
(o) [SECTION INTENTIONALLY LEFT BLANK]........................ 49
(p) Upgrade and Warranty Obligations.......................... 49
(q) Non-Compete............................................... 51
(r) Intercompany and Intracompany Accounts.................... 53
(s) Right of Payment Offset................................... 53
(t) Non-Solicitation.......................................... 53
(u) Audited Financial Statements.............................. 54
(v) Novation of Customer Contracts............................ 55
(w) Grant of Intellectual Property License to Seller.......... 55
(x) Sharing of Service Fees................................... 56
9. Employment Arrangements, Benefits and Pension Plans................ 57
(a) Employment................................................ 57
(b) Severance Benefits........................................ 58
(c) Employee Obligations...................................... 59
(d) Welfare Plans............................................. 60
(e) Benefit Plans............................................. 60
(f) Indemnification........................................... 61
10. Conditions Precedent to the Obligation of Buyer.................... 61
(a) Representations and Warranties............................ 62
(b) Covenants and Agreements.................................. 62
(c) Opinion of Counsel........................................ 62
(d) Legal Proceedings......................................... 62
(e) FCC License Modification.................................. 63
(f) Transition Agreement...................................... 63
(g) Consents Obtained......................................... 63
(h) Mutual Release............................................ 63
(i) Data ▇▇▇ ▇▇ (with COM.) Distributor Agreement............. 64
11. Conditions Precedent to the Obligation of Seller................... 64
(a) Representations and Warranties............................ 64
(b) Covenants and Agreements.................................. 64
(c) Opinion of Counsel........................................ 65
(d) Legal Proceedings......................................... 65
(e) FCC License Modification.................................. 65
(f) Transition Agreement...................................... 65
(g) Mutual Release............................................ 65
(h) H-S-R Determination....................................... 65
(i) Consents Obtained......................................... 66
(j) Certificate of ▇▇▇▇▇▇ Electronics Corporation............. 66
12. Finder's Fees, Brokers............................................. 66
-ii-
13. Waiver of Compliance with Bulk Transfer Laws....................... 66
14. Survival of Representations and Warranties......................... 67
15. Indemnification.................................................... 68
(a) Indemnification by Seller................................. 68
(b) Indemnification by Buyer.................................. 69
(c) Exclusivity............................................... 70
(d) Notice of Circumstance.................................... 71
(e) Certain Limitations....................................... 73
(f) Survival of Indemnification Obligations................... 74
16. Termination; Effect of Termination................................. 75
(a) Termination............................................... 75
(b) Effect of Termination..................................... 75
17. Miscellaneous...................................................... 76
(a) Costs Incident to Preparation of Agreement................ 76
(b) Parties in Interest....................................... 76
(c) Casualty.................................................. 77
(d) Assignment; Successors and Assigns........................ 77
(e) Notices................................................... 77
(f) Waiver; Remedies.......................................... 79
(g) Entire Agreement.......................................... 79
(h) Amendment................................................. 80
(i) Counterparts.............................................. 80
(j) Governing Law............................................. 80
(k) Disclosure Schedule....................................... 80
(l) Captions, Currency........................................ 80
(m) Publicity................................................. 81
(n) No Representations or Warranties.......................... 81
(o) Severability.............................................. 82
(p) Dispute Resolution Procedures............................. 82
(q) Definition of "Knowledge"................................. 82
(r) Guarantee of Buyer's Performance.......................... 83
Annex I - Dispute Resolution Procedures
-iii-
ASSET SALE AGREEMENT
ASSET SALE AGREEMENT, dated as of November 22, 1996 ("Agreement"), by and
among ROCKWELL ▇▇▇▇▇▇▇, INC., a Delaware corporation ("Seller"), AMERICAN MOBILE
SATELLITE CORPORATION, a Delaware corporation ("Parent"), and AMSC SUBSIDIARY
CORPORATION, a Delaware corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, Seller, through its Intelligent Transportation Systems segment
(and its predecessors), has engaged and is engaged in the Rockwell Land
Transportation Electronics' Mobile Communications Satellite Service business
through which Seller sells mobile messaging hardware and services to commercial
trucking fleets;
WHEREAS, Seller desires to sell and Buyer desires to purchase the service
portion (but not the manufacturing portion as hereinafter described) of the
Rockwell Land Transportation Electronics' Mobile Communications Satellite
Service business which sells mobile messaging and global positioning monitoring
systems and services for surface transportation to commercial trucking fleets
(the "Business");
WHEREAS, upon the terms and subject to the conditions hereinafter set
forth, Seller desires to sell and Buyer desires to purchase the Assets (as
hereinafter defined); and
WHEREAS, upon the terms and subject to the conditions hereinafter set
forth, Seller desires to transfer and Buyer desires to assume the Assumed
Liabilities (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises, the mutual agreements
hereinafter contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Seller, Buyer and Parent do each
hereby agree as follows:
1. Assets to Be Acquired.
---------------------
(a) Subject to the terms and conditions set forth herein, on the Closing
Date (as defined in Section 4) Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase and acquire from Seller, all of
Seller's right, title and interest in and to all of the assets, rights,
contracts, leases and agreements (tangible and intangible, wherever located)
used primarily in or relating primarily to the Business (other than the Retained
Assets, as defined in Section 1(b)), free and clear of any lien, security
interest, pledge, mortgage, charge, restriction, claim, retention of title
agreement or other encumbrance of whatever nature ("Lien") other than Permitted
Liens (as defined in Section 5(e)) as the same shall exist on the Closing Date,
including, without limitation:
(i) Rockwell Base Station; LESs; Tangible Assets. All
----------------------------------------------
machinery, fixtures, equipment, packing materials,
laboratory equipment and supplies, computers,
-2-
computer systems and computer support equipment and all other tangible
personal property described on Schedule 1(a)(i) all of which items are
located at Seller's Cedar Rapids facility;
(ii) Records. All financial, accounting and operating data
-------
and records within the last five years or otherwise reasonably
available (other than such data and records (A) which relate to
Retained Assets or (B) which relate to employees of Seller other than
the Continued Employees (as defined in Section 9(a)), including,
without limitation, all books, records, notes, sales and sales
promotional data, advertising materials, credit information, cost and
pricing information, customer and supplier lists, reference catalogs
and payroll and personnel records of all Continued Employees;
(iii) Certain Intellectual Property. All commercial and technical
------------------------------
information, including engineering, production and other designs,
drawings, specifications, formulas, technology, computer programs,
software, processes and proprietary information, trade secrets,
copyrights and know-how, including, without limitation, those relating
to the Super C protocol;
(iv) Contracts. All leases, license agreements,
---------
contracts, agreements, sale orders, purchase orders,
open bids and other commitments set forth on
Schedule 5(f) or not required to be set forth on Schedule
-3-
5(f) pursuant to the terms of Section 5(f) (collectively,
the "Contracts");
(v) Prepaid Items. All prepaid expenses, deposits and
-------------
retentions, including those held by third parties under the
Contracts;
(vi) Licenses, etc. All licenses, franchises, permits,
-------------
authorizations and approvals to the extent the same are transferable;
(vii) Goodwill. Any and all goodwill and going concern value,
--------
if any, of the Business;
(viii) Trademarks. All marks and any rights therein listed on
----------
Schedule 1(a)(viii) to the extent that such marks have acquired any
trademark or service ▇▇▇▇ status, together with the goodwill, if any,
of the Business connected with the use of, and symbolized by, the
marks;
(ix) Inventions. All patents, patent applications, inventions,
----------
innovation disclosures and mask work registrations listed on Schedule
1(a)(ix);
(x) Causes of Action. All choses in action, causes of action,
----------------
rights of recovery, rights of set-off, rights of recoupment and claims;
(xi) Breach of Warranty Claims. Any and all rights or claims
-------------------------
of Seller arising out of the breach of any express or
implied warranty by unaffiliated third-party manufacturers or sellers
of any of such Assets or any component part thereof; and
-4-
(xii) Mobile Terminal Intellectual Property. Seller shall at
----------------------------------------
Closing transfer to Buyer all of Seller's existing intellectual
property relating to the manufacture of mobile terminals or
authorization of the manufacture of mobile terminals by a third party.
The assets to be sold, conveyed, assigned, transferred and delivered by
Seller to Buyer pursuant to this Agreement are hereinafter collectively
referred to as the "Assets". The Assets will include all additions to
and replacements of any of the items described in this Section 1(a) in
accordance with this Agreement between the date of this Agreement and
the Closing Date, and will exclude all deletions, sales or other
disposals of any of the foregoing in accordance with this Agreement
between the date of this Agreement and the Closing Date.
(b) Notwithstanding anything contained herein to the contrary, the Assets
to be sold, conveyed, assigned, transferred and delivered by Seller to Buyer
hereunder shall not include any of Seller's right, title and interest in and to
the following (collectively, the "Retained Assets"):
(i) to the extent not covered by Section 1(a)(v), all cash, cash
equivalents, bank accounts and bank account credit balances, deposits,
funds, securities, short-term investments, certificates
of deposit, notes, checks, drafts and similar instruments;
-5-
(ii) all accounts receivable, notes receivable and loans
receivable outstanding on the Closing Date, together with all claims
and offsets thereto;
(iii) except as permitted by Section 8(g), the marks or names
"Rockwell", "Rockwell International", "▇▇▇▇▇▇▇", "▇▇▇▇▇▇▇ Avionics",
Seller's corporate logo or any other trademarks, trade names or service
marks of Seller, its subsidiaries or its affiliates, or any
applications or registrations thereof;
(iv) except as permitted by Section 8(g), all marks and any
rights therein other than those listed on Schedule 1(a)(viii) to the
extent that such marks listed on Schedule 1(a)(viii) have acquired any
trademark or service ▇▇▇▇ status;
(v) other than those listed on Schedule 1(a)(ix), all patents,
patent applications, inventions, innovation disclosures and mask work
registrations, provided that Seller hereby grants Buyer a worldwide
non-exclusive royalty-free, irrevocable license under any intellectual
property rights now in existence, or later coming into existence based
on patent applications, included in Retained Assets necessary to carry
on the Business as constituted on the effective date of this Agreement;
(vi) all pension plan and other benefit plan assets
relating to present or former employees of Seller
-6-
including, without limitation, Continued Employees (as hereinafter
defined);
(vii) all policies of insurance, fidelity, surety or similar
bonds and the coverages afforded thereby;
(viii) all rights to refunds of all Federal, state, local or
foreign income and franchise Taxes (as defined in Section 8(f)(ii)) and
all other taxes and all assessments, including, without limitation,
gross receipts, property, sales, use or other taxes and estimated taxes
relating thereto (and interest and penalties thereon) actually paid or
payable by Seller with respect to all taxable periods ending on or
before the Closing Date and the portion ending on the Closing Date of
any taxable period that begins before but has not ended by the Closing
Date;
(ix) all licenses or rights of Seller, its subsidiaries or its
affiliates (with respect to the Business) under any intellectual
property of third parties which cannot be sublicensed or transferred by
Seller (without any action by or cost to Seller) in connection with the
sale or transfer of the Business all of which are set forth on Schedule
1(b)(ix);
(x) except as and to the extent expressly provided in
Section 8(l), all inventory constituting work-in-process, raw
materials, parts, stores, spare parts, repair parts, components,
accessories and supplies (the "Closing Date Parts Inventory"); and
-7-
(xi) any matters relating to exploratory discussions conducted by
Seller concerning the potential development, manufacture and/or sale of
mobile terminals in India.
(c) Except as provided in this Agreement or the Transition Agreement (as
hereinafter defined), Buyer expressly acknowledges that the Business does not
include, and Seller is not selling, conveying, assigning, transferring or
delivering to Buyer, and that Buyer is not purchasing or acquiring from Seller
any assets used in or relating to the manufacturing portion of the Rockwell Land
Transportation Electronics' Mobile Communications Satellite Service business
which for the purposes of this Agreement and the Transition Agreement shall mean
any and all operations, wherever located, relating to or associated with the
development, design, construction, assembly, or production, of any and all
mobile radio communications system hardware, including, but not limited to,
multi-mode mobile terminals, or any part, piece, portion, component, or segment
thereof, or of any and all hardware for the interface/integration of mobile
messaging with on-board computing and monitoring systems, or any part, piece,
portion, component, or segment thereof. Buyer expressly acknowledges that
the Business does not include, and on the Closing Date Seller is not
selling, conveying, assigning, transferring or delivering to Buyer,
and that Buyer is not purchasing or acquiring from Seller any assets
used in or relating to the manufacturing portion (other than the
-8-
intellectual property being transferred from Seller to Buyer as provided in this
Agreement) of the Rockwell Land Transportation Electronics' Mobile
Communications Satellite Service business located at (i) Seller's Cedar Rapids
facility and (ii) Rockwell International Corporation's ("Rockwell") El Paso,
Texas manufacturing facility, including, without limitation, the machinery,
fixtures, equipment, and other tangible personal property described on Schedule
1(c) (collectively, the "Excluded Manufacturing Equipment"). Such Excluded
Manufacturing Equipment shall be conveyed to Buyer in accordance with the
Transition Agreement.
(d) Buyer expressly acknowledges that, except to the extent provided in
this Agreement or the Transition Agreement with respect to the intellectual
property being transferred from Seller to Buyer, the Business does not include,
and that Seller is not selling, conveying, assigning, transferring or delivering
to Buyer, and that Buyer is not purchasing or acquiring from Seller, any of
Seller's right, title and interest in and to any or all of the assets, rights,
contracts, leases and agreements used in or relating to any of the following
businesses of Seller, its subsidiaries or its affiliates: (i) "FleetMaster";
(ii) Railroad Electronics; (iii) trucking On Board Computing (including, without
limitation, "TripMaster"); (iv) Integrated Local Governments Systems (including,
without limitation, "TransitMaster" and "TransMaster"); (v) Transportation
Systems (including, without limitation, "TraffiCam"); (vi) Driver
-9-
Information Systems (including, without limitation, "PathMaster"); (vii)
Agricultural GPS (including, without limitation, "Vision System(TM)"); (viii)
handheld GPS (including, without limitation, "PLGR" and "SOLGR"); (ix) satellite
phone (including, without limitation, "SEC*SAT"); (x) military; and (xi)
avionics businesses and any prior, existing or future satellite or other
communications capability or service relating to any such business
(collectively, the "Excluded Businesses"). None of the assets, rights,
contracts, leases or agreements used in or relating to any such business are
used primarily in or relate primarily to the Business.
(e) EXCEPT TO THE EXTENT EXPRESSLY PROVIDED TO THE CONTRARY IN ARTICLES 5,8
AND 15, BUYER EXPRESSLY UNDERSTANDS AND AGREES THAT THE ASSETS ARE BEING
ACQUIRED BY BUYER "AS IS", "WHERE IS", WITH AND SUBJECT TO ALL FAULTS AND
DEFECTS THEREIN AND WITHOUT ANY REPRESENTATION, WARRANTY OR GUARANTEE OF ANY
KIND, EITHER EXPRESS OR IMPLIED, ARISING OUT OF LAW OR OTHERWISE, INCLUDING,
WITHOUT LIMITATION, ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR OF
FITNESS FOR A PARTICULAR PURPOSE.
(f) Seller shall deliver to Buyer at the Closing (as defined in Section 4)
such bills of sale and instruments of transfer as shall reasonably be requested
by Buyer to effect or evidence the sale, conveyance, assignment, transfer and
delivery of the Assets to Buyer.
(g) Anything contained herein to the contrary notwithstanding,
this Agreement shall not constitute an agreement
-10-
to assign any Contract or license if an assignment or attempted assignment of
the same without the consent of the other party or parties thereto would
constitute a breach thereof, violate any applicable law or in any way impair the
rights of Seller or Buyer thereunder. Seller shall, prior to the Closing, use
its reasonable efforts (it being understood that such efforts shall not include
any requirement of Seller or any of its subsidiaries or its affiliates to expend
money or offer or grant any financial accommodation to any third party, except
as and to the extent provided in Section 8(k)) as requested by Buyer, and Buyer
shall cooperate in all reasonable respects with Seller, to obtain all consents
and waivers and to resolve all impracticalities of assignments or transfers
necessary to convey to Buyer the Assets. If such consent is not obtained or if
an attempted assignment would be ineffective, would violate any applicable law
or would impair Seller's or Buyer's rights under any such Contract or license so
that Buyer would not receive all such rights, then (x) Seller shall use its
reasonable efforts (it being understood that such efforts shall not include any
requirement of Seller or any of its subsidiaries or its affiliates to expend
money or offer or grant any financial accommodation to any third party, except
as and to the extent provided in Section 8(k)) to provide or cause to be
provided to Buyer the benefits of any such Contract or license and Seller shall
promptly pay or cause to be paid to Buyer, when received, all moneys received by
Seller with respect to any such Contract or license and (y) to the extent that
Seller
-11-
provides to Buyer the benefits of any Contract or license, Buyer shall pay,
perform and discharge on behalf of Seller all of Seller's debts, liabilities,
obligations and commitments thereunder in a timely manner and in accordance with
the terms thereof.
2. Liabilities to Be Assumed.
-------------------------
(a) Subject to the terms and conditions set forth herein, in consideration
for the sale, conveyance, assignment, transfer and delivery of the Assets to
Buyer, on the Closing Date Seller shall assign, convey and transfer to Buyer,
and Buyer shall assume and undertake to pay, perform and discharge, in a timely
manner and in accordance with the terms thereof, all of Seller's debts,
liabilities, obligations and commitments arising out of or relating to the
Assets or the Business of any kind, character or description, whether known or
unknown, accrued, absolute, contingent, determined, determinable or otherwise,
whether presently in existence or arising hereafter (other than the Retained
Liabilities as defined in Section 2(b)), including, without limitation, any such
debts, liabilities, obligations and commitments arising under or relating to any
Contract (including, without limitation, any warranty obligation in respect
thereof), except as expressly provided herein or in the Transition Agreement.
(i) Parent and Buyer expressly understand and agree that any
obligation or liability relating to the manufacture, after the Closing,
by anyone other than Seller
-12-
of mobile terminals or other hardware (including component parts of
mobile terminals that anyone other than Seller assembles or
manufactures) in connection with the Business (including, without
limitation, all product liability claims that arise from, and all
supply contracts for component parts to which Seller is not a party,
relating to such manufacture of mobile terminals) shall for the
purposes of this Agreement constitute Assumed Liabilities, as defined
in clause (ii) below; and
(ii) The liabilities and obligations to be assumed by Buyer
pursuant to this Agreement, including, without limitation, the
liabilities and obligations described in clause (i) above, are
hereinafter collectively referred to as the "Assumed Liabilities".
(b) Notwithstanding anything contained herein to the contrary, Seller
expressly understands and agrees that the following obligations of Seller (the
"Retained Liabilities") shall be excluded from the Assumed Liabilities:
(i) any Tax liability of Seller for any Tax period or
portion thereof ending on or prior to the Closing Date;
(ii) any liability arising out of or relating to a Retained
Asset;
(iii) any and all obligations arising out of or relating to the
Product Sales Agreement dated December 20, 1994 by and between
Motorola, Inc. and Seller;
-13-
(iv) any and all debts, liabilities, obligations and commitments
of Seller of any kind, character or description whether known or
unknown, accrued, absolute, contingent, determined, determinable or
otherwise, whether presently in existence or arising hereafter not
arising out of or not relating to the Assets;
(v) any obligation or liability relating to the manufacture by
Seller of mobile terminals or other hardware (including component parts
of mobile terminals that Seller assembles or manufactures) in
connection with the Business (including, without limitation, all supply
contracts for component parts of mobile terminals and product liability
claims that arise from such manufacture);
(vi) any termination liability arising out of or relating to the
exercise by any customer of its termination protection provision, in
accordance with the terms and conditions set forth therein, of any
Contract identified on Section III of Schedule 5(c);
(vii) any liability arising out of or relating to any of the
Excluded Businesses;
(viii) any other liabilities and obligations expressly retained
by Seller under this Agreement; and
(ix) any and all obligations arising out of or
relating to the Mobile Satellite Communications Agreement,
dated May 8, 1992, as amended, between Rockwell
International Corporation and CRST, Inc. (the "CRST
-14-
Agreement"); provided, however, that such obligations shall cease being
a Retained Liability upon the execution and delivery of a reasonably
acceptable Novation Agreement by and among Rockwell, Seller, CRST, Inc.
and Buyer with respect to the CRST Agreement (the "CRST Novation
Agreement").
Seller shall remain liable for all Retained Liabilities and shall pay or
discharge, as and when the same become due and payable, the Retained
Liabilities.
(c) Buyer shall execute and deliver to Seller at the Closing such written
instruments of assumption as shall reasonably be requested by Seller to effect
or evidence the assumption by Buyer of the Assumed Liabilities.
3. Closing Consideration.
---------------------
In consideration for the sale, conveyance, assignment, transfer and
delivery of the Assets at the Closing, Buyer shall assume the Assumed
Liabilities.
4. Closing.
-------
The Closing of the purchase and sale of the Assets and the assumption of
the Assumed Liabilities (the "Closing") will take place at the offices of Battle
▇▇▇▇▇▇ LLP, Park Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at
10:00 a.m. New York time on November 22, 1996 or at such other place, date and
time as the parties hereto may agree (such time and date of the Closing being
herein called the "Closing Date"). The
-15-
Closing shall be deemed to be effective at 11:59 p.m. on the Closing Date.
5. Representations and Warranties of Seller.
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
(a) Corporate Organization. Seller is a corporation duly incorporated,
-----------------------
validly existing and in good standing under the laws of the State of Delaware.
Seller has all requisite corporate power and authority to own, lease and operate
the Assets where such Assets are now owned, leased or operated. Seller is duly
licensed and qualified to do business and is in good standing in all
jurisdictions in which the character or location of the properties owned or
leased by it or the nature of the business conducted by it makes such licensing
or qualification necessary, except where the failure to be so licensed or
qualified would not have a material adverse effect on (i) the business,
operations or condition (financial or otherwise) of the Business or the Assets
or (ii) the ability of Seller to consummate the transactions contemplated by
this Agreement or the Transition Agreement (each of (i) or (ii) a "Material
Adverse Effect").
(b) Corporate Authorization. Seller has all requisite corporate power
------------------------
and authority to execute and deliver this Agreement and the Transition
Agreement and to perform its obligations hereunder and thereunder. This
Agreement, the Transition Agreement and all instruments of transfer to be
-16-
delivered by Seller pursuant hereto and thereto have been or will be duly
authorized by all necessary corporate action on behalf of Seller. This Agreement
and the Transition Agreement constitute legal, valid and binding obligations of
Seller, and all instruments of transfer to be delivered pursuant hereto and
thereto, when executed and delivered, will constitute, legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
the enforcement of creditors' rights in general and by general principles of
equity.
(c) No Violation or Conflict. None of the execution,
---------------------------
delivery or performance of this Agreement or the Transition Agreement by Seller
will (i) conflict with the Certificate of Incorporation or By-Laws of Seller or
(ii) violate, conflict with, result in a breach of, or entitle any party to
accelerate the performance of any Contract (other than with respect to consents
to the transactions contemplated hereby under Contracts) material mortgage,
indenture, deed of trust, license, lease, contract, commitment, loan agreement
or agreement to which Seller is a party or any material law, rule, regulation,
order, ruling, decree, judgment or arbitration award to which Seller (with
respect to the Business or the Assets) is subject, except for such violations,
conflicts and breaches subject to this clause (ii) which individually or in the
aggregate would not have a
-17-
Material Adverse Effect. Except as set forth on Schedule 5(c), no consent,
approval or authorization of any person, partnership, corporation or other
entity is required under any Contract set forth on Schedule 5(f) in connection
with the sale of the Assets as contemplated hereby or the execution and delivery
of this Agreement or the Transition Agreement or the consummation by Seller of
the transactions contemplated hereby and thereby, other than any such consent
which if not obtained would not have a Material Adverse Effect and any such
consent that is applicable as a result of the specific legal or regulatory
status of Buyer or as a result of any other facts that specifically relate to
the business or activities in which Buyer is or proposes to be engaged, other
than the Business.
(d) Consents, Approvals or Authorizations. Except as set forth on
-------------------------------------
Schedule 5(d), no material consent, approval or authorization of, filing or
registration with, or notification to, any governmental or regulatory authority
or agency, domestic or foreign (a "Governmental Authority") is required by or
with respect to Seller in connection with the execution and delivery of this
Agreement or the Transition Agreement by Seller or the consummation by Seller of
the transactions contemplated hereby and thereby, other than any such
requirement that is applicable to Buyer as a result of the specific legal or
regulatory status of Buyer or as a result of any other facts that specifically
relate to the business or activities in which Buyer is or proposes to be
engaged, other than the Business.
-18-
(e) Title. Seller (with respect to the Business) owns all the
-----
Assets, free and clear of any Lien, except for those (i) referred to in the
Schedules, (ii) for Taxes not yet due or payable, (iii) that constitute
mechanics', carriers', workers' or other like liens or (iv) that neither
individually nor in the aggregate are material to the Business or the Assets in
character, amount or extent (the Liens described in clauses (i), (ii), (iii) and
(iv) above are collectively referred to herein as "Permitted Liens").
(f) Contracts.
----------
(i) Schedule 5(f) sets forth all (A) Contracts to which Seller (with
respect to the Business) is a party or by which Seller or the Assets
may be bound or affected (other than binding open bids and proposals)
which are in effect on the date hereof and expressly provide for
aggregate future payments (other than warranty and other
contingent payments) to or from Seller (with respect to the Business) of
more than Twenty-Five Thousand Dollars ($25,000) and (B) executory
written binding open bids and proposals by Seller or by which Seller or
the Assets may be bound or affected (with respect to the Business)
which are in effect on the date hereof and expressly contemplate
aggregate future payments (other than warranty and other contingent
payments) to Seller (with respect to the Business) of more than
Twenty-Five Thousand Dollars ($25,000), except those Contracts
described in clause (A) or
-19-
(B) above that may be canceled by Buyer without material penalty upon
not more than 90 days' notice.
(ii) Except as set forth on Schedule 5(f), on the date hereof, to
Seller's knowledge, there are no (A) defaults or threatened defaults on
the part of Seller under the provisions of any Contracts set forth on
Schedule 5(f) or (B) defaults or threatened defaults on the part of the
other party or parties under the provisions of any Contracts set forth
on Schedule 5(f), except in either case (I) for defaults which
individually or in the aggregate would not have a Material Adverse
Effect and (II) that in order to avoid a default under such Contracts
the consent of the other party or parties thereto may be required in
connection with the transactions contemplated hereby, which consents
are set forth on Schedule 5(d).
(iii) Except as set forth on Schedule 5(f), each Contract is a
valid, legal and binding obligation of Seller, and to Seller's
knowledge, of the other parties thereto, and no defenses, offsets, or
counterclaims thereto have been asserted, and to Seller's knowledge,
there does not exist any condition which, after notice or lapse of time
or both, would be a valid basis for the assertion by any party thereto
of any such defense, offset or counterclaim.
(g) Compliance with Laws.
--------------------
(i) To Seller's knowledge, except as set forth on
Schedule 5(g), Seller (with respect to the Business
-20-
and the Assets) is in compliance with all laws, statutes and
regulations (other than Environmental Laws) of Governmental Authorities
applicable to it, except where the failure to so comply would not have
a Material Adverse Effect.
(ii) To Seller's knowledge, Seller has obtained, and now maintains
as currently valid and effective, all permits (all of which are listed
on Schedule 5(g) hereto) required under the Environmental Laws (the
"Environmental Permits") in connection with the operation of the
Business. To Seller's knowledge, except as set forth in Schedule 5(g),
in connection with Seller's operation of the Business, Seller is in
compliance with all material terms and conditions of the Environmental
Permits and all applicable Environmental Laws.
(iii) To Seller's knowledge, Seller has provided to Buyer all
material information and communications (whether from a Governmental
Authority, employer or other person) in its possession or control
relating to the Business regarding alleged or suspected noncompliance
with any Environmental Laws or Environmental Permits or alleged or
suspected liability under any Environmental Laws.
(iv) To Seller's knowledge, except as disclosed on Schedule 5(g),
there are no material environmental liens or other encumbrances on any
of the properties owned or leased by the Seller in connection with
-21-
the operation of the Business, and no government actions have been
taken or are in process which are reasonably likely to subject any of
such properties to such liens or other encumbrances, and Seller would
not be required to place any notice or restriction relating to the
presence of Materials of Environmental Concern at any property owned or
leased by it in any deed to such property that is or was used in
connection with the operation of the Business.
(v) To Seller's knowledge, except as set forth in Schedule 5(g),
there is no Environmental Claim arising from the operation of the
Business pending or, to Seller's knowledge, threatened against Seller.
(vi) To Seller's knowledge, except as set forth in Schedule 5(g),
there are no past or present actions, activities, circumstances,
conditions, events or incidents relating to the operation of the
Business, including, without limitation, the release, emission,
discharge, presence or disposal of any Material of Environmental
Concern, that are reasonably likely to form the basis of any
Environmental Claim against Buyer or the Assets.
(vii) Definitions. For purposes of this Agreement, the terms
-----------
listed below shall have the following meanings:
(A) "Claims" shall mean all actions, causes
------
of action, suits, debts, dues, sums of money, accounts,
-22-
reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages,
judgments, extents, executions, claims, liabilities and demands
whatsoever, in law or equity.
(B) "Environmental Claim" means any Claim, investigation
-------------------
or notice by any person alleging potential liability (including,
without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries or fatalities, or penalties)
arising out of, based on or resulting from (x) the presence, release or
threatened release into the environment of, or human exposure to, any
Material of Environmental Concern at any location, whether or not owned
or operated by Seller or (y) activities or conditions forming the basis
of any violation, or alleged violation of, or liability or alleged
liability under, any Environmental Law.
(C) "Environmental Laws" shall mean all Federal, state
------------------
and local laws (including common law), statutes, rules, regulations
and ordinances (including any amendments thereto), including,
but not limited to, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"), 42 U.S.C. Sec. 9601
et seq., and the Resource Conservation and Recovery Act, 42 U.S.C.
-- ---
Sec. 6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C.
-- ---
-23-
Sec. 1251 et seq., the Clean Air Act, 42 U.S.C. Sec. 1857 et seq., and
-- --- -- ---
the Toxic Substances Control Act, 15 U.S.C. Sec. 2601 et seq., orders,
-- ---
decrees, plans, codes, judgments, injunctions, notice or demand
letters, prohibitions, obligations, schedules, timetables, standards,
conditions or requirements issued, entered, approved or promulgated
thereunder, relating to pollution or protection of human health or the
environment, including laws relating to emissions, discharges, releases
or threatened releases of Materials of Environmental Concern in, into,
onto or upon the environment (including, without limitation, ambient
air, surface water, ground water, or land), or otherwise relating to
the manufacture, processing, distribution, use, treatment, collection,
accumulation, storage, disposal, transport, or handling or Materials of
Environmental Concern.
(D) "Materials of Environmental Concern" shall mean all
----------------------------------
chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum, petroleum products and hazardous substances (as defined in
Section 101(14) of CERCLA, 42 U.S.C. Sec. 9601(14)), or solid or
hazardous wastes as now or hereafter defined under any Environmental
Laws.
(h) Permits. Schedule 5(h) sets forth all governmental franchises,
-------
licenses, permits, authorizations and approvals necessary to enable Seller to
own, lease or otherwise hold the Assets and to carry on the Business as
presently conducted, other than any such franchises, licenses, permits,
-24-
authorizations or approvals which if not obtained would not have a Material
Adverse Effect.
(i) Litigation. Except as set forth on Schedule 5(i), on the date hereof
----------
Seller is not a party to any legal action, suit or other proceeding by or before
any court, arbitrator or administrative agency (A) which would, if determined
adversely, individually or in the aggregate, have a Material Adverse Effect or
(B) which challenges or otherwise relates to the transactions contemplated by
this Agreement or the Transition Agreement, and on the date hereof Seller is not
aware that any such legal action, suit or other proceeding has been threatened.
Except as set forth on Schedule 5(i), on the date hereof there are no
outstanding orders, rulings, decrees or judgments to which Seller (with respect
to the Business) is a party, or by which it is bound, by or with any court,
arbitrator or administrative agency which could (x) reasonably be expected to
have a Material Adverse Effect or (y) challenge or otherwise relate to the
transactions contemplated by this Agreement or the Transition Agreement.
(j) Intellectual Property. Except as set forth on Schedule 5(j), on the
----------------------
date hereof, to Seller's knowledge, there are no material written claims or
demands of any person pertaining to, or any proceedings which are pending or
threatened which allege that the conduct of Seller regarding any Assets
infringes the intellectual property rights of others.
-25-
(k) Conduct of Business Since October 1, 1996. Except as set forth on
---------------------------------------------
Schedule 5(k), since October 1, 1996 to the date hereof the Business has been
conducted in the ordinary course.
(l) Employees. On the date hereof there is no labor strike or work stoppage
---------
pending or, to Seller's knowledge, threatened against Seller (with respect to
the Business) which would have a Material Adverse Effect. No Continued Employee
is entitled to the benefits of any collective bargaining agreement or other
labor union contract.
(m) Employee Benefit Plans. Schedule 5(m) hereto sets forth each material
-----------------------
pension, retirement, profit-sharing, deferred compensation, stock bonus or other
similar plan; each material medical, vision, dental or other health plan; each
material vacation, severance or life insurance plan and any other material
employee benefit plan to which Seller on the date hereof is required to
contribute in respect of the Business, or which Seller on the date hereof
sponsors for the benefit of any employees of Seller engaged in the Business or
under which current employees (or their beneficiaries) of Seller engaged in the
Business are on the date hereof eligible to receive benefits. Seller does not
participate in a "multiemployer plan" in respect of the Business as defined in
Section 4001(a)(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
(n) Sufficiency of Assets. The Assets constitute, and on the
---------------------
Closing Date will constitute, substantially all of the assets (other than the
Closing Date Parts Inventory) that are
-26-
necessary for the conduct by Buyer of the Business in substantially the same
manner as the Business is being conducted on the date hereof.
(o) Absence of Changes. Except as disclosed in Schedule 5(o), since October
------------------ -------------
1, 1996, there has not been:
(i) any sale, lease, transfer, pledge, encumbrance, or assignment
of any Assets, tangible or intangible, other than in the ordinary
course of business, or any damage, destruction or loss, whether or not
covered by insurance, which has had or would have a Material Adverse
Effect on the Business taken as a whole;
(ii) any entry into any agreement, commitment or transaction by
Seller with respect to the Business except agreements, commitments or
transactions disclosed to Buyer in a Schedule or entered into in the
ordinary course of business or as contemplated by this Agreement or the
Transition Agreement; or
(iii) any incurrence of any Assumed Liabilities other than in the
ordinary course of business consistent with past practices.
(p) Statement of Assets and Liabilities and Related Matters.
-------------------------------------------------------
(i) Schedule 5(p) is an unaudited Statement of Assets and
Liabilities as of September 30, 1996 (the "Statement of Assets and
Liabilities"). The Statement of Assets and Liabilities includes only
those amounts that
-27-
relate to the Assets and the Assumed Liabilities. The Statement of
Assets and Liabilities accurately presents, in all material respects,
the Assets and the Assumed Liabilities as of September 30, 1996 in
accordance with the accounting practices and procedures of Seller's
Avionics and Communications business. The amounts set forth in the
Statement of Assets and Liabilities have been obtained from the books
of account and financial records of Seller's Avionics and
Communications business relating to the Business. Buyer acknowledges
and understands that (A) the amount of the Warranty Reserves reflected
on the Statement of Assets and Liabilities in no way limits Buyer's
obligations with respect to warranty and repair contained in Section
8(p)(ii) and (B) the Statement of Assets and Liabilities has not been
prepared in accordance with Generally Accepted Accounting Principles.
(ii) To Seller's knowledge, there are no liabilities or
obligations with respect to the Assets or the Business except (A)
Retained Liabilities, (B) liabilities and obligations which are
disclosed in this Agreement and the Schedules or in the Contracts, (C)
other liabilities and obligations incurred in the ordinary course of
business which individually or in the aggregate would not have a
Material Adverse Effect and (D) other liabilities and obligations which
are accrued on the Statement of Assets and Liabilities.
-29-
6. Representations and Warranties of Buyer and Parent.
--------------------------------------------------
Buyer and Parent hereby represent and warrant to Seller as follows:
(a) Corporate Organization. Each of Buyer and Parent is a corporation duly
----------------------
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Buyer is a wholly-owned subsidiary of Parent.
(b) Corporate Authorization. Each of Buyer and Parent has all requisite
------------------------
corporate power and authority to execute and deliver this Agreement and the
Transition Agreement and to perform its obligations hereunder and thereunder.
This Agreement, the Transition Agreement and all instruments of assumption to be
delivered by Buyer or by Parent pursuant hereto and thereto have been or will be
duly authorized by all necessary corporate action on behalf of Buyer and Parent.
This Agreement and the Transition Agreement constitute legal, valid and binding
obligations of Buyer and Parent, and all instruments of assumption to be
delivered pursuant hereto and thereto, when executed and delivered, will
constitute, legal, valid and binding obligations of Buyer and Parent,
enforceable against each of them in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights in general and by general principles of equity.
-29-
(c) No Violation or Conflict. Except as set forth on Schedule 6(c), none of
------------------------
the execution, delivery or performance of this Agreement by Buyer or Parent, the
Transition Agreement by Buyer or the consummation by each of them of the
transactions contemplated hereby and thereby will (i) conflict with the Restated
Certificate of Incorporation or By-Laws of Buyer or Parent or (ii) violate,
conflict with, result in a breach of or entitle any party to accelerate the
performance of any material mortgage, indenture, deed of trust, license, lease,
contract, commitment, loan agreement or agreement to which Buyer or Parent is a
party or any material law, rule, regulation, order, ruling, decree, judgment or
arbitration award to which each of them is subject which would have a material
adverse effect on Buyer's ability to consummate the transactions contemplated by
this Agreement or the Transition Agreement. None of the execution, delivery or
performance of this Agreement by Buyer or Parent, the Transition Agreement by
Buyer or the consummation by either of them of the transactions contemplated
hereby and thereby will violate, conflict with or result in a breach of any of
the documents or instruments relating to Parent's Two Hundred and Twenty-Five
Million Dollar ($225,000,000) debt facility with ▇▇▇▇▇▇ Guaranty Trust Company
of New York and the Toronto Dominion Bank. Except as set forth on Schedule 6(c),
no material consent, approval or authorization of any person, partnership,
corporation or entity is required in connection with the execution and delivery
of this Agreement by Buyer or Parent, the
-30-
Transition Agreement by Buyer or the consummation by each of them of the
transactions contemplated hereby and thereby.
(d) Consents, Approvals or Authorizations. Except as set forth on
-------------------------------------
Schedule 6(d), no material consent, approval or authorization of, filing or
registration with, or notification to, any Governmental Authority is required by
or with respect to Buyer or Parent in connection with the execution and delivery
of this Agreement or the Transition Agreement by each of them or the
consummation by Buyer and Parent of the transactions contemplated hereby and
thereby.
(e) Litigation. On the date hereof none of Buyer or its subsidiaries or its
----------
affiliates (including, without limitation, Parent) is a party to any legal
action, suit or other proceeding by or before any court, arbitrator or
administrative agency (i) with respect to which there is a reasonable likelihood
of an adverse determination which would have a material adverse effect on the
ability of Buyer or Parent to consummate the transactions contemplated hereby or
(ii) which challenges or otherwise relates to the transactions contemplated by
this Agreement or the Transition Agreement, and on the date hereof neither Buyer
nor Parent is aware that any such legal action, suit or other proceeding has
been threatened. On the date hereof there are no outstanding orders, rulings,
decrees or judgments to which Buyer or any of its subsidiaries or its affiliates
(including, without limitation, Parent) is a party or by which any of them is
bound by or with any court, arbitrator or
-31-
administrative agency which could (x) reasonably be expected to have a material
adverse effect on the ability of Buyer or Parent to consummate the transactions
contemplated hereby or (y) challenge or otherwise relate to the transactions
contemplated by this Agreement or the Transition Agreement.
(f) Information. Seller has provided Buyer with such access to the
-----------
facilities, books, records and personnel of the Business as Buyer has deemed
necessary and appropriate in order for Buyer to investigate to its satisfaction
the Business sufficiently to make an informed investment decision to purchase
the Assets, to assume the Assumed Liabilities and to enter into this Agreement
and the Transition Agreement. Buyer has such knowledge and experience in
financial and business matters that Buyer is capable of evaluating the merits
and risks of the purchase of the Assets and the assumption of the Assumed
Liabilities.
(g) Losses. Buyer and Parent acknowledge and understand that the Business
------
has historically suffered significant operating losses and that there can be no
assurance that such operating losses will not continue after the Closing Date.
7. Investigation by Buyer; Confidentiality.
---------------------------------------
Prior to the Closing, or, if earlier, the date this Agreement is terminated
pursuant to Section 16(a) or otherwise, Seller will provide Buyer and its
representatives, employees, counsel and accountants with reasonable access,
during normal
-32-
business hours and upon reasonable notice, to the facilities, books, records and
personnel of Seller which relate to the Business and will provide to Buyer such
other information with respect to the Business as Buyer shall reasonably
request; provided, however, that such access shall not unreasonably interfere
with the normal operations of Seller or the Business. Buyer, Parent and Seller
acknowledge that all such information being provided is subject to the terms of
the Proprietary Information Exchange Agreement dated as of March 4, 1996 between
Parent and Seller ("Confidentiality Agreement"), the terms of which are
incorporated herein by reference.
8. Covenants.
---------
(a) Conduct of Business Prior to the Closing Date. Between the date hereof
---------------------------------------------
and the Closing, except as set forth on Schedule 8(a) or as otherwise
contemplated by this Agreement or with Buyer's prior written consent, Seller
will:
(i) cause the Business to be conducted only in the ordinary
course consistent with past practice;
(ii) cause management of the Business to use reasonable commercial
efforts to seek to preserve the business relationships existing between
the Business and its employees, customers and others transacting
business with the Business;
(iii) not incur any material obligations or
liabilities, absolute or contingent, with respect to the
-33-
Business, except in the ordinary course of the Business consistent
with past practice;
(iv) not enter into any agreement or contract which is material to
the business, operations or financial condition of the Business, except
in the ordinary course of the Business consistent with past practice;
(v) not encumber or pledge or otherwise dispose of any of the
Assets, except in the ordinary course of the Business consistent with
past practice;
(vi) not take any action which would cause the representations and
warranties made by Seller herein not to be true and correct, in all
material respects, as of the Closing; and
(vii) not enter into any agreement or contract which will require
an expenditure by Buyer after the Closing in excess of Twenty-Five
Thousand Dollars ($25,000) or will obligate Buyer for a time period
greater than six (6) months after the Closing.
(b) Transfer Taxes. Buyer and Seller shall each be responsible for and pay
--------------
one-half of all applicable sales and transfer taxes (including taxes, if any,
imposed upon the transfer of personal property) and filing, recording,
registration and other taxes and fees payable in connection with the
transactions contemplated by this Agreement.
(c) Further Assurances. From time to time after the
-------------------
Closing at Buyer's request and without further consideration,
-34-
Seller shall execute and deliver or cause to be executed and delivered such
other and further instruments of conveyance, assignment and transfer, and take
or cause to be taken such other action, including, without limitation, providing
access to employees of Seller as Buyer may reasonably request for the more
effective conveyance and transfer of the Assets to Buyer, including, without
limitation, the recordation, registration and maintenance of such Assets. From
time to time after the Closing, at Seller's request and without further
consideration, Buyer will execute and deliver such other and further instruments
of assumption and take such other action as Seller may reasonably request for
the more effective assumption by Buyer of the Assumed Liabilities.
(d) Post-Closing Access; Preservation of Records.
--------------------------------------------
(i) From and after the Closing, Buyer shall make or cause to be
made available to Seller and its agents and employees all books,
records and documents of Buyer and its subsidiaries and its affiliates
relating to the Assets or the operation of the Business prior to the
Closing Date (and the assistance of Buyer's and its subsidiaries' and
its affiliates' employees responsible for such books, records and
documents) during regular business hours as may be reasonably necessary
for (A) preparing tax returns and financial statements and responding
to tax audits covering operations and transactions at or prior to the
Closing Date, (B) investigating, settling, preparing for the defense or
-35-
prosecution of, defending or prosecuting any legal action, suit,
investigation or other proceeding pending, threatened or anticipated by
or against Seller or any of its subsidiaries or its affiliates or any
of their properties, officers, directors or employees (or for which
Seller or any of its subsidiaries or its affiliates has any
obligations) before any court, arbitrator, governmental department,
commission, board, bureau or agency, domestic or foreign, (C) preparing
reports to stockholders and Governmental Authorities or (D) such other
purposes for which access to such documents is reasonably necessary;
provided, however, that access to such books, records, documents and
employees shall not unreasonably interfere with the normal operations
of Buyer, its subsidiaries and its affiliates and the reasonable
out-of-pocket expenses of Buyer incurred in connection therewith shall
be paid by Seller. Buyer shall maintain and preserve all such books,
records and other documents for the greater of (x) seven (7) years
after the Closing Date or (y) any applicable statutory or regulatory
retention period, as the same may be extended. In the event Buyer
wishes to destroy such books, records and documents after that time, it
shall first give ninety (90) days' prior written notice to Seller and
Seller shall have the right at its option to take possession of such
books, records and documents provided that it does so no later than
sixty (60) days after the end of such 90-day period.
-36-
(ii) From and after the Closing, Seller shall make or cause to be
made available to Buyer and its agents and employees all books, records
and documents of Seller relating to the Business during regular
business hours for the same or similar purposes, to the extent
applicable, as set forth in Section 8(d)(i) above; provided, however,
that access to such books, records and documents shall not unreasonably
interfere with the normal operations of Seller and the reasonable
out-of-pocket expenses of Seller incurred in connection therewith shall
be paid by Buyer. Seller shall maintain and preserve all such books,
records and other documents for the greater of (A) seven (7) years
after the Closing Date or (B) any applicable statutory or regulatory
retention period, as the same may be extended. In the event Seller
wishes to destroy such books, records and documents after that time, it
shall first give ninety (90) days' prior written notice to Buyer and
Buyer shall have the right at its option to take possession of such
books, records and documents provided that it does so no later than
sixty (60) days after the end of such 90-day period.
(iii) Each of Seller and Buyer agrees that all information
provided to it pursuant to this Section 8(d) shall be treated by such
party in the same manner as such party treats its own confidential
information.
-37-
(e) Reasonable Best Efforts. Each of Seller and Buyer shall use its
-------------------------
reasonable best efforts to cause to be fulfilled the conditions to their
respective obligations and the respective obligations of the other party set
forth in Sections 10 and 11.
(f) Allocation of Consideration.
---------------------------
(i) The Assumed Liabilities shall be allocated among the various
assets comprising the Assets pursuant to Section 1060 of the Internal
Revenue Code of 1986, as amended (the "Code") and in accordance with
the procedures set forth in Schedule 8(f) (the "Consideration
Allocation"). Seller and Buyer each hereby affirms that the
Consideration Allocation is fair and equitable. Seller and Buyer each
agree that they will report and cause to be reported all Federal,
state, provincial, local, foreign and other Tax consequences of the
transactions contemplated hereby in a manner consistent with the
Consideration Allocation and that they will not, except to the extent
required by law, take any position inconsistent therewith in connection
with any return, refund claim, litigation or otherwise regarding Taxes.
Each party shall promptly notify the other if the Internal Revenue
Service or any other taxing authority proposes to reallocate the
Consideration Allocation. In the event of a determination (as defined
in 1313 of the Code) relating to the reallocation of the Consideration
Allocation, the parties shall be free to file
-38-
amended returns or claims for refund based on such reallocation.
(ii) For the purpose of this Agreement, "Tax" or "Taxes" shall
mean all taxes, charges, duties, fees, levies or other assessments,
including, without limitation, income, excise, property, sales, value
added, profits, license, withholding, payroll, employment, net worth,
capital gains, transfer, stamp, social security, environmental,
occupation and franchise taxes imposed by any Governmental Authority,
and including any interest, penalties and additions attributable
thereto.
(g) Interim Use of Seller's Trademark, Trade Name and Corporate Symbol.
------------------------------------------------------------------
(i) Following the Closing, none of Buyer or any of its
subsidiaries or its affiliates (including, without limitation, Parent)
shall have any rights to use any trademarks, trade names or logos of
Seller or any of its subsidiaries or its affiliates not included in the
Assets, or any contraction, abbreviation or simulation thereof, and
will not hold itself out as having any affiliation with Seller or its
subsidiaries or its affiliates. However, Buyer may utilize without
obligation to pay royalties to Seller the trademark or trade name
"Rockwell", "Rockwell International", "▇▇▇▇▇▇▇" or "▇▇▇▇▇▇▇ Avionics"
or any thereof in connection with the category of documents described
in clause (ii) constituting Assets as of the Closing Date, subject to
the terms and conditions of this
-39-
Section 8(g), and for a period not to exceed six months may refer to
such trademarks and trade names in a manner that identifies the
Business as comprising the "former Rockwell Land Transportation
Electronics' Mobile Communications Satellite Service business."
(ii) All documents constituting Assets as of the Closing Date
within the following categories may be used for the duration of the
periods following the Closing indicated below or until the supply is
exhausted, whichever is the first to occur:
Maximum Period
of Permitted
Use Following
Category of Documents the Closing
--------------------- ---------------
A. Stationery 3 months
B. Invoices, purchase orders, debit and
credit memos and other similar
documents of a transactional nature 3 months
C. Business cards 1 month
D. Other outside forms such as packing
lists, labels, packing materials and
cartons, etc. 3 months
E. Forms for internal use only 6 months
F. Product literature 6 months;
provided, however, that no document within any of the above category A,
B or F may be used by Buyer for any purpose within the stated period
unless such document clearly and prominently displays a statement, the
form of which is approved by Seller, to the effect that the Business
was formerly owned by Seller and disclaiming that either Buyer or
Parent has any apparent or actual authority to act as an
-40-
agent of Seller or otherwise on behalf of Seller in connection with
the Business or otherwise.
(iii) Except (A) as permitted in subsections (i) and (ii) of this
Section 8(g), (B) for use in connection with hardware or other products
or equipment to be provided by Seller as contemplated by this Agreement
or the Transition Agreement, (C) as may be agreed to by Seller and
NewEast Wireless Technologies, Inc., and (D) as otherwise contemplated
by this Agreement or the Transition Agreement, Buyer shall not use and
shall cause its subsidiaries and its affiliates (including, without
limitation, Parent) not to use the trademark or trade name "Rockwell",
"Rockwell International", "▇▇▇▇▇▇▇" or "▇▇▇▇▇▇▇ Avionics" or Seller's
corporate symbol or any thereof or any name or ▇▇▇▇ which includes the
words "Rockwell", "Rockwell International", "▇▇▇▇▇▇▇", "▇▇▇▇▇▇▇
Avionics", any name or ▇▇▇▇ confusingly similar thereto or any special
script, type font, form, style, logo, design, device or symbol used or
possessed by Seller or its subsidiaries or its affiliates before or
after the Closing which contains the trademark or trade name "Rockwell"
or "Rockwell International", "▇▇▇▇▇▇▇", "▇▇▇▇▇▇▇ Avionics" or any name
or ▇▇▇▇ confusingly similar thereto.
(h) Performance by Buyer of Obligations under Contracts.
---------------------------------------------------------
Except as expressly provided to the contrary in this Agreement, Buyer shall
assume as of the Closing Date and shall
-41-
pay or perform in a timely manner, and in accordance with their terms, any and
all obligations under the Contracts.
(i) Insurance.
---------
(i) Seller shall keep, or cause to be kept, all insurance policies
set forth on Schedule 8(i), or suitable replacements therefor (which
may include policies containing terms less or more favorable than those
set forth on Schedule 8(i)), in full force and effect up to the Closing
Date. Buyer hereby understands and agrees that it shall be Buyer's
responsibility as of and after the Closing Date to provide for adequate
insurance for the Business and the Assets.
(ii) With respect to any loss, liability or damage (other than a
casualty loss or damage) with respect to the Assets arising out of
events occurring prior to the Closing Date for which Seller or any of
its subsidiaries or its affiliates would be entitled to assert a claim
for recovery under any third-party "occurrence basis" policy of
insurance maintained prior to the Closing Date ("Occurrence Basis
Insurance") in accordance with the terms thereof, at the request of
Buyer, Seller will use reasonable efforts in asserting, or to assist
Buyer in asserting, claims under and, if recoverable, collecting any
proceeds payable under such Occurrence Basis Insurance with respect to
such loss, liability or damage, provided that all of Seller's
out-of-pocket costs and expenses incurred in connection with the
-42-
foregoing are promptly reimbursed by Buyer and, provided further, that
such claims shall be subject to (and recovery thereon shall be reduced
by the amount of) any applicable deductibles, retentions,
self-insurance provisions or any payment or reimbursement obligation of
Seller or any of its subsidiaries or its affiliates in respect thereof.
(iii) With respect to any casualty loss or damage with respect to
the Assets arising out of events occurring prior to the Closing Date
for which Seller or any of its subsidiaries or its affiliates would be
entitled to assert a claim for recovery under any Occurrence Basis
Insurance in accordance with the terms thereof, at the request of
Buyer, Seller will use reasonable efforts in asserting, or to assist
Buyer in asserting, claims under such Occurrence Basis Insurance with
respect to such loss; provided that all of Seller's out-of-pocket costs
and expenses incurred in connection with the foregoing are promptly
reimbursed by Buyer and, provided further, that Seller shall reimburse
Buyer for the full amount of any applicable deductibles, retentions,
self-insurance provisions or any payment or reimbursement obligation of
Seller or any of its subsidiaries or affiliates in respect thereof.
(j) Cash Management.
----------------
(i) Seller will, and will cause its subsidiaries
and its affiliates to, forward promptly by
-43-
check to Buyer any customer payments in respect of accounts receivable
constituting Assets received by Seller or any of its subsidiaries or
its affiliates after the Closing Date, whether received in lock boxes,
via wire transfer or otherwise. (ii) Buyer will, and will cause its
subsidiaries and its affiliates (including, without limitation, Parent)
to, forward promptly by check to Seller any customer payments in
respect of accounts receivable constituting Retained Assets received by
Buyer or any of its subsidiaries or its affiliates (including, without
limitation, Parent) after the Closing Date, whether received in lock
boxes, via wire transfer or otherwise.
(k) Consents.
--------
(i) Seller shall, prior to the Closing, use its reasonable efforts
(it being understood that such efforts shall not include any
requirement of Seller or any of its subsidiaries or its affiliates to
expend money or grant any financial accommodation to any third party
except as and to the extent provided in this Section 8(k)), and Buyer
shall cooperate in all reasonable respects with Seller, to obtain the
consents and waivers necessary to assign to Buyer the Contracts listed
on Schedule 8(k).
(ii) To the extent Seller and Buyer agree to provide to any
existing customer of Seller being assigned to Buyer one or more
incentives to induce any such customer to
-44-
grant its consent or waiver to assign its Contract to Buyer in
connection with the transactions contemplated hereby, Seller and Buyer
shall each be responsible and pay one-half (1/2) of the aggregate cost
of providing any such incentive.
(l) Inventory.
---------
(i) Seller, at its sole cost and expense, shall provide to Buyer
(A) four thousand (4,000) new fully assembled multi-mode mobile
terminals (with KDU) and (B) one thousand (1,000) new fully assembled
multi-mode mobile terminals (without KDU) (collectively, the "Inventory
MTs") bearing the model numbers and conforming to the specifications
set forth on Schedule 8(l). Each Inventory MT shall conform to (and
where necessary be upgraded by Seller to include, at its sole cost and
expense) the Upgrade Obligations (as hereinafter defined). Buyer
understands and agrees that all mobile terminals included in finished
goods inventory as of the Closing Date as so upgraded shall constitute
Inventory MTs. Seller shall utilize only new and not used or
refurbished parts or components constituting part of the Closing Date
Parts Inventory in connection with its manufacture, production or
upgrade of any Inventory MTs.
(ii) Seller, at its sole cost and expense, shall provide to Buyer
one thousand (1000) fully assembled multi-mode mobile terminals
(without KDU) (the "Upgraded Customer Returned Goods") for use by Buyer
which shall be upgraded by Seller, at its sole cost and expense, to
include
-45-
the Upgrade Obligations. Buyer agrees that Seller shall utilize
components relating to customer returned goods ("Customer Returned
Goods") to fulfill its obligations under this clause (ii).
(iii) Seller and Buyer shall agree to a delivery schedule (the
"Delivery Schedule") substantially in accordance with Schedule
8(l)(iii) for the Inventory MTs and the Upgraded Customer Returned
Goods within sixty (60) days following the Closing Date. Prior to
delivery in accordance with the Delivery Schedule, Seller shall be
obligated to store, at its sole cost and expense, all such Inventory
MTs and Upgraded Customer Returned Goods. At the request of Buyer,
Seller shall be obligated to store, at Buyer's sole cost and expense as
set forth in Schedule 8(l)(iii), any such Inventory MTs and Upgraded
Customer Returned Goods from and after the scheduled date of their
delivery in accordance with the Delivery Schedule; provided, however,
Buyer shall remove or cause to be removed all such items at its sole
cost and expense no later than June 30, 1998. Any such items so
retained by Seller after the scheduled date of their delivery in
accordance with the Delivery Schedule shall for the purposes of Section
8(p)(ii) be deemed to be delivered to Buyer in accordance with the
Delivery Schedule.
(iv) Subject to availability, each of Buyer and Seller may, at no
cost and expense to such party, utilize any used or refurbished
components, including those
-56-
components relating to Customer Returned Goods returned either prior to
or following the Closing Date (other than those necessary to provide
the Upgraded Customer Returned Goods), constituting a part of the
Closing Date Parts Inventory to the extent required to fulfill its
respective repair, warranty and, in the case of Seller upgrade,
obligations contained in Section 8(q). Prior to any transfer according
to the provisions of Section 8(l)(v), neither party shall be entitled
to use any part of Closing Date Parts Inventory for any purpose not
related to the Business. Buyer shall have the right to utilize any (i)
multi-mode terminals in excess of six hundred and fifty (650) terminals
or (ii) satellite only terminals in excess of four hundred and fifty
(450) terminals for any purpose relating to the Business including,
without limitation, for resale or for any use by any existing or new
customer without any obligation to reimburse Seller therefor. The
amount of excess, if any, of such terminals shall be determined each
time Buyer seeks to use any such terminals for any such purpose.
(v) Seller shall transfer, without additional consideration, to
Buyer, free and clear of any Lien (other than Permitted Liens) any
Closing Date Parts Inventory remaining after Seller's (A) delivery of
all Inventory MTs required by Section 8(l)(i) and (B) completion of its
repair, warranty and upgrade obligations contained in
-47-
Section 8(q), and in the case of new components, if any, the completion
of Seller's obligations under the Transition Agreement. All shipping
and delivery costs incurred in connection with any such transfer shall
be the sole responsibility of Buyer.
(m) Discounted Satellite Usage Fees. Unless otherwise agreed to by a
----------------------------------
customer, as an additional inducement for Seller to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, Buyer shall
charge the customers under the Contracts identified in Schedule 8(m) the
discounted satellite usage fees set forth in such Schedule.
(n) On-Board Computing. As soon as practicable following the Closing,
-------------------
Seller, at its sole cost and expense, shall complete the on-board computing
interfaces for Data ▇▇▇ ▇▇ (with COM.) (which shall include any necessary
corresponding upgrades to that customer's Exec 2000) for the customer and the
number of such customers' trucks identified in Schedule 8(n), which customer the
parties acknowledge has as of the date hereof paid Seller in full for such
product upgrade. As soon as practicable following the Closing, Seller, at
customer's sole cost and expense, shall offer and, if accepted, deliver and
complete the on-board computing interface for Data ▇▇▇ ▇▇ (with COM.) (which
shall include any necessary corresponding upgrades to that customer's Exec 2000)
for each of the customers and their respective number of trucks identified in
Schedule 8(n), whom the parties acknowledge have as of the date hereof been
offered such
-48-
product upgrade by Seller. Seller shall be responsible for the warranty and
support of the computer interface for Data ▇▇▇ ▇▇ (with COM.)
products sold to such customers.
(o) [SECTION INTENTIONALLY LEFT BLANK]
(p) Upgrade and Warranty Obligations.
--------------------------------
(i) Upgrade Program. Seller and Buyer shall undertake an
---------------
upgrade program for a period of up to eighteen (18) months from the
Closing Date for the current software load and other identified issues
set forth on Schedule 8(l) ("Upgrade Obligations") for any mobile
terminal (except for any mobile terminal in use pursuant to the CRST
Agreement) in use by customers of the Business on the Closing Date (the
"Fielded MTs"). The following entity shall be responsible for the task
or obligation identified below with respect to the upgrade program for
the Fielded MTs, which shall include sole responsibility for all costs
and expenses incurred in connection with the completion of such task or
obligation:
Task/Obligation Responsibility
--------------- --------------
Removal/Return Customer
Shipping/Installation
Shipping to Customer Buyer
Configuration Buyer
Repair Seller for Upgrade
Obligations identified on
Schedule 8(l), otherwise
Buyer
-49-
Buyer shall be responsible for any and all costs and expenses
incurred in connection with the completion of the Removal/Return,
Shipping/Installation task or obligation to the extent not paid by any
customer.
Seller shall have no obligation to upgrade any of the Customer
Returned Goods except those which constitute Upgraded Customer Returned
Goods as provided in Section 8(l)(ii).
(ii) Warranty. Seller shall, at its sole cost and expense, warrant
each Inventory MT in accordance with the warranty policy set forth on
Schedule 8(p) for a period of 12 months from the date of each unit's
delivery to Buyer in accordance with the Delivery Schedule; provided,
however, Seller's warranty obligations contained in this Section
8(p)(ii) shall terminate with respect to all the Inventory MTs on or
before June 30, 1999 notwithstanding the delivery date therefor.
Subject to Seller's obligation to perform the upgrade program for
Fielded MTs contained in Section 8(p)(i), and its warranty obligations
with respect to (A) Inventory MTs contained in Section 8(p)(ii) and (B)
Manufactured MTs (as defined in the Transition Agreement), Buyer shall,
at its sole cost and expense, assume all warranty and repair
obligations with respect to any Fielded MTs, Inventory MTs and
Manufactured MTs, including, without limitation, all warranty and
repair obligations arising under or relating to any Contract.
-50-
(q) Non-Compete.
-----------
(i) Seller covenants that, for a period of three years after the
Closing Date, neither it nor any entity now or hereafter controlled by
Seller will, directly or indirectly, enter into or acquire control of
more than a 5% interest in any business engaged in (A) the sale of
satellite mobile messaging services for commercial trucking fleets or
(B) except as provided in this Agreement or in the Transition
Agreement, the sale of satellite only or multi-mode mobile terminals
for commercial trucking fleets which are substantially identical as a
whole in design, form, fit and function to the Inventory MTs or
Manufactured MTs; provided, however, that if Seller acquires control of
any business having any operations engaged in such services during such
three year period, it shall divest such operations as promptly as
practicable and in any event not later than one year following such
acquisition. The covenant contained in this clause (i) shall not
preclude any of the Excluded Businesses from providing any service
(including, without limitation, any prior, existing or future satellite
or other communications capability or service) to the extent that such
service does not include the sale of satellite mobile messaging
services for commercial trucking fleets. For purposes of this Section,
On Board Computing services are not considered to be services presently
sold by the Business.
-51-
(ii) Seller acknowledges that in the event of its breach of the
foregoing covenant, money damages would be an inadequate remedy.
Accordingly, without prejudice to the rights of Buyer to seek such
damages or other remedies available to it, Buyer may seek, and Seller
acknowledges and covenants that it will not contest the appropriateness
and availability of, injunctive or other equitable relief in any
proceeding which Buyer may bring to enforce the foregoing covenant not
to compete on its express and explicit terms. No waiver of any breach
of the foregoing covenant shall be implied from any forbearance or
failure of Buyer to take action thereon.
(iii) Seller and Buyer agree that, if any provision of this
Section 8(q) should be adjudicated to be invalid or unenforceable, such
provision shall be deemed deleted herefrom with respect, and only with
respect, to the operation of such provision in the particular
jurisdiction in which such adjudication was made; provided, however,
that to the extent any such provision may be made valid and enforceable
in such jurisdiction by limitations on the scope of the activities,
geographical area or time period covered, Seller and Buyer agree that
such provision instead shall be deemed limited to the extent, and only
to the extent, necessary to make such provision enforceable to the
fullest extent permissible under the laws and public policies applied
in such jurisdiction.
-52-
(iv) The covenants contained in this Section
8(q) shall be construed and enforced independently of any other
provision of this Agreement or any other understanding or agreement
between the parties, and the existence of any claim or cause of action
of Seller against Buyer, of whatever nature, shall not constitute a
defense to the enforcement against Seller of the covenants contained
herein.
(r) Intercompany and Intracompany Accounts. All intercompany and
-------------------------------------------
intracompany accounts with respect to the Business shall be cancelled without
payment by either Buyer or Seller as of the Closing Date.
(s) Right of Payment Offset. Buyer shall be entitled to offset, dollar for
-----------------------
dollar, the first Five Hundred and Twenty Seven Thousand Dollars ($527,000) of
any amounts owed to Seller pursuant to the terms of this Agreement or the
Transition Agreement. Any amount not offset by June 30, 1998 shall promptly be
paid in cash to Buyer.
(t) Non-Solicitation. From the date of this Agreement until the Closing,
----------------
Buyer, Parent and Seller each agree, and shall use its respective best efforts
to cause its respective affiliates', officers, directors, employees and agents
not to, solicit or encourage, directly or indirectly, in any manner any
discussion with, or furnish or cause to be furnished any information to, any
person other than Seller, Buyer or Parent in connection with, or negotiate for
or otherwise pursue, the sale
-53-
of the Assets or the Business or any material portion thereof or the mobile
messaging service business and assets of Buyer, or any material portion thereof,
as the case may be.
(u) Audited Financial Statements. Seller shall provide Deloitte & Touche
------------------------------
LLP access to the books, work papers, records and personnel of Seller and its
affiliates with respect to the Business in connection with, and shall use
reasonable best efforts to facilitate, Deloitte & Touche LLP's work in
connection with its preparation of and delivery to Buyer within sixty (60) days
after the Closing of any financial statements (including an opinion of Deloitte
& Touche LLP thereon) with respect to the Business required by Rule 3-05 of
Regulation S-X of the Securities Exchange Act of 1934, as amended, including,
without limitation, (i) the execution of and delivery to Deloitte & Touche LLP
of a standard engagement letter and (ii) the provision of any necessary
management representation letters to Deloitte & Touche LLP as may be reasonably
requested by Deloitte & Touche LLP in connection therewith. Buyer acknowledges
and agrees that Seller is engaging Deloitte & Touche LLP on behalf of Buyer for
administrative purposes only in an effort to facilitate the preparation of such
financial statements and that Seller has no obligation in connection with the
delivery thereof or otherwise in connection therewith except to the extent
expressly set forth herein. Buyer shall be solely responsible for the
preparation and delivery of such financial statements, including, without
limitation, for all fees and disbursements of Deloitte & Touche
-54-
LLP and Buyer's independent auditors incurred in connection therewith.
(v) Novation of Customer Contracts. Buyer shall use its reasonable best
-------------------------------
efforts to terminate each Contract in accordance with its terms or to enter into
a novation agreement with respect to each of the Contracts listed in Section I
of Schedule 5(f) (Customer Contracts) prior to or at the expiration of the
existing term of each such Contract whereby Seller shall be released from its
obligations under each such Contract.
(w) Grant of Intellectual Property License to Seller. Immediately following
------------------------------------------------
the Closing, Buyer hereby grants Seller and its affiliates, a nonexclusive,
world-wide royalty-free, irrevocable license under all intellectual property
rights transferred to Buyer under this Agreement, including patents later
issuing on patent applications or innovation disclosures to permit Seller and
its affiliates (i) to practice fully such intellectual property rights in any
field of use except such uses which would violate the Non-Compete covenant of
Section 8(r) herein and (ii) to perform its obligations under the Transition
Agreement, including, without limitation, its obligations with respect to
Manufactured MTs; provided, however, that such license shall not include (x) all
marks and any rights therein listed on Schedule 1(a)(viii) to the extent that
such marks have acquired any trademark or service ▇▇▇▇ status, together with the
goodwill, if any, of the Business connected with the use of, and symbolized by,
the marks and (y) patents or other Assets covering or
-55-
constituting the Super C protocol. Such license shall be non-sublicensable and
non-transferable except that it may be transferred to a purchaser of all or
substantially all of the assets of the business of Seller or any of its
affiliates. Seller shall, and shall cause its affiliates to, hold all
intellectual property subject to the license granted hereunder confidential in
the same manner as Seller or its affiliates treats its own confidential or
proprietary information.
(x) Sharing of Service Fees.
-----------------------
(i) Buyer shall remit to Seller Twenty-Five percent (25%) of any
service fees received by Buyer pursuant to the Mobile Communications
System Purchase Agreement, dated October 19, 1995, as amended, between
Buyer (as successor-in-interest to Rockwell) and West Side Unlimited
Corp. ("West Side") for the two year period following the Closing Date;
(ii) Buyer shall remit to Seller (A) Nine Dollars ($9.00) per
mobile terminal per month for which service fees have been received for
such month and (B) an additional twenty-five percent (25%) of the
remaining service fees retained by Buyer pursuant to the CRST
Agreement, as amended by the CRST Novation Agreement;
(iii) Buyer shall promptly remit any amounts owing pursuant to
clauses (i) and (ii) above to Seller quarterly in arrears within thirty
(30) days following the end of each such quarter. Each such payment
shall be
-56-
accompanied by a certification of Buyer's chief financial officer,
controller or assistant controller as to the amounts of all such
service fees received during the relevant period and the calculation of
the actual amounts being paid;
(iv) Buyer shall not reduce the amount of the service fees charged
for any service to either of the customers described in clauses (i) and
(ii) above without the prior written consent of Seller; and
(v) Anything contained herein to the contrary notwithstanding, in
the event that West Side properly exercises its satisfaction guarantee
on or before December 13, 1996, Buyer's obligation to make any payments
pursuant to clauses (i) and (ii) above shall terminate and shall be of
no further force and effect and Buyer shall be entitled to retain any
service fees received from either customer in total.
9. Employment Arrangements, Benefits and Pension Plans.
---------------------------------------------------
(a) Employment. Buyer may offer employment, with at least comparable
----------
wages and benefits in the aggregate (without consideration to Seller's pension
plans), commencing as of the Closing Date, to any of the employees of Seller
listed on Schedule 9(a); provided, however, that nothing contained in this 9(a)
is intended to confer upon any employee listed on Schedule 9(a), including,
without limitation, any such employee who becomes a Continued Employee, any
right to continued employment
-57-
after evaluation by Buyer or Seller of its respective employment needs after the
Closing Date. The employees who accept such an offer of employment by Buyer are
herein referred to as "Continued Employees".
(b) Severance Benefits.
------------------
(i) Seller shall be solely responsible for and shall pay when due
all direct and indirect liabilities, claims, losses, damages, costs and
expenses in respect of any claim of any employee to whom Buyer may
offer employment pursuant to 9(a) and who does not accept such
employment, that such employee's employment has been terminated, either
voluntarily or involuntarily, in conjunction with the transactions
contemplated hereby, including, without limitation, any claim for
severance pay, unemployment benefits or any other liabilities, claims,
losses, damages, costs and expenses (including interest, penalties and
fees of legal counsel), asserted against, imposed upon or incurred by
Buyer or any of its subsidiaries or its affiliates (including, without
limitation, Parent) or Seller or any of its subsidiaries or its
affiliates arising from or relating in any way to such claims (whether
or not such claim is based on any severance policy, agreement,
arrangement or program which may exist or arise under any contract,
employment agreement or under any Federal, state or local law).
-58-
(ii) Buyer shall be solely responsible for and shall pay when due
all direct and indirect liabilities, claims, losses, damages, costs and
expenses in respect of any claim of any Continued Employee that such
Employee's employment has been terminated, either voluntarily or
involuntarily, at any time after the transactions contemplated hereby,
including, without limitation, any claim for severance pay,
unemployment benefits or any other liabilities, claims, losses,
damages, costs and expenses (including interest, penalties and fees of
legal counsel), asserted against, imposed upon or incurred by Buyer or
any of its subsidiaries or its affiliates (including, without
limitation, Parent) or Seller or any of its subsidiaries or its
affiliates arising from or relating in any way to such claims (whether
or not such claim is based on any severance policy, agreement,
arrangement or program which may exist or arise under any contract,
employment agreement or under any Federal, state or local law).
(c) Employee Obligations.
---------------------
(i) Except as set forth in Section 9(b) with respect to severance
arrangements, Seller shall be solely responsible for and shall pay when
due any liabilities or obligations (including commissions) associated
with the employment of any employees of Seller engaged in the Business
arising out of any action through the Closing of any kind, character or
description, including, without
-59-
limitation, Seller's obligations with respect to employee benefit
plans, accrued vacation/holiday, bonuses, or otherwise; and
(ii) Except as set forth in Section 9(b) with respect to severance
arrangements, Buyer shall be solely responsible for and shall pay when
due any liabilities or obligations (including commissions) associated
with the employment of any employees of Buyer (including, without
limitation, any Continued Employee) engaged in the Business arising out
of any action after the Closing of any kind, character or description,
including, without limitation, Buyer's obligations with respect to
employee benefit plans, accrued vacation/holiday, bonuses, or
otherwise.
(d) Welfare Plans. Buyer shall grant to each Continued Employee credit for
-------------
their service with Seller, its subsidiaries or its affiliates prior to the
Closing Date under Buyer's welfare benefit plans and shall grant credit for
deductibles for 1996 to the extent reasonably available under any relevant plan.
(e) Benefit Plans. Buyer shall, to the extent permitted by the relevant
--------------
plan, grant to each Continued Employee credit under Buyer's benefit plans
(including, any pension, savings or retirement plan to the extent permitted
under the terms of such plan and consistent with maintaining such plan's ERISA
qualification) for purposes of eligibility and vesting (but not benefit accrual)
for all service credited to such Continued
-60-
Employee under the terms of Seller's benefit plans as of the day prior to the
Closing Date.
(f) Indemnification.
---------------
(i) Buyer shall be responsible for, and indemnify, defend and hold
Seller and each of its subsidiaries and its affiliates (including, without
limitation, Rockwell) and each of their employees, directors, officers and
stockholders (collectively, the "Seller Group") harmless from and against any
and all loss, liability, damage or expense, including, without limitation,
reasonable fees and disbursements of legal counsel (collectively, "Damages"),
based upon, arising out of or otherwise in respect of failure of Buyer to comply
with any provision of this Section 9.
(ii) Seller shall be responsible for, and indemnify, defend and hold
Buyer and each of its subsidiaries and its affiliates (including, without
limitation, Parent) and each of their employees, directors, officers and
stockholders (collectively, the "Buyer Group") harmless from and against any and
all Damages, based upon, arising out of or otherwise in respect of any failure
of Seller to comply with any provision of this Section 9.
10. Conditions Precedent to the Obligation of Buyer.
-----------------------------------------------
The obligation of Buyer to consummate the transactions
contemplated hereby shall be subject to the satisfaction, or
waiver by Buyer, on or prior to the Closing Date, of each of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
-------------------------------
Seller set forth in this Agreement shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
all such representations and warranties had been made on and as of such date,
except (i) to the extent such representations and warranties are by their
express provisions made as of the date of this Agreement or another specific
date and (ii) for the effect of any activities or transactions which are
contemplated by this Agreement, and there shall have been delivered to Buyer a
certificate to that effect, dated the Closing Date, signed by an Officer of
Seller.
(b) Covenants and Agreements. Each and all of the covenants and agreements
------------------------
of Seller to be performed or complied with prior to the Closing pursuant to this
Agreement shall have been duly performed and complied with in all material
respects or duly waived and there shall have been delivered to Buyer a
certificate to that effect, dated the Closing Date, signed by an Officer of
Seller.
(c) Opinion of Counsel. Buyer shall have been furnished an opinion of the
------------------
Associate General Counsel or an Assistant General Counsel of Seller, dated the
Closing Date.
(d) Legal Proceedings. No inquiry, action or proceeding
------------------
shall have been instituted which, in the opinion of
-62-
counsel to Buyer, is reasonably likely to result in an adverse determination
which would have a material adverse effect on the ability of Buyer or Parent to
consummate the transactions contemplated by this Agreement or the Transition
Agreement, or to challenge the validity of such transactions or any material
part thereof, or resulting in damages being payable by Buyer or Parent on
account or as a result thereof.
(e) FCC License Modification. The Federal Communications Commission ("FCC")
------------------------
shall have consented to the modification of Buyer's temporary authority so as to
permit the utilization by Buyer of up to thirty-three thousand (33,000) mobile
terminals in connection with the Business and Seller shall have surrendered its
temporary authority to the FCC in connection with such modification ("Buyer
License Modification").
(f) Transition Agreement. Seller shall have executed and delivered a
---------------------
transition agreement (the "Transition Agreement") with Buyer.
(g) Consents Obtained. All consents referred to on Schedule 8(k) shall have
-----------------
been obtained and shall be in full force and effect.
(h) Mutual Release. Buyer shall have been released from all contractual
---------------
obligations to Seller arising out of or relating to the Satellite Capacity
Agreement dated March 30, 1994 by and between Buyer and Seller pursuant to a
release (the "Mutual Release") executed between Buyer and Seller.
-63-
(i) Data ▇▇▇ ▇▇ (with COM.) Distributor Agreement. Seller shall have
------------------------------------------------
executed and delivered a distributor agreement with Buyer.
11. Conditions Precedent to the Obligation of Seller.
------------------------------------------------
The obligation of Seller to consummate the transactions contemplated hereby
shall be subject to the satisfaction or waiver by Seller, on or prior to the
Closing Date, of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of
-------------------------------
Buyer set forth in this Agreement shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
all such representations and warranties had been made on and as of such date,
except (i) to the extent such representations and warranties are by their
express provisions made as of the date of this Agreement or another specific
date and (ii) for the effect of any activities or transactions which are
contemplated by this Agreement, and there shall have been delivered to Seller a
certificate to that effect, dated the Closing Date, signed by the President or a
Vice President of Buyer.
(b) Covenants and Agreements. Each and all of the covenants and agreements
------------------------
of Buyer to be performed or complied with prior to the Closing pursuant to this
Agreement shall have been duly performed and complied with in all material
respects or duly waived and there shall have been delivered to Seller a
-64-
certificate to that effect, dated the Closing Date, signed by the President or a
Vice President of Buyer.
(c) Opinion of Counsel. Seller shall have been furnished an opinion of the
------------------
Vice President and General Counsel of Buyer, dated the Closing Date.
(d) Legal Proceedings. No inquiry, action or proceeding shall have been
------------------
instituted which, in the opinion of counsel to Seller, is reasonably likely to
result in an adverse determination which would have a Material Adverse Effect,
or to challenge the validity of such transactions or any material part thereof,
or resulting in damages being payable by Seller on account or as a result
thereof.
(e) FCC License Modification. The FCC shall have consented to the Buyer
-------------------------
License Modification.
(f) Transition Agreement. Buyer shall have executed and delivered a
---------------------
Transition Agreement with Seller.
(g) Mutual Release. Buyer shall have executed and delivered the Mutual
---------------
Release with Seller.
(h) H-S-R Determination. Within sixty (60) days of the Closing Date,
--------------------
the Board of Directors of Buyer (or the Executive Committee of the Board of
Directors) shall have made a good faith determination that the fair market value
of the Assets within the meaning of, and as determined in accordance with, Rule
801.10 of the Regulations promulgated under the ▇▇▇▇- ▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, is not more than Fifteen Million Dollars
($15,000,000), and at the Closing Buyer
-65-
shall deliver to the Seller a certification of the President or a Vice President
of Buyer to the effect that such timely determination remains in full force and
effect on the Closing Date.
(i) Consents Obtained. All consents referred to on Schedule 8(k) shall have
-----------------
been obtained and shall be in full force and effect.
(j) Certificate of ▇▇▇▇▇▇ Electronics Corporation. Buyer shall have
-------------------------------------------------
delivered a Certificate of ▇▇▇▇▇▇ Electronics Corporation in the form agreed to
by the parties.
12. Finder's Fees, Brokers.
----------------------
Seller represents and warrants to Buyer that it has not authorized any
person to act as broker, finder or in any other similar capacity in connection
with the transactions contemplated by this Agreement and the negotiations
leading to it. Buyer represents and warrants to Seller that it has not
authorized any person to act as broker, finder or in any other similar capacity
in connection with the transactions contemplated by this Agreement and the
negotiations leading to it.
13. Waiver of Compliance with Bulk Transfer Laws.
--------------------------------------------
The parties hereby waive compliance with the provisions of any bulk
transfer laws which may be applicable to the transactions contemplated by this
Agreement, the Transition Agreement and the transactions contemplated hereby and
thereby. Seller shall indemnify, defend and hold the Buyer Group harmless from
and against any and all Damages incurred by any member of
-66-
the Buyer Group based upon, arising out of or otherwise in respect of such
noncompliance.
14. Survival of Representations and Warranties.
-------------------------------------------
Each and every representation and warranty of Seller or Buyer contained in
this Agreement (other than (i) Seller's representation and warranty with respect
to title to the Assets contained in Section 5(e), (ii) Seller's and Buyer's
representations and warranties with respect to corporate authorization and
enforceability of this Agreement contained in Sections 5(b) and 6(b),
respectively, and (iii) Seller's and Buyer's representations and warranties with
respect to finder's fees and brokers contained in Section 12), in any Schedule
or in any certificate or instrument delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the Closing Date and
shall continue in full force and effect until November 22, 1997 and then
terminate and expire with respect to any theretofore unasserted claims arising
out of or relating to or otherwise in respect of any falsity, breach or
inaccuracy of such representations and warranties. Seller's and Buyer's
representations and warranties with respect to finder's fees and brokers
contained in Section 12 and corporate authorization and enforceability of this
Agreement contained in Sections 5(b) and 6(b), respectively, or on any related
Schedule hereto or in any certificate or document delivered pursuant hereto
shall survive the execution and delivery of this
-67-
Agreement, the consummation of the transactions contemplated hereby and the
Closing Date until all applicable statutes of limitation (including any
extension thereof) have expired and then expire with respect to any theretofore
unasserted claims arising out of or otherwise in respect of any falsity, breach
or inaccuracy of such representations or warranties. The representations and
warranties with respect to title contained in Section 5(e) or on any related
Schedule hereto or in any certificate or document delivered pursuant hereto
shall survive the execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby and the Closing Date without time
limitation. This Section 14 shall have no effect upon any other obligation of
either Seller or Buyer whether to be performed before, on or after the Closing
Date.
15. Indemnification.
---------------
(a) Indemnification by Seller. Seller shall indemnify, defend and hold the
-------------------------
Buyer Group harmless from and against any and all Damages actually incurred by
any member of the Buyer Group based upon, arising out of or otherwise in respect
of (i) any falsity, breach or inaccuracy of any representation or warranty made
by Seller herein or in any certificate or other document delivered pursuant
hereto, (ii) any breach or violation of any covenant or agreement of Seller
contained herein or in any certificate or other document delivered pursuant
hereto or (iii) the Retained Liabilities.
-68-
(b) Indemnification by Buyer. Buyer shall indemnify, defend and hold the
------------------------
Seller Group harmless from and against any and all Damages actually incurred by
any member of the Seller Group based upon, arising out of or otherwise in
respect of (i) any falsity, breach or inaccuracy of any representation or
warranty made by Buyer herein or in any certificate or other document delivered
pursuant hereto, (ii) any breach or violation of any covenant or agreement of
Buyer contained herein or in any certificate or other document delivered
pursuant hereto, (iii) the Assumed Liabilities and (iv) any claims or demands
of, or any proceeding by or on behalf of INMARSAT against Seller or any member
of the Seller Group regarding INMARSAT's alleged ownership of the Standard C
protocol in connection with the Business, including, without limitation, any
such claim, demand or proceeding relating to the use of Standard C in the
Fielded MTs, the Inventory MTs and the Manufactured MTs. Without the prior
written consent of Buyer or Parent, neither Seller nor any member of the Seller
Group shall communicate with INMARSAT or INMARSAT's counsel or representatives
concerning the use by Buyer, any member of the Buyer Group, Seller or any member
of the Seller Group of the Standard C protocol except in the case that any
member of the Seller Group is required (by oral questions, interrogatories,
request for information or other documents in legal proceedings, subpoena, civil
investigative demand or other similar process) to communicate or otherwise
disclose any such matter. In the event that Seller or any member of the Seller
-69-
Group is requested or required (by oral questions, interrogatories, request for
information or other documents in legal proceedings, subpoena, civil
investigative demand or other similar process) to so communicate with INMARSAT
or INMARSAT's counsel or representatives, Seller shall provide Buyer with prompt
written notice of any such request or requirement so that Buyer may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this restriction. If, in the absence of a protective order or
other remedy or the receipt of a waiver by Buyer, Seller or any member of the
Seller Group is nonetheless, in the written opinion of Seller's counsel, legally
compelled to so communicate with INMARSAT or INMARSAT's counsel or
representatives or else stand liable for contempt or suffer other censure or
penalty, Seller or such member of the Seller Group may, without liability
hereunder, communicate to INMARSAT or INMARSAT's counsel or representatives to
the extent such counsel advises such communication is legally required. In such
event, to the extent possible, Seller will cooperate with Buyer to respond to
such requirements in a manner consistent with Buyer's interests, but subject to
all legal requirements.
(c) Exclusivity. Each of Buyer, Parent and Seller acknowledges and agrees
-----------
that its sole and exclusive remedy with respect to any and all claims for
damages covered by the indemnification provisions in Sections 15(a)(i) and
15(b)(i), as the case may be, shall be pursuant to the indemnification
provisions set forth in this Section 15. In furtherance of the
-70-
foregoing, each of Buyer, Parent and Seller
hereby waives, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action it or any of its respective subsidiaries or
its affiliates may have against the other party or such other party's
subsidiaries or its affiliates or any other member of the Seller Group or Buyer
Group, as the case may be, arising under or based upon any Federal, state or
local statute, law, ordinance, rule, regulation or common law or at equity but
only to the extent they relate to the matters described in the immediately
preceding sentence.
(d) Notice of Circumstance. Promptly after receipt by any member of the
Buyer Group or the Seller Group of notice of any action, proceeding, claim or
potential claim or discovery by any member of the Buyer Group or the Seller
Group of any facts (any of which is hereinafter individually referred to as a
"Circumstance"), which could give rise to a right to indemnification pursuant to
any provision of this Agreement, such person (the "Indemnified Party") shall
give the party who may become obligated to provide indemnification hereunder
(the "Indemnifying Party") written notice describing the Circumstance in
reasonable detail. If notice of a Circumstance is not given to the Indemnifying
Party within a sufficient period of time or in sufficient detail to apprise the
Indemnifying Party of the nature of the Circumstance (in each instance taking
into account the facts and circumstances with respect to such Circumstance), the
Indemnifying Party shall not be liable to the Indemnified
-71-
Party to the extent that the Indemnifying Party's position is actually
prejudiced as a result thereof. The Indemnifying Party shall have the right, at
its option, to compromise or defend, at its own expense and by its own counsel,
any Circumstance involving the asserted liability of the Indemnified Party. If
any Indemnifying Party shall undertake to settle, compromise or defend any such
asserted liability, it shall promptly notify the Indemnified Party of its
intention to do so, and the Indemnified Party agrees to cooperate fully with the
Indemnifying Party and its counsel in the settlement or compromise of, or
defense against, any such asserted liability. All costs and expenses incurred in
connection with such cooperation shall be borne by the Indemnifying Party. In
the event that the Indemnifying Party shall so assume such defense, it shall not
compromise or settle any such claim, action, or suit unless (i) the Indemnified
Party gives its prior written consent, which shall not be unreasonably withheld
or (ii) the terms of the compromise or settlement of such claim, action, or suit
provide that the Indemnified Party shall have no responsibility for the
discharge of any settlement amount and impose no other material obligations or
duties on the Indemnified Party, and the compromise or settlement discharges all
rights against the Indemnified Party with respect to such claim, action, or
suit. In any event, the Indemnified Party shall have the right at its own
expense to participate in the defense of such asserted liability, provided that
the Indemnifying Party shall have the right to have its own counsel
-72-
control the defense of the Indemnified Party. Under no circumstances shall the
Indemnified Party settle or compromise any such asserted liability without the
written consent of the Indemnifying Party.
(e) Certain Limitations.
-------------------
(i) Seller shall not be liable to indemnify Buyer for any Damages
based upon, arising out of, or otherwise in respect of the matters set
forth in Section 15(a)(i) hereof once the aggregate amount of Damages
actually paid by Seller to the Buyer Group with respect to such claims
exceeds Two Million Dollars ($2,000,000); provided, however, that the
limitation contained in this clause shall not apply to any Damages
based upon, arising out of, or otherwise in respect of any falsity,
breach or inaccuracy of Seller's representation and warranty with
regard to title to the Assets contained in Section 5(e).
(ii) Seller shall not be liable to indemnify Buyer for any Damages
based upon, arising out of or otherwise in respect of the matters set
forth in Section 15(a)(i) hereof, except to the extent that the
aggregate amount of Damages exceeds One Hundred Thousand Dollars
($100,000) (the "Threshold Amount"); provided, however, that once the
Threshold Amount has been exceeded the Seller shall be liable for the
entire amount of such Damages, including the Threshold Amount.
-73-
(iii) The amount of any Damages for which indemnification is
provided under this Agreement shall be net of any amounts recovered or
recoverable by the Indemnified Party from third parties (including,
without limitation, amounts recovered or recoverable under insurance
policies) with respect to such Damages or other liability. Seller and
Buyer, as appropriate, shall, or shall cause each Indemnified Party to,
use its reasonable best efforts to pursue promptly any claims or rights
it may have against all third parties which would reduce the amount of
Damages for which indemnification is provided under this Agreement.
(iv) Neither Seller nor Buyer shall have any
obligation to indemnify the other or any other persons under this Agreement
against, or otherwise have any liability under this Agreement with respect to,
lost profits or consequential damages.
(f) Survival of Indemnification Obligations. The indemnification
--------------------------------------------
obligations for all Damages relating to matters set forth in Sections 15(a)(i)
and 15(b)(i) hereof shall survive the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and the Closing Date
and continue in full force and effect thereafter to the extent set forth in
Section 14 hereof and then expire (other than as set forth in such Section 14)
with respect thereto. The indemnification obligations for all Damages related to
matters set forth in the other clauses set forth in Sections 15(a) and
-74-
15(b) hereof shall survive the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the Closing Date and
continue in full force and effect thereafter without time limitation.
16. Termination; Effect of Termination.
----------------------------------
(a) Termination. This Agreement may be terminated at any time prior to the
-----------
Closing:
(i) by mutual written consent of
Seller and Buyer;
(ii) by Buyer if, as of the time of the Closing, the
conditions specified in Section 10 have not been satisfied and shall not have
been waived by Buyer;
(iii) by Seller if, as of the time of the Closing, the
conditions specified in Section 11 have not been satisfied and shall not have
been waived by Seller; or
(iv) by either party hereto if the Closing does not
occur on or prior to December 15, 1996; provided, however, that the party
seeking termination pursuant to clauses (ii), (iii) and (iv) is not in breach of
its representations, warranties, covenants or agreements contained in this
Agreement.
(b) Effect of Termination. In the event of the termination
-----------------------
of this Agreement pursuant to Section 16(a), this Agreement, other than with
respect to Sections 7, 12, 17(a) and 17(m), which shall continue in effect,
shall thereafter become void and have no effect, and without any liability on
the part of
-75-
either party or its subsidiaries or its affiliates or any other member of the
Seller Group or the Buyer Group in respect thereof, except that nothing herein
will relieve either party from liability for any breach of this Agreement.
17. Miscellaneous.
-------------
(a) Costs Incident to Preparation of Agreement. Seller and Buyer shall each
------------------------------------------
pay, without right of reimbursement from the other, all costs incurred by it
incident to the preparation, execution and delivery of this Agreement and the
performance of its obligations hereunder, whether or not the transactions
contemplated by this Agreement are consummated, including, without limitation,
fees and disbursements of legal counsel, accountants and consultants employed by
the respective parties hereto in connection with the transactions contemplated
by this Agreement.
(b) Parties in Interest. This Agreement is binding upon and is for the
--------------------
benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is not made for the benefit of any person (including,
without limitation, any Continued Employee), firm, corporation or other entity
not a party hereto, and no person (including, without limitation, any Continued
Employee), firm, corporation or other entity other than the parties hereto or
their respective successors and permitted assigns shall acquire or have any
right, remedy or claim under or by virtue of this Agreement, except that members
of the Buyer Group and the Seller Group shall be entitled
-76-
to the rights to indemnification provided to the Buyer Group and the Seller
Group, respectively, hereunder.
(c) Casualty. Subject to the provisions of Section 8(i), if, prior to the
--------
Closing, any Assets or a portion thereof are damaged or destroyed by fire or
other casualty, Buyer shall not have the option to cancel and rescind this
Agreement but shall be obligated to consummate the transactions contemplated
hereby without adjustment in the closing consideration except that Buyer shall
be entitled to all of Seller's right, title and interest in and to any award
from any insurance proceeds with respect thereto, provided, however, that Buyer
will have the option to cancel and rescind this Agreement if such damage or
destruction has had or could reasonably be expected to have a Material Adverse
Effect.
(d) Assignment; Successors and Assigns. Neither Seller nor Buyer shall
------------------------------------
convey, assign or otherwise transfer any of its rights or obligations under this
Agreement without the express written consent of the other party hereto, which
consent shall not be unreasonably withheld; provided, however, that Buyer may
freely assign any and all of its rights, obligations and interests hereunder to
a wholly-owned subsidiary of Parent, provided that Parent shall not be released
from its obligations under this Agreement, including, without limitation, its
guarantee obligations set forth in Section 17(r).
(e) Notices. All notices or other communications required
-------
or permitted to be given hereunder shall be in writing
-77-
and shall be delivered by hand, telecopied or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service
(and shall be deemed given when so delivered by hand or telecopied, or, if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service)) addressed as follows:
If to Seller:
Rockwell International Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Senior Vice President,
General Counsel and Secretary
with a copy to:
Rockwell International Corporation
▇▇▇▇▇▇▇ Commercial Electronics
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Assistant General Counsel
and
Battle ▇▇▇▇▇▇ LLP
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to Buyer or Parent:
American Mobile Satellite Corporation
and AMSC Subsidiary Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Vice President and General Counsel
-78-
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Building
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
or in any case to such other address or addresses as hereafter shall be
furnished as provided in this Section 17(e) by any party hereto to the other
party hereto.
(f) Waiver; Remedies. No delay on the part of either Buyer or Seller in
-----------------
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of either Buyer or Seller of any
right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. Unless
otherwise provided, the rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies which the parties hereto may
otherwise have at law or in equity.
(g) Entire Agreement. This Agreement, the Transition Agreement and the
-----------------
Confidentiality Agreement constitute the entire agreement among the parties with
respect to the subject matter hereof and this Agreement, the Transition
Agreement and such Confidentiality Agreement supersede all prior agreements or
understandings of the parties relating thereto, including,
-79-
without limitation, the non-binding Letter of Intent dated October 1, 1996 by
and between Parent and Seller.
(h) Amendment. This Agreement may be modified or amended only by written
---------
agreement of the parties hereto.
(i) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument.
(j) Governing Law. This Agreement shall be governed and construed in
--------------
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
(k) Disclosure Schedule. All Schedules referred to herein are contained in
-------------------
the Disclosure Schedule to be delivered at Closing (the "Disclosure Schedule").
Matters disclosed by Seller to Buyer pursuant to any Section of this Agreement
shall be deemed to be disclosed with respect to all Sections of this Agreement
to the extent this Agreement requires such disclosure.
(l) Captions, Currency. All section titles or captions contained
-------------------
in this Agreement or in any item contained in the Disclosure Schedule referred
to herein, and the Table of Contents to this Agreement, are for convenience only
and shall not be deemed a part of this Agreement or affect the meaning or
interpretation of this Agreement. Unless otherwise specified, all references
herein to numbered sections are to Sections of
-80-
this Agreement and all references herein to Schedules are to Schedules contained
in the Disclosure Schedule. Unless otherwise specified, all references contained
in this Agreement or in any Schedule referred to herein, or in any instrument or
document delivered pursuant hereto, to dollars shall mean United States Dollars.
(m) Publicity. No press release or announcement concerning the transactions
---------
contemplated hereby shall be issued by any party without the prior consent of
the other parties, except as such release or announcement may be, in the opinion
of the disclosing party's legal counsel, required by law, rule or regulation,
including the rules of a stock exchange or automated trading market on which or
in which such disclosing party's securities are traded, in which case the party
required to make the release or announcement shall allow the other parties
reasonable time to comment on such release or announcement in advance of such
issuance.
(n) No Representations or Warranties. Buyer acknowledges that none of
-----------------------------------
Seller or any of its subsidiaries or its affiliates or any other person has made
any representation or warranty, expressed or implied, as to the accuracy or
completeness of any information regarding Seller, the Business, the Assets or
the Assumed Liabilities not included in this Agreement or the Schedules, and
none of Seller, any of its subsidiaries or its affiliates or any other person
will have or be subject to any liability to Buyer, any of its subsidiaries or
-81-
its affiliates or any other person resulting from the distribution to Buyer or
Buyer's use of, any such information. Buyer further acknowledges that, except as
expressly set forth in this Agreement or the Schedules contained in the
Disclosure Schedule, there are no representations or warranties of any kind,
expressed or implied, with respect to Seller, the Business, the Assets or the
Assumed Liabilities.
(o) Severability. If any provision of this Agreement or the application of
------------
any such provision to any person or circumstance shall be held invalid, illegal
or unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof.
(p) Dispute Resolution Procedures. All disputes relating to or arising out
-----------------------------
of any provision of the Agreement shall be resolved pursuant to procedures set
forth in Annex I to this Agreement, the terms of which are incorporated herein
by reference.
(q) Definition of "Knowledge". For the purposes of this Agreement,
---------------------------
"knowledge" or "aware of" or a similar phrase with respect to Seller shall mean
the actual knowledge of the persons listed on Schedule 17(q) ("Seller's
Representatives") and not any constructive or imputed knowledge of Seller or any
of its subsidiaries or its affiliates or any of their directors, officers,
employees or agents.
-82-
(r) Guarantee of Buyer's Performance. As an additional inducement for
---------------------------------
Seller to execute and deliver this Agreement and to consummate the transactions
contemplated hereby Parent, for itself and its successors-in-interest and
assigns, hereby guarantees the full and faithful performance and observation by
Buyer under this Agreement or the Transition Agreement, of all of the
representations, warranties, covenants, conditions and agreements in this
Agreement or the Transition Agreement, provided to be performed and observed by
Buyer without requiring any notice of nonpayment, nonperformance or
non-observance or proof of notice or demand whereby to charge Parent
-83-
therefor, all of which Parent hereby expressly waives. Parent expressly agrees
that the Buyer may, without notice to the undersigned, modify the Agreement or
the Transition Agreement, and grant extensions and concessions to Seller in
respect thereof without in any manner affecting the liability of the undersigned
hereunder. This Guarantee shall remain in effect notwithstanding any bankruptcy,
reorganization or insolvency of Parent, Buyer or any successor or assignee
thereof, or any disaffirmance or abandonment by a trustee thereof. Parent hereby
waives notice of acceptance of this Guarantee. Parent shall have any defense to
the performance of this Guarantee that would be available to Buyer in connection
with its obligations under this Agreement and the Transition Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ROCKWELL ▇▇▇▇▇▇▇, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
Name: L.A. Erickson
Title: Assistant Treasurer
AMERICAN MOBILE SATELLITE CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
AMSC SUBSIDIARY CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
ANNEX I
DISPUTE RESOLUTION PROCEDURES
-----------------------------
Negotiation -- Mediation -- Arbitration
This Annex I to the Asset Sale Agreement dated as of November 22, 1996 (the
"Agreement") by and between ROCKWELL ▇▇▇▇▇▇▇, INC., a Delaware corporation
("Seller"), and AMERICAN MOBILE SATELLITE CORPORATION, a Delaware corporation
("Parent") and AMSC Subsidiary Corporation, a Delaware corporation ("Buyer")
sets forth the procedures for resolving disputes relating to or arising out of
any provision of the Agreement, as prescribed pursuant to Section 17(p) thereof.
This Annex forms a part of the Agreement, and all terms used herein that are
defined in the Agreement shall have the respective meanings ascribed to them
therein unless otherwise defined herein, and this Annex is subject to the
provisions of the Agreement.
(i) In the event of any dispute between Buyer and Seller or any member of
the Buyer Group or the Seller Group relating to or arising out of any provision
of the Agreement, each party shall promptly designate one or more
representatives and the respective representatives of the parties shall meet
promptly in an effort to resolve the dispute extrajudicially.
(ii) If the dispute is not resolved as a result of such meeting,
the dispute shall be referred to a member of the respective senior
managements (which shall mean President or any Vice President of Seller
who shall be empowered to act on behalf of Seller and the President or
any Vice President of Buyer who shall be empowered to act on behalf
of Buyer) within ten days after the meeting prescribed in paragraph (i).
(iii) A member of the senior management of each party shall meet to attempt
to resolve the dispute within thirty (30) days after the dispute has been
referred to them as prescribed in paragraph (ii).
(iv) Prior to the meeting of the members of the senior managements of the
parties, the parties shall exchange written summaries of the issues and the
underlying evidence relating to the dispute. The disputing party shall submit
its written summary to the other party not less than twenty (20) days before the
meeting of the senior management. This submission shall set forth the basis of
the dispute and identify the member of its senior management authorized to
resolve the dispute on its behalf. Within ten days thereafter, the other party
shall submit its written summary to the disputing party. This submission shall
respond to the matters raised in the written summary provided by the disputing
party and identify the member of the senior management of the other party
authorized to resolve the dispute on its behalf.
(v) If the dispute is not resolved by the senior management of each party,
the parties shall appoint a neutral advisor who shall, within sixty (60) days
after his appointment, submit to the parties a non-binding written opinion which
-2-
addresses the merits of each party's position and assesses which party is likely
to prevail at a trial on the merits, setting forth findings of fact and
conclusions of law in support thereof.
(vi) The parties shall exchange names of potential neutral advisors and
select from this pool a mutually acceptable candidate. If the parties cannot
agree on the selection of a neutral advisor, the Center for Public Resources,
New York, New York U.S.A. ("CPR") or its designee (or if the CPR shall decline
to do so, any judge or retired judge of the federal courts in the State of New
York) shall select a neutral advisor from among the Judicial Panelists of the
CPR Legal Program and the retired judges of the federal or state courts in the
State of New York.
(vii) The parties shall enter into an agreement with the neutral advisor
prohibiting any ex parte contacts with the neutral advisor without the explicit
consent of the other party and requiring the neutral advisor to treat any
information conveyed to him as confidential and prohibit his disclosure of any
confidential or trade secret information. Such agreement shall also provide that
the neutral advisor will be disqualified as a trial witness, consultant or
expert for any party, and that his advisory opinion of the likely outcome of any
litigation of the dispute is inadmissible for any purpose.
(viii) Ten days after the neutral advisor has been designated, each party
shall submit to the neutral advisor, as well as to the other party, a concise
written statement summarizing the issues and underlying evidence supporting its
position.
-3-
(ix) The neutral advisor may in his sole discretion conduct a mini-trial,
under such rules of procedure as he shall prescribe and as shall be reasonably
acceptable to the parties, at which the parties shall present their respective
positions on the disputes. If the neutral advisor wishes to consult with the
parties on any issue relating to the dispute prior to the mini-trial, he shall
outline his general areas of inquiry and, on agreement by both parties, he may
submit written questions jointly to the parties. The parties shall respond to
these questions in writing and shall provide each other with a copy of any such
response.
(x) The fees and expenses of the neutral advisor shall be apportioned
equally between the parties to the dispute.
(xi) Ten days after the neutral advisor issues his opinion to the parties,
members of the senior management shall meet again in an attempt to resolve the
dispute.
(xii) If the good faith attempts to resolve the dispute stated in
paragraphs (i), (iii) and (xi) are unsuccessful, the parties shall submit such
dispute to arbitration. Such arbitration shall be conducted in accordance with
the rules of the Center for Public Resources Rules for Non-Administered
Arbitration of Business Disputes by three arbitrators, of whom each party shall
appoint one. Any arbitrator not appointed by a party shall be selected from the
CPR Panels of Distinguished Neutrals. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C.,
-4-
Sections 1-16, and judgment upon the award rendered by the Arbitrators may be
entered by any court having jurisdiction thereof. The place of the arbitration
shall be New York, New York. The arbitrators are not empowered to award damages
in excess of actual damages, including punitive damages. The arbitrators shall
make written findings of fact and conclusions of law, and the decision of the
arbitrators shall be final.
(xiii) Each party shall pay its own expenses of arbitration and the expense
of the arbitrators shall be equally shared; provided, however, that if in the
opinion of the arbitrators any claim for indemnification under the Agreement or
any defense in objection thereto was unreasonable, the arbitrators may assess,
as part of their award, all or any part of the arbitration expenses (including
reasonable attorneys' fees and disbursements) of the other party and of the
arbitrators against the party raising such unreasonable claim, defense or
objection.
(xiv) All deadlines specified in this Annex I may be extended by mutual
agreement.
-5-
