Exhibit 2(d)
MASTER SEPARATION AGREEMENT
dated as of
_______________ __, 1997
among
General Motors Corporation,
▇▇▇▇▇▇ Network Systems, Inc.
Delco Electronics Corporation
and
HE Holdings, Inc.
TABLE OF CONTENTS
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Page
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ARTICLE 1
Definitions
Section 1.01. Defined Terms................................................. 2
ARTICLE 2
Transfer and Assumption
Section 2.01. Transfer and Contribution of Assets........................... 13
Section 2.02. Assumption of Liabilities..................................... 14
Section 2.03. Employee Matters.............................................. 15
Section 2.04. Methods of Transfer and Assumption............................ 15
Section 2.05. Nonassignable Contracts....................................... 16
Section 2.06. Other Agreements.............................................. 16
ARTICLE 3
Indemnification
Section 3.01. Indemnification by ▇▇▇▇▇▇..................................... 19
Section 3.02. Indemnification by Telecom.................................... 19
Section 3.03. Indemnification by Delco...................................... 20
Section 3.04. Indemnification Procedures.................................... 20
Section 3.05. Certain Limitations........................................... 22
Section 3.06. Exclusivity of Tax Indemnification............................ 23
ARTICLE 4
Access to Information
Section 4.01. Restrictions on Disclosure of Information..................... 23
Section 4.02. Legally Required Disclosure of Confidential Information....... 24
Section 4.03. [Access to Information........................................ 24
Section 4.04. Production of Witnesses....................................... 25
Section 4.05. Reimbursement................................................. 25
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Page
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ARTICLE 5
Insurance Matters
Section 5.01. Cooperation in Insurance Matters.............................. 26
Section 5.02 Claims........................................................ 26
ARTICLE 6
Employees
Section 6.01. Employee Matters.............................................. 28
ARTICLE 7
Post-Closing Adjustment
Section 7.01. Closing Date Balance Sheet.................................... 28
Section 7.02. Post-Closing Adjustment....................................... 32
ARTICLE 8
Conditions
Section 8.01. Conditions to the Obligations of the Parties.................. 33
ARTICLE 9
Miscellaneous
Section 9.01. Entire Agreement.............................................. 34
Section 9.02. Governing Law................................................. 34
Section 9.03. Descriptive Headings.......................................... 34
Section 9.04. Notices....................................................... 34
Section 9.05. Parties in Interest........................................... 37
Section 9.06. Counterparts.................................................. 37
Section 9.07. Binding Effect; Assignment.................................... 37
Section 9.08. Dispute Resolution............................................ 37
Section 9.09. Severability.................................................. 38
Section 9.10. Failure or Indulgence Not Waiver; Remedies Cumulative......... 39
Section 9.11. Amendment..................................................... 39
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SCHEDULES AND EXHIBITS
----------------------
Schedule 1 Additional Delco Assets
Schedule 2 Additional ▇▇▇▇▇▇ Assets
Schedule 3 Additional Telecom Assets
Schedule 4 Other ▇▇▇▇▇▇ Businesses
Schedule 5 ▇▇▇▇▇▇ Contracts
Schedule 6 Certain ▇▇▇▇▇▇ Intellectual Property
Schedule 7 Certain ▇▇▇▇▇▇ Liabilities
Schedule 8 Certain Telecom Liabilities
Schedule 9 Certain Delco Liabilities
Schedule 10 Dual Use Intellectual Property
Schedule 11 Additional Intellectual Property
Schedule 7.01 Post-Closing Adjustment
Exhibit A Real Estate
Exhibit B Auditors' Report
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MASTER SEPARATION AGREEMENT
This Master Separation Agreement (this "Agreement"), dated as of
___________, 1997 is made by and among General Motors Corporation, a Delaware
corporation ("GM"), HE Holdings, Inc., a Delaware corporation and a wholly owned
subsidiary of GM ("▇▇▇▇▇▇"), Delco Electronics Corporation, a Delaware
corporation and a wholly owned subsidiary of GM, and ▇▇▇▇▇▇ Network Systems,
Inc., a Delaware corporation and a wholly owned subsidiary of GM.
RECITALS
WHEREAS, ▇▇▇▇▇▇ and Raytheon Company, a Delaware corporation ("Raytheon"),
are parties to that certain Agreement and Plan of Merger dated as of January 16,
1997, as amended from time to time (the "Merger Agreement"), pursuant to which
Raytheon's business will be combined with the Defense Business through the
merger of Raytheon with and into ▇▇▇▇▇▇ (the "Merger"); and
WHEREAS, as a condition to entering into the Merger Agreement, Raytheon has
required that ▇▇▇▇▇▇ be, at the time of consummation of the Merger, an
independent, publicly owned company, comprising the Defense Business; and
WHEREAS, in order to satisfy such condition, the parties hereto, subject to
the terms and conditions hereof, intend to effect certain transfers of assets,
subject to assuming certain liabilities, as described herein; and
WHEREAS, it is the intention of the parties to this Agreement that the
transfers described herein will qualify as tax-free under the Internal Revenue
Code of 1986, as amended (the "Code"); and
WHEREAS, the parties hereto also intend to enter into certain agreements
governing their relationships following the effectiveness of the Merger;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.01. Defined Terms. (a) Capitalized terms used herein
which are not otherwise defined herein shall have the meanings ascribed to them
in the Merger Agreement.
(b) The following terms, as used herein, shall have the following
meanings:
"Additional Delco Assets" means those certain Assets that are not
presently owned by Delco or its Subsidiaries but are used primarily, or are held
for use primarily, in the Automotive Electronics Business, as identified on
Schedule 1.
"Additional Delco Liabilities" means all Liabilities relating to or arising
out of the Additional Delco Assets.
"Additional ▇▇▇▇▇▇ Assets" means those certain Assets that are not
presently owned by ▇▇▇▇▇▇ or its Subsidiaries but are used primarily, or are
held for use primarily, in the Defense Business, as identified on Schedule 2.
"Additional ▇▇▇▇▇▇ Liabilities" means all Liabilities relating to or
arising out of the Additional ▇▇▇▇▇▇ Assets.
"Additional Telecom Assets" means those certain Assets that are not
presently owned by Telecom or its Subsidiaries but are used primarily, or are
held for use primarily in, the Telecommunications and Space Business, as
identified on Schedule 3.
"Additional Telecom Liabilities" means all Liabilities relating to or
arising out of the Additional Telecom Assets.
"Affiliate" of any specified Person means any other Person directly or
indirectly Controlling, Controlled by, or under common Control with, such
specified Person.
"Ancillary Separation Agreements" means the Definitive Agreements and any
other agreements entered into among the parties hereto on or prior to the Spin-
Off Merger Time with respect to the relationships of the parties after the Spin-
Off Merger Time, subject to Section 4.2(b) of the GM Implementation Agreement.
"Arbiter" has the meaning set forth in Section 7.01.
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"Assets" means any and all assets, properties and rights, whether tangible
or intangible, whether real, personal or mixed, whether fixed, contingent or
otherwise, and wherever located, including, without limitation, the following:
(i) real property interests (including leases), land, plants,
buildings and improvements;
(ii) machinery, equipment, vehicles, furniture and fixtures,
leasehold improvements, supplies, repair parts, tools, plant, laboratory
and office equipment and other tangible personal property, together with
any rights or claims arising out of the breach of any express or implied
warranty by the manufacturers or sellers of any of such assets or any
component part thereof;
(iii) inventories, including raw materials, work-in-process, finished
goods, parts, accessories;
(iv) notes, loans and accounts receivable (whether current or not
current), interests as beneficiary under letters of credit, advances and
performance and surety bonds;
(v) banker's acceptances, shares of stock, bonds, debentures,
evidences of indebtedness, certificates of interest or participation in
profit-sharing agreements, collateral-trust certificates, investment
contracts, voting trust certificates, puts, calls, straddles, options,
swaps, collars, caps and other securities or hedging arrangements of any
kind;
(vi) financial, accounting and operating data and records including,
without limitation, books, records, electronic data, notes, sales and sales
promotional data, advertising materials, credit information, cost and
pricing information, customer and supplier lists, reference catalogs,
payroll and personnel records, minute books, stock ledgers, stock transfer
records and other similar property, rights and information;
(vii) domestic and foreign patents and patent applications, together
with any continuations, continuations-in-part or divisional applications
thereof, and all patents issuing thereon (including reissues, renewals and
re-examinations of the foregoing); invention disclosures; mask works; net
lists; copyrights, and copyright applications and registrations;
trademarks, servicemarks, service names, trade names, and trade dress, in
each case together with any applications and registrations therefor and all
appurtenant goodwill relating thereto; trade secrets, commercial and
technical
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information, know-how, proprietary or confidential information, including
engineering, production and other designs, notebooks, processes, drawings,
specifications, formulae, and technology; computer and electronic data
processing programs and software (object and source code), data bases and
documentation thereof; inventions (whether patented or not); and all other
Intellectual Property under the laws of any country throughout the world;
(viii) Contracts and all rights therein;
(ix) prepaid expenses, deposits and retentions held by third
parties;
(x) claims, causes of action, choses in action, rights under
insurance policies, rights under express or implied warranties, rights of
recovery, rights of set-off, and rights of subrogation;
(xi) licenses, franchises, permits, authorizations and approvals; and
(xii) goodwill and going concern value.
"Auditors' Report" has the meaning set forth in Section 7.01.
"Automotive Electronics Business" means (i) the businesses heretofore or
currently engaged in by HEC and its Subsidiaries as reported in the automotive
electronics segment (or its predecessor segment) in HEC's financial statements,
(ii) any former or discontinued operations primarily related to such businesses
as previously conducted (but excluding any former or discontinued operations
that, during the time that such operations were active, previously were reported
in the automotive electronics segment (or its predecessor segment) in HEC's or
its predecessor's financial statements but were subsequently moved to, and are
currently, or if divested, last were, reported in, the aerospace and defense
systems segment, telecommunications and space segment or the corporate/other
segment (or their predecessors' segments) in HEC's (or its predecessor's)
financial statements), and (iii) the businesses related to the Additional Delco
Assets; provided, however, that at the Spin-Off Merger Time, Delco and ▇▇▇▇▇▇
will each own 50% of the capital stock or other equity interest of HE Microwave
LLC.
"Automotive Electronics Employees" has the meaning ascribed to such term in
the Employee Matters Agreement.
4
"Business Day" means a day other than a Saturday, a Sunday or a day on
which banking institutions located in the State of New York are authorized or
obligated by law or executive order to close.
"Closing Date Balance Sheet" has the meaning set forth in Section 7.01.
"Closing Date Final Amount" has the meaning set forth in Section 7.01.
"Closing Date Financial Information" has the meaning set forth in Section
7.01.
"Closing Date Statement of Purchase Price Adjustment Amounts" has the
meaning set forth in Section 7 .01.
"Confidential Information" means with respect to any party hereto, (a) any
Information concerning such party, its business or any of its Affiliates that
was obtained by another party hereto prior to the Spin-Off Merger Time, (b) any
Information concerning such party that is obtained by another party under
Section 4.03, or (c) any other Information obtained by, or furnished to, another
party hereto that (i) is marked "Proprietary" or "Company Private" or words of
similar import by the party owning such Information, or any Affiliate of such
party, or (ii) the party owning such Information has notified such other party
in writing is confidential or secret; provided, however, that any Information
provided by GM to any of ▇▇▇▇▇▇, Telecom or Delco regarding the Defense
Business, Telecommunications and Space Business or the Automotive Electronics
Business, respectively, shall not be deemed Confidential Information with
respect to the use of such Information in their respective businesses by ▇▇▇▇▇▇,
Telecom or Delco, as the case may be.
"Contracts" means any contract, agreement, lease, license, sales order,
purchase order, instrument or other commitment that is binding on any Person or
any part of its property under applicable law.
"Control" means the possession, direct or indirect, of the power to direct
or cause the direction of the management of the policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Controlling" and "Controlled" have the corollary meanings ascribed thereto.
"Defense Business" means (i) the businesses heretofore or currently engaged
in by HEC and its Subsidiaries as reported in the aerospace and defense systems
segment (or its predecessor segment) in HEC's financial statements, (ii) any
former or discontinued operations primarily related to such businesses as
previously conducted (but excluding any
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former or discontinued operations that, during the time that such operations
were active, previously were reported in the aerospace and defense system
segment (or its predecessor segment) in HEC's or its predecessor's financial
statements but were subsequently moved to, and are currently, or if divested,
last were, reported in, the telecommunications and space segment or automotive
electronics segment (or their predecessors' segments) in HEC's (or its
predecessor's) financial statements), (iii) the businesses related to the
Additional ▇▇▇▇▇▇ Assets, and (iv) the other businesses set forth on Schedule 4.
"Defense Employee Arrangements" has the meaning ascribed to such term in
the Employee Matters Agreement.
"Defense Employee Benefit Plans" has the meaning ascribed to such term in
the Employee Matters Agreement.
"Defense Employees" has the meaning ascribed to such term in the Employee
Matters Agreement.
"Definitive Agreements" has the meaning set forth in Section 2.06.
"Delco" means Delco Electronics Corporation, a Delaware corporation that,
after giving effect to the HEC Reorganization (as defined in the ▇▇▇▇▇▇
Distribution Agreement), will be a direct Subsidiary of GM and the parent
corporation of all entities owned directly or indirectly by GM that will engage
after the Spin-Off Merger Time in the Automotive Electronics Business conducted
immediately prior to the consummation of the transactions set forth herein.
"Delco Assets" means all of HEC's or HEC's Subsidiaries' right, title and
interest (including minority interests) in and to all Assets of HEC or any of
its Subsidiaries other than ▇▇▇▇▇▇ that are used primarily in or held primarily
for use in the operations of the Automotive Electronics Business, including the
Additional Delco Assets and the rights of Delco and its Subsidiaries under this
Agreement and the agreements contemplated hereby (including the Ancillary
Separation Agreements), but excluding the ▇▇▇▇▇▇ Assets, the Telecom Assets and
any cash and cash equivalents.
"Delco Liabilities" means (i) all Liabilities relating primarily to, or
arising primarily out of, the Automotive Electronics Business as conducted at
any time prior to, on or after the Spin-Off Merger Time, including, without
limitation, all Liabilities relating to or arising out of the Delco Assets, (ii)
the Liabilities described on Schedule 9, (iii) the obligations of Delco created
pursuant to this Agreement and the agreements contemplated hereby (including
under
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the Ancillary Separation Agreements) and (iv) all Liabilities with respect to
Automotive Electronics Employees and Retired Automotive Electronics Employees.
"Dual Use Technology" shall mean all Intellectual Property developed by
▇▇▇▇▇▇ for the Defense Business (i) that is useful in the Telecommunications and
Space Business as conducted immediately prior to the Spin-Off Merger Time and
(ii) which covers components manufactured or processes that are to be utilized
by the Telecommunications and Space Business, and, with respect to patents,
patent applications and invention disclosures, shall consist of the patents,
patent applications and invention disclosures set forth on Schedule 10 hereof.
"Employee Arrangements" means all employment or consulting agreements,
collective bargaining agreements and all bonus and other incentive compensation,
deferred compensation, disability, severance, stock award, stock option or stock
purchase agreements, policies or arrangements with respect to the employment and
termination of employment of any employee, officer, director or other Person
employed at any time by HEC or any of its Subsidiaries.
"Employee Benefit Plan" means each employee benefit plan, as defined in
Section 3(3) of ERISA, which HEC or any of its Subsidiaries maintains or to
which HEC or any of its Subsidiaries has an obligation to make contributions.
"Employee Matters Agreement" means the agreement to be entered into as of
the Spin-Off Merger Time among ▇▇▇▇▇▇, Telecom and Delco, with respect to, among
other things, certain employee benefit and liability issues.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Final Determination" means (i) with respect to federal income Taxes, a
"determination" as defined in Section 1313(a) of the Code or execution of an
Internal Revenue Service Form 870AD and, with respect to Taxes other than
federal income Taxes, any final determination of liability in respect of a Tax
that, under applicable law, is not subject to further appeal, review or
modification through proceedings or otherwise (including the expiration of a
statute of limitations or a period for the filing of claims for refunds, amended
returns or appeals from adverse determinations) or (ii) the payment of Tax by
▇▇▇▇▇▇, HEC or any of their Affiliates, whichever is responsible for payment of
such Tax liability under applicable law, with respect to any item disallowed or
adjusted by a Taxing authority, provided that such responsible party determines
that no action should be taken to
7
recoup such payment and ▇▇▇▇▇▇ (if the responsible party is HEC or any of its
Affiliates) or HEC (if the responsible party is ▇▇▇▇▇▇ or any of its Affiliates)
agrees.
"HAC" means ▇▇▇▇▇▇ Aircraft Company, a Delaware corporation.
"HEC" means ▇▇▇▇▇▇ Electronics Corporation, a Delaware corporation and as
of the date hereof, the owner of all of the capital stock of ▇▇▇▇▇▇.
"HEC Reorganization" has the meaning ascribed to such term in the ▇▇▇▇▇▇
Distribution Agreement.
"HRL" means ▇▇▇▇▇▇ Research Laboratories LLC, a Delaware limited liability
company.
"▇▇▇▇▇▇ Assets" means all of HEC's or HEC's Subsidiaries' right, title and
interest (including minority interests) in and to all Assets of HEC or any of
its Subsidiaries that are used primarily in or held primarily for use in the
operations of the Defense Business, including without limitation the ▇▇▇▇▇▇
Facilities, the ▇▇▇▇▇▇ Intellectual Property, the ▇▇▇▇▇▇ Contracts, the
Additional ▇▇▇▇▇▇ Assets, the Assets of the Defense Employee Arrangements and
the Defense Employee Benefit Plans as provided in the Employee Matters Agreement
and the rights of ▇▇▇▇▇▇ and its Subsidiaries under this Agreement and the
agreements contemplated hereby (including the Ancillary Separation Agreements),
but excluding (i) the Telecom Assets, (ii) the Delco Assets and (iii) any cash
and cash equivalents on the Closing Date Balance Sheet.
"▇▇▇▇▇▇ Contracts" means all Contracts pursuant to which ▇▇▇▇▇▇ or any of
its Subsidiaries (determined immediately following the Spin-Off Merger Time) are
parties (other than Contracts that constitute Additional Telecom Assets or
Additional Delco Assets) and the other Contracts identified on Schedule 5.
"▇▇▇▇▇▇ Debt" means the Debt contemplated by the Merger Agreement to be
Debt of ▇▇▇▇▇▇ and its Subsidiaries as of the Effective Time.
"▇▇▇▇▇▇ Facilities" means the real property and facilities described on
Exhibit A that currently are, or will be on or prior to the Spin-Off Merger
Time, owned by, or leased to, ▇▇▇▇▇▇ or any of its Subsidiaries.
"▇▇▇▇▇▇ Intellectual Property" means all of HEC's or HEC's Subsidiaries'
right, title and interest in and to the Intellectual Property relating primarily
to the Defense Business
8
and shall include, without limitation, the patents, patent applications, and
trademarks set forth on Schedule 6 hereof. In no event shall ▇▇▇▇▇▇
Intellectual Property include the ownership of Dual Use Technology or any
trademark, servicemark or trade or company name which contains the name
"▇▇▇▇▇▇"; provided, however, that the ▇▇▇▇▇▇ Intellectual Property shall include
▇▇▇▇▇▇'▇ rights under the Intellectual Property Agreements contemplated by this
Agreement.
"▇▇▇▇▇▇ Interim Balance Sheet" means the unaudited pro forma consolidated
balance sheet as of September 30, 1996 for ▇▇▇▇▇▇ contained in the ▇▇▇▇▇▇
Interim Statements and included in the disclosure schedule to the Merger
Agreement.
"▇▇▇▇▇▇ Liabilities" means (i) the ▇▇▇▇▇▇ Debt, together with accrued and
unpaid interest thereon at the Spin-Off Merger Time to the extent reflected on
the Closing Date Balance Sheet (other than with respect to the ▇▇▇▇▇▇ Debt to be
incurred in connection with the Intercompany Payment for which there will be no
accrued and unpaid interest at the Spin-Off Merger Time), (ii) all Liabilities
relating primarily to, or arising primarily out of, the Defense Business as
conducted at any time prior to, on or after the Spin-Off Merger Time, including
without limitation all Liabilities relating to or arising out of the ▇▇▇▇▇▇
Assets, (iii) the Liabilities described on Schedule 7, (iv) all Liabilities with
respect to Defense Employees and Retired Defense Employees, (v) all Liabilities
arising under the Defense Employee Arrangements and Defense Employee Benefit
Plans, and (vi) the obligations of ▇▇▇▇▇▇ created pursuant to this Agreement,
the agreements contemplated hereby (including under the Ancillary Separation
Agreements) and the other Transaction Agreements (to the extent such other
Transaction Agreements contain obligations or liabilities of ▇▇▇▇▇▇ and/or its
Subsidiaries from and after the Spin-Off Merger Time).
"▇▇▇▇▇▇ Spin-Off Separation Agreement" means the agreement to be entered
into prior to the Effective Time between GM and ▇▇▇▇▇▇, with respect to certain
separation issues.
"Income Tax" has the meaning ascribed to such term in the Tax Sharing
Agreement.
"Indemnifying Party" means a Person that is obligated to provide
indemnification pursuant to Article 3 of this Agreement.
"Indemnitee" means a Person that is entitled to seek indemnification
pursuant to Article 3 of this Agreement.
9
"Information" means all records, books, contracts, instruments, computer
data and other data and information.
"Intellectual Property" means any and all domestic and foreign patents and
patent applications, together with any continuations, continuations-in-part or
divisional applications thereof, and all patents issuing thereon (including
reissues, renewals and re-examinations of the foregoing); invention disclosures;
mask works; net lists; copyrights, and copyright applications and registrations;
trademarks, servicemarks, service names, trade names, and trade dress, in each
case together with any applications and registrations therefor and all
appurtenant goodwill relating thereto; trade secrets, commercial and technical
information, know-how, proprietary or confidential information, including
engineering, production and other designs, notebooks, processes, drawings,
specifications, formulae, and technology; computer and electronic data
processing programs and software (object and source code), data bases and
documentation thereof; inventions (whether patented or not); and all other
intellectual property under the laws of any country throughout the world.
"Intellectual Property Agreements" means all agreements to be entered into
prior to the Spin-Off Merger Time between ▇▇▇▇▇▇ and Telecom (or between their
respective Affiliates) with respect to the treatment after the Spin-Off Merger
Time of Intellectual Property, all as described herein.
"Liabilities" means any and all debts, liabilities, commitments and
obligations, whether fixed, contingent or absolute, matured or unmatured,
liquidated or unliquidated, accrued or not accrued, known or unknown, whenever
or however arising (including, without limitation, whether arising out of any
Contract or tort based on negligence or strict liability) and whether or not the
same would be required by generally accepted accounting principles to be
reflected in financial statements or disclosed in the notes thereto.
"Loss" or "Losses" has the meaning ascribed to such terms in the ▇▇▇▇▇▇
Spin-Off Separation Agreement.
"Person" means an individual, partnership, limited liability company, joint
venture, corporation, trust, unincorporated association, any other entity, or a
government or any department or agency or other unit thereof.
"Prior Relationship" means the ownership relationships among GM, HEC,
▇▇▇▇▇▇, Telecom and Delco at any time prior to giving effect to the HEC
Reorganization and the Spin-Off Transactions.
10
"Purchase Price Adjustment Amounts" has the meaning set forth in Section
7.01.
"Representatives" means directors, officers, employees, agents,
consultants, advisors, accountants, attorneys and representatives.
"Retired Automotive Electronics Employees" has the meaning ascribed to such
term in the Employee Matters Agreement.
"Retired Defense Employees" means all former employees of the Defense
Business as described in the Employee Matters Agreement.
"Retired Satellite Employees" has the meaning ascribed to such term in the
Employee Matters Agreement.
"Satellite Employees" has the meaning ascribed to such term in the Employee
Matters Agreement.
"Spin-Off Merger" means the merger of Merger Sub with and into GM pursuant
to the ▇▇▇▇▇▇ Distribution Agreement.
"Spin-Off Merger Time" means the date and time as of which the Spin-Off
Merger becomes effective.
"Spin-Off Transactions" means the ▇▇▇▇▇▇ Spin-Off and the Telecom Spin-Off
transactions contemplated by the ▇▇▇▇▇▇ Distribution Agreement.
"Subsidiary" means with respect to any specified Person, any corporation or
other legal entity of which such Person or any of its Subsidiaries Controls or
owns, directly or indirectly, more than 50% of the stock of other equity
interest entitled to vote on the election of the members to the board of
directors or similar governing body.
"Tax" has the meaning ascribed to such term in the ▇▇▇▇▇▇ Spin-Off
Separation Agreement.
"Tax Sharing Agreement" means the agreement to be entered into as of the
Spin-Off Merger Time among GM, ▇▇▇▇▇▇ and Telecom, with respect to certain
Income Tax matters.
"Telecom" means ▇▇▇▇▇▇ Network Systems, Inc., a Delaware corporation that,
after giving effect to the HEC Reorganization, will be a direct Subsidiary of GM
and the parent
11
corporation of all entities owned directly or indirectly by GM that will engage
in the Telecommunications and Space Business after the Spin-Off Merger Time (and
which will be renamed ▇▇▇▇▇▇ Electronics Corporation as of the Spin-Off Merger
Time).
"Telecom Assets" means all of HEC's or HEC's Subsidiaries right, title and
interest (including minority interests) in and to all Assets of ▇▇▇▇▇▇ or any of
its Subsidiaries that are used primarily in or held primarily for use in the
operations of the Telecommunications and Space Business, including the
Additional Telecom Assets and the rights of Telecom and its Subsidiaries under
this Agreement and the agreements contemplated hereby (including the Ancillary
Separation Agreements), but excluding the ▇▇▇▇▇▇ Assets and the Delco Assets.
"Telecom Liabilities" means (i) all Liabilities relating primarily to, or
arising primarily out of, the Telecommunications and Space Business as conducted
at any time prior to, on or after the Spin-Off Merger Time, including without
limitation all Liabilities relating to or arising out of the Telecom Assets,
(ii) all Liabilities with respect to Satellite Employees and Retired Satellite
Employees, (iii) the Liabilities described on Schedule 8, (iv) the obligations
of Telecom created pursuant to this Agreement and the agreements contemplated
hereby (including under the Ancillary Separation Agreements), (v) all other
Liabilities of ▇▇▇▇▇▇ that are neither Delco Liabilities nor ▇▇▇▇▇▇ Liabilities
and (vi) any Debt of ▇▇▇▇▇▇ or its Subsidiaries in excess of the ▇▇▇▇▇▇ Debt.
"Telecommunications and Space Business" means the businesses heretofore or
currently engaged in by HEC and its Subsidiaries (including the businesses
related to the Additional Telecom Assets), other than (i) the Automotive
Electronics Business and (ii) the Defense Business.
"Third-Party Claim" means any claim, suit, arbitration, inquiry, proceeding
or investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any arbitration tribunal asserted by a
Person other than any party hereto or their respective Affiliates which gives
rise to a right of indemnification hereunder.
"Transaction Agreements" has the meaning set forth in the GM Implementation
Agreement.
"Transferee" means any Person that will receive a transfer of Assets
pursuant to Article 2.
"Transferor" means any Person that will make a transfer of Assets pursuant
to Article 2.
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ARTICLE 2
Transfer and Assumption
Section 2.01. Transfer and Contribution of Assets.
(a) Subject to the terms and conditions of this Agreement:
(i) prior to the Spin-Off Merger Time, GM shall cause HEC (or shall
cause HEC's appropriate Subsidiary) to transfer to ▇▇▇▇▇▇ (or at ▇▇▇▇▇▇'
election, a Subsidiary of ▇▇▇▇▇▇) all of HEC's (or its Subsidiary's) right,
title and interest in and to the Additional ▇▇▇▇▇▇ Assets;
(ii) prior to the Spin-Off Merger Time, GM shall cause HEC (or
shall cause HEC's appropriate Subsidiary) to transfer to Telecom (or at
Telecom's election, an Affiliate of Telecom) all of HEC's (or its
Subsidiary's) right, title and interest in and to the Additional Telecom
Assets;
(iii) prior to the Spin-Off Merger Time, GM shall cause HEC (or shall
cause HEC's appropriate Subsidiary) to transfer to Delco (or at Delco's
election, an Affiliate of Delco) all of HEC's right, title and interest in
and to the Additional Delco Assets;
(iv) immediately following the actions referred to in the preceding
clauses and prior to the Spin-Off Merger Time, (a) HAC will merge with and
into ▇▇▇▇▇▇, with ▇▇▇▇▇▇ as the surviving corporation, and (b) HEC will
merge with and into GM, with GM as the surviving corporation; and
(v) immediately following the actions referred to in clause (iv) and
prior to the Spin-Off Merger Time, ▇▇▇▇▇▇ shall transfer to GM all of its
right, title and interest in and to the shares of capital stock of Telecom.
(b) All of the transfers of Assets to be effected pursuant to this Article
2 are hereinafter collectively referred to as the "Transfer" and the Assets so
transferred are hereinafter collectively referred to as the "Transferred
Assets."
(c) Notwithstanding anything in this Agreement to the contrary, ▇▇▇▇▇▇
shall retain and shall not transfer, convey, assign or contribute to any Person
the ▇▇▇▇▇▇ Assets.
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In addition, the parties hereto acknowledge and agree that Telecom retains the
Telecom Assets and that Delco retains the Delco Assets.
(d) Each of the parties hereto acknowledges and agrees that the
Transferred Assets will be transferred "as is where is" and that, except as set
forth in (e) below, each Transferor makes and has made no warranty, either
express or implied, including without limitation warranties of merchantability
or fitness for a particular purpose, with respect to any Transferred Assets.
(e) Telecom represents and warrants to ▇▇▇▇▇▇ that, except for cash and
cash equivalents and without giving effect to the sale or anticipated sale of,
or other action with respect to, any ▇▇▇▇▇▇ Assets pursuant to Section 5.1(b) of
the Merger Agreement, the ▇▇▇▇▇▇ Assets as of and immediately following the
Spin-Off Merger Time (i) will include (A) all Assets owned or held by HEC and
its Subsidiaries and (B) all Assets to which HEC and its Subsidiaries have
contractual rights (whether through ownership, lease, license or otherwise), in
the case of clause (A) and clause (B) immediately prior to the Spin-Off Merger
Time which are primarily used in, or held primarily for use in, the Defense
Business as such business is conducted as of the Spin-Off Merger Time and (ii)
will be sufficient to conduct the Defense Business as so conducted immediately
prior to the Spin-Off Merger Time.
Section 2.02. Assumption of Liabilities.
(a) Simultaneously with the actions referred to in Section 2.01(a)(i),
▇▇▇▇▇▇, in partial consideration for the transfer of the Additional ▇▇▇▇▇▇
Assets, shall assume and on a timely basis pay, satisfy and discharge (or cause
its Subsidiaries to pay, satisfy and discharge) in accordance with their terms
any and all Additional ▇▇▇▇▇▇ Liabilities.
(b) Simultaneously with the actions referred to in Section 2.01(a)(ii),
Telecom, in partial consideration for the transfer of the Additional Telecom
Assets, shall assume and on a timely basis pay, satisfy and discharge (or cause
its Subsidiaries to pay, satisfy and discharge) in accordance with their terms
any and all Additional Telecom Liabilities.
(c) Simultaneously with the actions referred to in Section 2.01(a)(iii),
Delco, in partial consideration for the transfer of the Additional Delco Assets,
shall assume and on a timely basis pay, satisfy and discharge (or cause its
Subsidiaries to pay, satisfy and discharge) in accordance with their terms, any
and all Additional Delco Liabilities.
(d) ▇▇▇▇▇▇ hereby retains or assumes, as the case may be, and no other
party hereto shall assume or have any liability with respect to, the ▇▇▇▇▇▇
Liabilities. Telecom
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hereby retains or assumes, as the case may be, and no other party hereto shall
have any liability with respect to, the Telecom Liabilities. Delco hereby
retains or assumes, as the case may be, and no other party hereto shall have any
liability with respect to, the Delco Liabilities.
Section 2.03. Employee Matters. Notwithstanding anything to the contrary
contained in this Agreement:
(a) the rights and obligations of the parties with respect to (i) Employee
Benefit Plans for the benefit of employees and former employees (and their
beneficiaries) of ▇▇▇▇▇▇ and its Subsidiaries and (ii) all Contracts relating to
medical, dental and other services entered into by ▇▇▇▇▇▇ and existing for the
benefit of ▇▇▇▇▇▇ and its Subsidiaries and their employees, are subject to the
provisions of Article 6; and
(b) the rights and obligations of GM and Delco with respect to the Employee
Benefit Plans for the benefit of employees and former employees (and their
beneficiaries) of Delco shall be governed by separate agreements between Delco
and GM.
Section 2.04. Methods of Transfer and Assumption. The parties hereto
agree that (i) any Transfer shall be effected by delivery by the Transferor to
the Transferee of (A) with respect to those Assets which are evidenced by
capital stock certificates or similar instruments, certificates duly endorsed in
blank or accompanied by stock powers or other instruments of assignment executed
in blank, (B) with respect to any real property interest and/or any improvements
thereon, a grant deed or the equivalent thereof in accordance with local
practice, and (C) with respect to all other Assets, such good and sufficient
instruments of contribution, assignment, conveyance, transfer and delivery, in
form and substance reasonably satisfactory to the appropriate Transferor and
Transferee, as shall be necessary to vest in such Transferee, all of the
Transferor's right, title and interest in and to any such Assets, (ii) the
assumption of the Liabilities contemplated pursuant to Section 2.02 hereof shall
be effected by delivery by the party assuming such Liability to the party which
is the obligor under such Liability, of such good and sufficient instruments of
assumption, in form and substance reasonably satisfactory to such two parties,
as shall be necessary for the assumption of such Liabilities. Each party hereto
also agrees to deliver to each other party hereto such other documents,
instruments, certificates and agreements as may be reasonably requested by any
such other party hereto in connection with the transactions contemplated hereby
and to take such further action as may be reasonably necessary to carry out the
provisions hereof, including without limitation, appropriate transfer
instruments if a ▇▇▇▇▇▇ Asset, Telecom Asset or Delco Asset is inadvertently
transferred to the incorrect Transferee. Notwithstanding any provision to the
contrary contained in this Agreement, in the event and
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to the extent that there is any conflict between the provisions of this
Agreement and the provisions of any of the instruments of transfer or assumption
referred to in this Section 2.04, the provisions of this Agreement shall prevail
and govern. To the extent that any transfers contemplated hereby are not
consummated prior to the Effective Time, the parties hereto covenant and agree
to take all actions reasonably necessary or appropriate to complete such
transfers promptly following the Effective Time.
In addition to the foregoing, each Transferor also agrees to deliver
to each applicable Transferee (at such Transferee's sole expense) all tangible
property included in the Transferred Assets that is reasonably requested by any
such Transferee in connection with the transactions contemplated hereby.
Section 2.05. Nonassignable Contracts. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any Contract or Asset if an assignment or attempted assignment of the
same without the consent of another Person would constitute a breach thereof or
in any way impair the rights of a party thereunder. If any such consent is not
obtained or if an attempted assignment would be ineffective or would impair such
party's rights under any such Contract or Asset so that the party entitled to
the benefits of such purported transfer (the "Intended Transferee") would not
receive all such rights, then (x) the party purporting to make such transfer
(the "Intended Transferor") shall use commercially reasonable efforts to provide
or cause to be provided to the Intended Transferee, to the extent permitted by
law, the benefits of any such Contract or Asset and the Intended Transferor
shall promptly pay or cause to be paid to the Intended Transferee when received
all moneys received by the Intended Transferor with respect to any such Contract
or Asset and (y) in consideration thereof the Intended Transferee shall pay,
perform and discharge on behalf of the Intended Transferor all of the Intended
Transferor's Liabilities thereunder in a timely manner and in accordance with
the terms thereof. In addition, the Intended Transferor shall take such other
actions as may reasonably be requested by the Intended Transferee in order to
place the Intended Transferee, insofar as reasonably possible, in the same
position as if such Contract or Asset had been transferred as contemplated
hereby and so all the benefits and burdens relating thereto, including
possession, use, risk of loss, potential for gain and dominion, control and
command, shall inure to the Intended Transferee. If and when such consents and
approvals are obtained, the transfer of the applicable Contract or Asset shall
be effected in accordance with the terms of this Agreement.
Section 2.06. Other Agreements. (a) The parties hereto are simultaneously
entering into agreements embodying certain relationships between the Defense
Business, the Telecommunications and Space Business and the Automotive
Electronics Business after the
16
Effective Time. These agreements concern the operation of HRL, Income Taxes,
Intellectual Property, real estate, information technology, supply arrangements,
transition services, certain Government Contract matters, corporate purchasing,
certain separation issues between ▇▇▇▇▇▇ and GM, HE Microwave LLC and employee
matters (the "Definitive Agreements").
(b) The parties hereto agree to take all action as may be necessary in
order to eliminate (whether through repayment, forgiveness or otherwise) as of
the Spin-Off Merger Time all intercompany balances between ▇▇▇▇▇▇ or its
Subsidiaries, on the one hand, and HEC or any of its other Subsidiaries, on the
other hand (in both cases determined after giving effect to the HEC
Reorganization, but without giving effect to the merger of HEC into GM).
ARTICLE 3
Indemnification
Section 3.01. Indemnification by ▇▇▇▇▇▇. ▇▇▇▇▇▇ shall indemnify, defend
and hold harmless GM, HEC, Telecom, Delco and each of their respective
Subsidiaries (determined after giving effect to the HEC Reorganization) and
their respective successors-in-interest and each of their respective past and
present Representatives against any losses, claims, damages, liabilities or
actions, arising, whether prior to or following the Transfer, out of or in
connection with the ▇▇▇▇▇▇ Liabilities (including in connection with any breach
after the Spin-Off Merger Time by ▇▇▇▇▇▇ or any of its Subsidiaries of any terms
of the Transaction Agreements), the ▇▇▇▇▇▇ Assets or the Defense Business, and
▇▇▇▇▇▇ shall reimburse such entity, each such Subsidiary, each such successor-
in-interest and each such Representative for any legal or any other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action.
Section 3.02. Indemnification by Telecom. Telecom shall indemnify, defend
and hold harmless GM, HEC, ▇▇▇▇▇▇, Delco and each of their respective
Subsidiaries (determined after giving effect to the HEC Reorganization) and
their respective successors-in-interest, including with respect to ▇▇▇▇▇▇, the
Surviving Corporation, and each of their respective past and present
Representatives against any losses, claims, damages, liabilities or actions,
arising, whether prior to or following the Transfer, out of or in connection
with the Telecom Liabilities, the Telecom Assets, the Telecommunications and
Space Business or a violation of the representations and warranties set forth in
Section 2.01(e) hereof and, with respect to GM and its related parties, the
merger of HEC with and into GM (other than any
17
such losses, claims, damages, liabilities or actions resulting from such merger
that primarily relate to the Automotive Electronics Business), and Telecom shall
reimburse such entity, each such Subsidiary, each such successor-in-interest and
each such Representative for any legal or any other expenses reasonably incurred
by any of them in connection with investigating or defending any such loss,
claim, damage, liability or action. Such indemnification with respect to ▇▇▇▇▇▇
shall include any amounts paid by ▇▇▇▇▇▇ pursuant to Section 5.1(h) of the
Merger Agreement in respect of Telecom Liabilities.
Section 3.03. Indemnification by Delco. Delco shall indemnify, defend and
hold harmless GM, HEC, ▇▇▇▇▇▇, Telecom and each of their respective Subsidiaries
(determined after giving effect to the HEC Reorganization) and their respective
successors-in-interest, including with respect to ▇▇▇▇▇▇, the Surviving
Corporation, and each of their respective past and present Representatives
against any losses, claims, damages, liabilities or actions, arising, whether
prior to or following the Transfer, out of or in connection with the Delco
Liabilities, the Delco Assets or the Automotive Electronics Business and with
respect to GM and its related parties, the merger of HEC with and into GM, to
the extent such losses, claims, damages, liabilities or actions primarily relate
to the Automotive Electronics Business, and Delco shall reimburse such entity,
each such Subsidiary, each such successor-in-interest and each such
Representative for any legal or any other expenses reasonably incurred by any of
them in connection with investigating or defending any such loss, claim, damage,
liability or action. Such indemnification with respect to ▇▇▇▇▇▇ shall include
any amounts paid by ▇▇▇▇▇▇ pursuant to Section 5.1(h) of the Merger Agreement in
respect of Delco Liabilities.
Section 3.04. Indemnification Procedures. (a) If any Indemnitee receives
notice of the assertion of any Third-Party Claim with respect to which an
Indemnifying Party is obligated under this Agreement to provide indemnification,
such Indemnitee shall give such Indemnifying Party notice thereof (together with
a copy of such Third-Party Claim, process or other legal pleading) promptly
after becoming aware of such Third-Party Claim; provided, however, that the
failure of any Indemnitee to give notice as provided in this Section 3.04 shall
not relieve any Indemnifying Party of its obligations under this Section 3.04,
except to the extent that such Indemnifying Party is actually prejudiced by such
failure to give notice. Such notice shall describe such Third-Party Claim in
reasonable detail.
(b) An Indemnifying Party, at such Indemnifying Party's own expense
and through counsel chosen by such Indemnifying Party (which counsel shall be
reasonably acceptable to the Indemnitee), may elect to defend any Third-Party
Claim. If an Indemnifying Party elects to defend a Third-Party Claim, then,
within ten Business Days after receiving notice of such Third-Party Claim (or
sooner, if the nature of such Third Party
18
claim so requires), such Indemnifying Party shall notify the Indemnitee of its
intent to do so, and such Indemnitee shall cooperate in the defense of such
Third-Party Claim. Such Indemnifying Party shall pay such Indemnitee's
reasonable out-of-pocket expenses incurred in connection with such cooperation.
Such Indemnifying Party shall keep the Indemnitee reasonably informed as to the
status of the defense of such Third Party Claim. After notice from an
Indemnifying Party to an Indemnitee of its election to assume the defense of a
Third-Party Claim, such Indemnifying Party shall not be liable to such
Indemnitee under this Section 3.04 for any legal or other expenses subsequently
incurred by such Indemnitee in connection with the defense thereof other than
those expenses referred to in the preceding sentence; provided, however, that
such Indemnitee shall have the right to employ one law firm as counsel, together
with a separate local law firm in each applicable jurisdiction ("Separate
Counsel"), to represent such Indemnitee in any action or group of related
actions (which firm or firms shall be reasonably acceptable to the Indemnifying
Party) if, in such Indemnitee's reasonable judgment at any time, either a
conflict of interest between such Indemnitee and such Indemnifying Party exists
in respect of such claim, or there may be defenses available to such Indemnitee
which are different from or in addition to those available to such Indemnifying
Party and the representation of both parties by the same counsel would be
inappropriate, and in that event (i) the reasonable fees and expenses of such
Separate Counsel shall be paid by such Indemnifying Party (it being understood,
however, that the Indemnifying Party shall not be liable for the expenses of
more than one Separate Counsel (excluding local counsel) with respect to any
Third-Party Claim (even if against multiple Indemnitees)) and (ii) each of such
Indemnifying Party and such Indemnitee shall have the right to conduct its own
defense in respect of such claim. If an Indemnifying Party elects not to defend
against a Third Party Claim, or fails to notify an Indemnitee of its election as
provided in this Section 3.04 within the period of ten Business Days described
above, the Indemnitee may defend, compromise, and settle such Third Party Claim
and shall be entitled to indemnification hereunder (to the extent permitted
hereunder); provided, however, that no such Indemnitee may compromise or settle
any such Third-Party claim without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, the Indemnifying Party shall not, without the
prior written consent of the Indemnitee, (i) settle or compromise any Third-
Party Claim or consent to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to the
Indemnitee of a written release from all liability in respect of such Third-
Party Claim or (ii) settle or compromise any Third-Party Claim in any manner
that would be reasonably likely to have a material adverse effect on the
Indemnitee.
(c) Notwithstanding the provisions of Section 3.04(b), ▇▇▇▇▇▇, on the
one hand, and GM, Telecom and/or Delco, on the other hand, shall jointly control
the defense
19
of, and cooperate with each other with respect to defending, any Third-Party
Claim with respect to which ▇▇▇▇▇▇, on the one hand, and GM, Telecom and/or
Delco, on the other hand, are claiming rights to indemnification under Sections
3.01, 3.02 or 3.03. If either ▇▇▇▇▇▇, on the one hand, or GM, Telecom and/or
Delco, on the other hand, fails to defend jointly any such Third-Party Claim,
the other party or parties shall solely defend such Third-Party Claim and the
party or parties failing to defend jointly shall use all commercially reasonable
efforts to cooperate with the other party or parties in its or their defense of
such Third Party Claim; provided, however, that no party may compromise or
settle any such Third-Party Claim without the prior written consent of the other
appropriate party or parties, which consent shall not be unreasonably withheld
or delayed. All costs and expenses of any party in connection with, and during
the course of, the joint control of the defense of any such Third-Party Claim
shall be initially paid by the party that incurs such costs and expenses. Such
costs and expenses shall be reallocated and reimbursed in accordance with the
respective indemnification obligations of the parties at the conclusion of the
defense of such Third-Party Claim.
Section 3.05. Certain Limitations. (a) The amount of any indemnifiable
losses or other liability for which indemnification is provided under this
Agreement shall be net of any amounts actually recovered by the Indemnitee from
third parties (including, without limitation, amounts actually recovered under
insurance policies) with respect to such indemnifiable losses or other
liability. Any Indemnifying Party hereunder shall be subrogated to the rights
of the Indemnitee upon payment in full of the amount of the relevant
indemnifiable loss. An insurer who would otherwise be obligated to pay any
claim shall not be relieved of the responsibility with respect thereto or,
solely by virtue of the indemnifi cation provision hereof, have any subrogation
rights with respect thereto. If any Indemnitee recovers an amount from a third
party in respect of an indemnifiable loss for which indemnification is provided
in this Agreement after the full amount of such indemnifiable loss has been paid
by an Indemnifying Party or after an Indemnifying Party has made a partial
payment of such indemnifiable loss and the amount received from the third party
exceeds the remaining unpaid balance of such indemnifiable loss, then the
Indemnitee shall promptly remit to the Indemnifying Party the excess (if any) of
(A) the sum of the amount theretofore paid by such Indemnifying Party in respect
of such indemnifiable loss plus the amount received from the third party in
respect thereof, less (B) the full amount of such indemnifiable loss or other
liability.
(b) The amount of any loss or other liability for which indemnification is
provided under this Agreement shall be (i) increased to take account of any net
Tax cost incurred by the Indemnitee arising from the receipt or accrual of an
indemnification payment hereunder (grossed up for such increase) and (ii)
reduced to take account of any net Tax benefit
20
realized by the Indemnitee arising from incurring or paying such loss or other
liability. In computing the amount of any such Tax cost or Tax benefit, the
Indemnitee shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the receipt or
accrual of any indemnification payment hereunder or incurring or paying any
indemnified loss. Any indemnification payment hereunder shall initially be made
without regard to this Section 3.05(b) and shall be increased or reduced to
reflect any such net Tax cost (including gross-up) or net Tax benefit only after
the Indemnitee has actually realized such cost or benefit. For purposes of this
Agreement, an Indemnitee shall be deemed to have "actually realized" a net Tax
cost or a net Tax benefit to the extent that, and at such time as, the amount of
Taxes payable by such Indemnitee is increased above or reduced below, as the
case may be, the amount of Taxes that such Indemnitee would be required to pay
but for the receipt or accrual of the indemnification payment or the incurrence
or payment of such Loss, as the case may be. The amount of any increase or
reduction hereunder shall be adjusted to reflect any Final Determination with
respect to the Indemnitee's liability for Taxes, and payments between such
indemnified parties to reflect such adjustment shall be made if necessary.
(c) Any indemnification payment made under this Agreement shall be
characterized for Tax purposes as if such payment were made immediately prior to
the Spin-Off Merger Time.
Section 3.06. Exclusivity of Tax Indemnification. Notwithstanding
anything in this Agreement to the contrary, (i) the terms of the Tax Sharing
Agreement shall govern the rights and obligations among the parties with respect
to indemnification relating to Income Tax and (ii) the terms of the ▇▇▇▇▇▇ Spin-
Off Separation Agreement shall govern the rights and obligations of the parties
thereto with respect to indemnification relating to the matters covered thereby.
ARTICLE 4
Access to Information
Section 4.01. Restrictions on Disclosure of Information. (a) Without
limiting its obligations under any other agreement between or among the parties
hereto and/or any of their respective Affiliates relating to confidentiality,
each of the parties hereto agrees that it shall not, and shall not permit any of
its Affiliates or Representatives to, disclose any Confidential Information to
any Person, other than to such Affiliates or Representatives on a
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need-to-know basis in connection with the purpose for which the Confidential
Information was originally disclosed. Notwithstanding the foregoing, each of
the parties hereto and its respective Affiliates and Representatives may
disclose such Confidential Information, and such Information shall no longer be
deemed Confidential Information, to the extent that such party can demonstrate
that such Confidential Information is or was (i) available to such party outside
the context of the Prior Relationship on a nonconfidential basis prior to its
disclosure by the other party, (ii) in the public domain other than by the
breach of this Agreement or by breach of any other agreement between or among
the parties hereto and/or any of their respective Affiliates relating to
confidentiality, or (iii) lawfully acquired outside the context of the Prior
Relationship on a nonconfidential basis or independently developed by, or on
behalf of, such party by Persons who do not have access to, or descriptions of,
any such Confidential Information.
(b) Policies and Procedures. Each of the parties hereto shall
maintain, and shall cause their respective Affiliates to maintain, policies and
procedures, and develop such further policies and procedures as shall from time
to time become necessary or appropriate, to ensure compliance with this Section
4.01.
Section 4.02. Legally Required Disclosure of Confidential Information. If
any of the parties to this Agreement or any of their respective Affiliates or
Representatives becomes legally required to disclose any Confidential
Information, such disclosing party shall promptly notify the party owning the
Confidential Information (the "Owning Party") and shall use all commercially
reasonable efforts to cooperate with the Owning Party so that the Owning Party
may seek a protective order or other appropriate remedy and/or waive compliance
with this Section 4.02. All expenses incurred by the disclosing party in
seeking a protective order or other remedy shall reasonably be borne by the
Owning Party. If such protective order or other remedy is not obtained, or if
the Owning Party waives compliance with this Section 4.02, the disclosing party
or its Affiliate or Representative, as applicable, shall (a) disclose only that
portion of the Confidential Information which its legal counsel advises it is
compelled to disclose or else stand liable for contempt or suffer other similar
significant corporate censure or penalty, (b) use all commercially reasonable
efforts to obtain reliable assurance requested by the Owning Party that
confidential treatment will be accorded such Confidential Information, and (c)
promptly provide the Owning Party with a copy of the Confidential Information so
disclosed, in the same form and format so disclosed, together with a description
of all Persons to whom such Confidential Information was disclosed.
Section 4.03. Access to Information. Until the ten-year anniversary of
the Spin-Off Merger Time, each of the parties hereto shall cooperate with and
afford, and shall cause their respective Affiliates and Representatives to
cooperate with and afford, to the
22
other party reasonable access upon reasonable advance written request to all
information (other than information protected from disclosure by the attorney
client privilege or work product doctrine) created prior to the Spin-Off Merger
Time within such party's (or its Affiliates or Representatives') possession.
Access to the requested information shall be provided so long as it relates to
the requesting party's (the "Requestor") business, assets or liabilities, and
access is reasonably required by the Requestor as a result of the parties' Prior
Relationship for purposes of auditing, accounting, claims or litigation (except
for claims or litigation between the parties hereto), employee benefits,
regulatory or tax purposes or fulfilling disclosure or reporting obligations
including, without limitation, Information reasonably necessary for the
preparation of reports required by or filed under the Securities Exchange Act of
1934, as amended, with respect to any period entirely or partially prior to the
Spin-Off Merger Time.
Access as used in this paragraph shall mean the obligation of a party in
possession of Information (the "Possessor") requested by the Requestor to exert
its reasonable best efforts to locate all requested Information that is owned
and possessed by Possessor, its Affiliates or Representatives. The Possessor,
at its own expense, shall conduct a diligent search designed to identify all
requested Information and shall collect all such Information for inspection by
the Requestor during normal business hours at the Possessor's place of business.
Subject to confidentiality and/or security provisions as the Possessor may
reasonably deem necessary, the Requestor may have all requested Information
duplicated at Requestor's expense. Alternatively, the Possessor may choose to
deliver, at its own expense, all requested Information to the Requestor in its
original form. If so, the Possessor shall notify the Requestor in writing at
the time of delivery if such Information is to be returned to the Possessor. In
such case, the Requestor shall return such Information when no longer needed to
the Possessor at the Possessor's expense.
In connection with providing Information pursuant to this Section 4.03,
each of the parties hereto shall upon the request of the other party make
available its respective employees (and those of their respective Affiliates and
Representatives) to the extent that they are reasonably necessary to discuss and
explain all requested Information with and to the requesting party.
During the ten-year period described above, the parties shall maintain
Information in their possession at the Spin-Off Merger Time in accordance with
their respective corporate records retention policies; provided, however that
prior to disposing of any Information in accordance with such policies, the
parties hereto shall provide written notice to the other party of its intent to
dispose of such Information and shall provide such other party the opportunity
to take ownership and possession of such Information (at such other party's sole
23
expense) within 90 days after such notice is delivered. If such other party
does not confirm its intention in writing to take ownership and possession of
such Information within such 90-day period, the party who possesses the
Information may proceed with the disposition of such Information. Written
notice of intent to dispose of Information shall include a description of the
Information in detail sufficient to allow the other party to reasonably assess
its potential need to retain such Information. At a minimum, the description
shall include the organization that generated or received the Information, the
type of Information, the contract number or program name to which the
Information pertains (if applicable), and the dates of the Information.
Section 4.04. Production of Witnesses. Until the six-year anniversary
of the Spin-Off Merger Time, each of the parties hereto shall use all
commercially reasonable efforts, and shall cause each of their respective
Affiliates to use all commercially reasonable efforts, to make available to each
other, upon written request, its directors, officers, employees and other
Representatives as witnesses to the extent that any such Person may reasonably
be required (giving consideration to the business demands upon such Persons) in
connection with any legal, administrative or other proceedings in which the
requesting party may from time to time be involved; provided, however, that with
respect to any legal or administrative proceedings relating to the tax liability
of any of the parties hereto or any of their respective Affiliates, each of the
parties hereto shall, and shall cause each of their respective Affiliates to,
make their directors, officers, employees and other Representatives available as
witnesses until such time as the statute of limitations for all tax years prior
to and including the year in which the Merger is consummated have expired.
Section 4.05. Reimbursement. Each party to this Agreement providing
access, information or witnesses to another party pursuant to Sections 4.03 or
4.04 shall be entitled to receive from the recipient, upon the presentation of
invoices therefor, payment for all reasonable out-of-pocket costs and expenses
(excluding allocated compensation, salary and overhead expense) as may be
reasonably incurred in providing such information or witnesses.
ARTICLE 5
Insurance Matters
Section 5.01. Cooperation in Insurance Matters. Prior to the Spin-Off
Merger Time, GM, ▇▇▇▇▇▇ and Telecom have maintained insurance programs which
provide certain coverages for a number of entities, including GM, ▇▇▇▇▇▇ and
Telecom, their respective Affiliates, their officers and directors, and other
insured parties, including HRL (and its predecessor) and HE Microwave LLC. From
and after the Spin-Off Merger Time, except as
24
provided herein, ▇▇▇▇▇▇ shall be responsible for obtaining and maintaining its
own insurance program separately from the GM and/or Telecom insurance programs
(which may continue to be maintained by GM and/or Telecom, as the case may be).
Notwithstanding the foregoing, (1) GM and Telecom, upon the request of ▇▇▇▇▇▇,
shall use commercially reasonable efforts to assist ▇▇▇▇▇▇ in the transition to
its own separate insurance coverage from and after the Spin-Off Merger Time, and
shall provide ▇▇▇▇▇▇ with any information that is in the possession of either GM
or Telecom, as the case may be, and is reasonably available and necessary to
either obtain such insurance coverage or to assist ▇▇▇▇▇▇ in preventing gaps in
its insurance coverages, (2) each of GM, ▇▇▇▇▇▇, Telecom and Delco on the
request of the other shall cooperate with and use commercially reasonable
efforts to assist the other in the collection of proceeds from insurance claims
made under any insurance policy for the benefit of any insured party, and (3)
neither ▇▇▇▇▇▇, ▇▇, Telecom or Delco, nor any of their Affiliates, shall take
any action that would jeopardize or otherwise interfere with any party's ability
to collect any proceeds payable pursuant to any insurance policy.
Section 5.02. Claims. With respect to any Liabilities, including but not
limited to any ▇▇▇▇▇▇ Liabilities or other claims or damages in respect of
▇▇▇▇▇▇ Assets arising out of events, acts, or omissions first occurring prior to
the Spin-Off Merger Time, for which ▇▇▇▇▇▇ or any of its Affiliates, officers,
directors, employees or other covered parties may be entitled to assert a claim
for recovery under any policy of insurance maintained prior to the Spin-Off
Merger Time (an "Insurance Policy") in accordance with the terms thereof, GM or
Telecom, as the case may be, at the request of ▇▇▇▇▇▇, ▇▇▇▇ use their
commercially reasonable efforts in asserting, or assisting ▇▇▇▇▇▇ in asserting,
such claims under any such Insurance Policy; similarly, with respect to any
Telecom Liability or Delco Liability or other claims or damages in respect of
any Telecom Asset or Delco Asset arising out of events first occurring prior to
the Spin-Off Merger Time which may be covered under an Insurance Policy, in
accordance with the terms thereof, ▇▇▇▇▇▇, at the request of Telecom or Delco,
will use commercially reasonable efforts in asserting, or assisting Telecom or
Delco in asserting, claims under any such Insurance Policy with respect to any
Telecom Liability or Delco Liability or damages in respect of any Telecom Asset
or Delco Asset; provided that in all cases (1) all reasonable and necessary
costs and expenses incurred in connection with the foregoing by such asserting
or assisting party shall be promptly paid or reimbursed by the requesting party,
(2) to the full extent permitted by contract and law, the control and
administration of such Insurance Policies, including with respect to any
proposed buyouts of such Insurance Policies, shall remain with GM and Telecom,
as the case may be (except that any such action taken by GM or Telecom shall
treat fairly all insured parties and their respective claims and shall not
unduly favor one insured party over another), (3) 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
25
obligations of GM, Telecom or any of their Subsidiaries in respect thereof, (4)
▇▇▇▇▇▇, its Subsidiaries, directors and officers shall promptly pay or reimburse
GM or Telecom, as the case may be, for costs and expenses incurred after the
Spin-Off Merger Time which are associated with such ▇▇▇▇▇▇' claims (whether such
claim was made before or is made after the Spin-Off Merger Time), including but
not limited to retrospective premium adjustments, (5) with respect to claims-
made Insurance Policies, such claims must have been incurred and reported prior
to the Spin-Off Merger Time, (6) ▇▇▇▇▇▇ shall report to GM any claims with
respect to Insurance Policies maintained by GM, and (7) ▇▇▇▇▇▇ shall be
responsible for providing all notices to the appropriate insurance company under
Telecom's Insurance Policies with respect to any claims made by ▇▇▇▇▇▇
thereunder (with a copy of each such notice to insurance companies to be
provided to Telecom), and provided further, that for any claims exceeding
$250,000, ▇▇▇▇▇▇ shall first consult with Telecom prior to the submission of
such notices. Except for environmental claims and litigation referenced below,
GM and Telecom and their respective insurers shall have the right to control the
investigation, defense and settlement of all claims, but no such settlement may
be effected without ▇▇▇▇▇▇' consent (which consent shall not be unreasonably
withheld or delayed) unless such settlement (i) includes a complete release of
▇▇▇▇▇▇ or its Subsidiaries, as the case may be, and (ii) does not require ▇▇▇▇▇▇
or such Subsidiaries to make payments thereunder except for applicable
deductibles, self-insured retentions, retrospective premium adjustments and the
like not in excess of $50,000 per claim. As to environmental claims and/or
litigation relating to ▇▇▇▇▇▇ Liabilities or ▇▇▇▇▇▇ Assets, ▇▇▇▇▇▇ shall have
the right to control the investigation, defense and site-specific settlement
thereof, but with respect to any party entitled to benefits under such Insurance
Policies covering such claims, no such settlement may be effected without such
party's consent, which consent shall not be unreasonably withheld or delayed,
unless such settlement (a) includes a complete release of such party, (b) does
not require such party to make any payment thereunder and (c) does not prejudice
the insurance coverage of GM or Telecom or their respective Subsidiaries at
other sites. Telecom agrees that it will, upon ▇▇▇▇▇▇' request, (i) provide to
▇▇▇▇▇▇ summaries of any Insurance Policy in its possession purchased during the
three-year period prior to the Spin-Off Merger Time and (ii) make available to
▇▇▇▇▇▇ copies of all Insurance Policies in its possession related to the Defense
Business. The Employee Matters Agreement sets forth certain cost allocations
among the parties hereto with respect to the Insurance Policies.
Each of Telecom and GM and its respective Subsidiaries, directors and
officers shall promptly pay or reimburse GM or Telecom, as the case may be, for
such party's cost and expenses incurred after the Spin-Off Merger Time which are
associated with Telecom's or GM's claims for which Telecom or GM or any of their
respective Affiliates, officers, directors, employees or other covered parties
may be entitled to assert a claim for recovery under any Insurance Policies of
the other in accordance with the terms thereof (whether such
26
claim was made before or is made after the Spin-Off Merger Time), including but
not limited to retrospective premium adjustments. GM agrees that it will, upon
Telecom's request, (i) provide to Telecom summaries of any Insurance Policy in
its possession purchased during the three-year period prior to the Spin-Off
Merger Time and (ii) make available to Telecom copies of all Insurance Policies
in its possession related to the Telecommunications and Space Business.
ARTICLE 6
Employees
Section 6.01. Employee Matters. Effective as of the Spin-Off Merger Time,
(a) those Defense Employees who are employed by HEC or any of its Subsidiaries,
other than ▇▇▇▇▇▇ and ▇▇▇▇▇▇' Subsidiaries, immediately prior to the Spin-Off
Merger Time shall become employed by ▇▇▇▇▇▇ and its Subsidiaries, (b) those
Satellite Employees who are employed by ▇▇▇▇▇▇ or its Subsidiaries immediately
prior to the Spin-Off Merger Time shall become employed by Telecom or its
Subsidiaries and (c) those Automotive Electronics Employees who are employed by
HEC or its Subsidiaries immediately prior to the Spin-Off Merger Time shall
become employed by Delco or its Subsidiaries.
ARTICLE 7
Post-Closing Adjustment
Section 7.01. Closing Date Balance Sheet. (a) Within 60 days after the
Effective Time, Telecom shall deliver to its auditors a balance sheet of ▇▇▇▇▇▇
and its Subsidiaries as of immediately prior to the Effective Time after giving
effect to the transfer of all Assets, assumptions of liabilities and
consummation of all other transactions contemplated by Article 2 hereof in a
format comparable to Schedule 7.01 (the "Closing Date Balance Sheet"), prepared
in accordance with GAAP and using (to the extent consistent with GAAP) the same
accounting methods, policies, practices and procedures with consistent
classifications, judgments, and valuation and estimation methodologies as used
in the preparation of the ▇▇▇▇▇▇ Interim Balance Sheet, including those
adjustments required by this Section 7.01(a) and Section 7.01(b). The Closing
Date Balance Sheet shall be accompanied by an additional schedule of information
prepared by Telecom (the "Closing Date Statement of Purchase Price Adjustment
Amounts"), the first column of which shall be a copy of the Closing Date Balance
Sheet, and the remaining columns of which shall detail
27
the amounts to be eliminated from the Closing Date Balance Sheet to arrive at
amounts to be included in the determination of the purchase price adjustment
calculation (the "Purchase Price Adjustment Amounts") in the manner set forth in
Schedule 7.01 which schedule sets forth the comparable presentation utilizing
the ▇▇▇▇▇▇ Interim Balance Sheet instead of the Closing Date Balance Sheet;
provided, however, that the calculations contemplated by the Closing Date
Statement of Purchase Price Adjustment Amounts shall eliminate from the Closing
Date Balance Sheet the following: the amounts set forth on the Closing Date
Balance Sheet in the line items entitled "Cash," "Investments," "Goodwill, Net,"
"Pension Asset," "Pension and OPEB-Current Portion," "OPEB," "Pension," "Current
Deferred Taxes," "Current Portion of Long Term Debt" (only to the extent the
same constitutes "Debt" as defined in Section 5.2(c) of the Merger Agreement),
"Short Term Borrowings" (only to the extent the same constitutes "Debt" as
defined in Section 5.2(c) of the Merger Agreement), "Intercompany Accounts"
(which item does not include accounts between GM and its Subsidiaries other than
HEC and its Subsidiaries, on the one hand, and ▇▇▇▇▇▇ and its Subsidiaries, on
the other hand, which are not treated as intercompany accounts), "Income Taxes
Payable" (except to the extent of non-United States tax liabilities included
therein), "Long Term Debt" (only to the extent the same constitutes "Debt" as
defined in Section 5.2(c) of the Merger Agreement), "Noncurrent Deferred Taxes,"
"Stockholder's Equity" and "Other Liabilities" (to the extent included in the
accounts listed on the Detail of Other Liabilities in Schedule 7.01), calculated
in accordance with GAAP consistently applied. The Closing Date Statement of
Purchase Price Adjustment Amounts shall state the net difference between the sum
of the asset values listed as Purchase Price Adjustment Amounts and the sum of
the liability values listed as Purchase Price Adjustment Amounts, in each case
calculated and set forth as required hereby (such net difference being the
"Closing Date Final Amount"). The Closing Date Final Amount shall be used to
determine the post closing adjustment contemplated by Section 7.02. The Closing
Date Balance Sheet and the Closing Date Statement of Purchase Price Adjustment
Amounts are referred to collectively as the "Closing Date Financial
Information."
(b) Telecom shall engage its auditors (the "Telecom Auditors") at its
expense to, within 60 days after its delivery of the Closing Date Financial
Information under Section 7.01(a) above: (i) read this Agreement and all other
documents and instruments deemed necessary by the Telecom Auditors to discharge
their obligations required under this Agreement; (ii) audit the Closing Date
Balance Sheet in accordance with generally accepted auditing standards; and
(iii) deliver to Surviving Corporation and Telecom a draft report in the form
set forth in Exhibit B hereto (the final version of which is referred to as the
"Auditors' Report") together with the Closing Date Balance Sheet to which such
draft Auditors' Report relates. The Auditors' Report shall report, without
qualification or other limitation arising out of the scope of the audit, that
the Closing Date Balance Sheet presents
28
fairly the financial position of the Defense Business as of immediately prior to
the Effective Time in conformity with GAAP.
The notes to the Closing Date Financial Information will state the
following:
(1) the Closing Date Balance Sheet does not give effect to any purchase
accounting (or similar related) adjustments, or any other accounting effects,
arising from the transactions provided for in the Merger Agreement or any of the
other Transaction Agreements; and
(2) the Closing Date Balance Sheet does take into account all liabilities,
accruals and other adjustments on or prior to the Effective Time which would be
appropriate to a balance sheet being prepared at a financial year-end including
(without limitation) all liabilities and accruals relating to the Defense
Business which may previously have been recorded at the corporate office or
other organizational level, including (without limitation) all liabilities (A)
for such charges as rentals, maintenance services, property taxes, general and
product liability insurance (including self-insurance accruals), (B) arising
from the employment of the employees of the Defense Business (including
obligations for accrued bonuses, workers' compensation obligations (including
claims filed and obligations incurred but not reported), medical, dental,
severance, profit sharing, vacation time, paid time off, other insurance and
business expenses) and (C) all other ▇▇▇▇▇▇ Liabilities required to be included
on the Closing Date Balance Sheet in accordance with GAAP; provided that all
intercompany balances between ▇▇▇▇▇▇ or its Subsidiaries , on the one hand, and
HEC or its other Subsidiaries, on the other hand (in both cases determined after
giving effect to the ▇▇▇▇▇▇ Reorganization, but without giving effect to the
merger of HEC into GM), will be eliminated prior to the Effective Time (whether
through repayment, forgiveness or otherwise) and will not appear as assets or
liabilities on the Closing Date Balance Sheet.
The Closing Date Financial Information shall be prepared in accordance with
GAAP consistently applied and use the same techniques and methodologies in
determining estimates and judgments for evaluating the status of Contracts and
Government Contract rate reserves as were used in preparing the ▇▇▇▇▇▇ Interim
Statements. Reserves shall be provided, as appropriate, for all Contracts, with
total estimated costs at completion (including all other overhead costs
allocated to such Contracts in accordance with GAAP in a manner consistent with
the methodology used in preparing the ▇▇▇▇▇▇ Interim Balance Sheet) in excess of
the firm negotiated ceiling price based on the most recently completed Contract
cost estimates. Adjustments shall have been made to reflect all other Contracts
on the individual contract percentage of completion method in accordance with
GAAP (using ▇▇▇▇▇▇' historical methodology for determining the percentage of
completion), based upon effort performed through the Effective Time, and
utilizing the most recently completed Contract cost
29
estimates. When calculating the earnings associated with the most recently
completed Contract cost estimates, adjustments shall have been provided for the
difference between booked Government Contract overhead rates and the rates that
are expected to be negotiated with the government for all years open for audit
by the government.
Telecom covenants to make all such changes to the Closing Date Balance
Sheet as shall be necessary to enable the Telecom Auditors to deliver the draft
report in substantially the form set forth in Exhibit B and to deliver the
Auditors' Report.
(c) Within 30 Business Days after the receipt of the Closing Date Financial
Information and the draft Auditors' Report, the Surviving Corporation shall
notify Telecom of any objections thereto and Telecom and the Surviving
Corporation shall attempt in good faith to reach an agreement as to the matter
or matters in dispute. If Telecom and the Surviving Corporation reach agreement
on all matters in dispute, the terms of Section 7.02 hereof shall determine the
amount and timing of any payments due to Telecom or the Surviving Corporation.
If Telecom and the Surviving Corporation, notwithstanding such good faith
effort, shall have failed to resolve the matter or matters in dispute within 20
Business Days after the Surviving Corporation advises Telecom of its objections,
then Telecom promptly will direct the Telecom Auditors to issue the Auditors'
Report and the related financial statements and Telecom will prepare the Closing
Date Statement of Purchase Price Adjustment Amounts and deliver copies thereof
to the Surviving Corporation and the Surviving Corporation's representative.
Any remaining disputed matters shall be finally and conclusively determined by
an independent auditing firm of recognized national standing (the "Arbiter")
selected by Telecom and Surviving Corporation, which shall not be the regular
auditing firm of Telecom or Surviving Corporation. Promptly, but not later than
30 Business Days after its acceptance of its appointment, the Arbiter shall
determine (based solely on presentations by the Surviving Corporation and
Telecom to the Arbiter and not by independent review) only those issues in
dispute and shall render a report as to the disputes and containing a revised
Closing Date Statement of Purchase Price Adjustment Amounts, which report shall
be conclusive and binding upon the parties hereto. In resolving any disputed
item, the Arbiter may not assign a value to any particular item greater than the
greatest value for such item claimed by either party or less than the smallest
value for such item claimed by either party, in each case, as presented to the
Arbiter. For purposes of the Arbiter's determination of the Closing Date Final
Amount, the amounts to be included shall be the appropriate amounts from the
Closing Date Statement of Purchase Price Adjustment Amounts for items that are
not in dispute, and the amounts determined by the Arbiter as to items that were
submitted for resolution by the Arbiter.
30
(d) For purposes of complying with the terms set forth herein, each party
shall cooperate with and make available to the other party and its
Representatives, all information and access to its personnel, shall permit
access to its facilities and shall permit the other party and its
Representatives to make copies of all information, records, data and use
commercially reasonable efforts to make available auditors' working papers
(including, without limitation, all historic audit workpapers), in each case as
may be reasonably required in connection with the analysis of the ▇▇▇▇▇▇ Interim
Balance Sheet, the draft Auditors' Report, the Auditors' Report, the Closing
Date Financial Information and the resolution of any dispute(s) thereunder.
Without limiting the generality of the foregoing, Telecom shall cause the
Telecom Auditors to make available at its office to the Surviving Corporation
and its representative immediately after delivery of the draft Auditors' Report
pursuant to Section 7.01(b) above the workpapers therefor (which may be copied
by the Surviving Corporation if it so elects).
Section 7.02. Post-Closing Adjustment. As soon as the Auditors' Report
has been delivered pursuant to the provisions set forth in Section 7.01 hereof
and either all disagreements with respect to the Closing Date Final Amount have
been resolved directly by Telecom and Surviving Corporation or the report of the
Arbiter has been issued: (a) in the event that the Closing Date Final Amount
shall exceed $2,210,017,000 (as adjusted pursuant to the last paragraph of
Section 7.02, the "Target") by $50 million or more, then the Surviving
Corporation shall pay to Telecom, in cash, the amount in excess of $50 million
by which the Closing Date Final Amount exceeds the Target, plus interest thereon
from the Effective Time to the date of such payment thereof at the per annum
rate equal to the rate announced by Citibank, N.A. in the City of New York as
its base rate as in effect on the Effective Time; or (b) in the event that the
Target shall exceed the Closing Date Final Amount by an amount greater than $50
million, Telecom shall pay to the Surviving Corporation, in cash, the amount in
excess of $50 million by which the Target exceeds the Closing Date Final Amount,
plus interest thereon from the Effective Time to the date of such payment
thereof at the per annum rate equal to the rate announced by Citibank, N.A. in
the City of New York as its base rate as in effect on the Effective Time. Any
such cash payment pursuant to this Section 7.02 shall be made within 10 Business
Days following the later of (i) the receipt by the parties of the Auditors'
Report and (ii) if there shall exist a dispute between the parties as to the
amount of Closing Date Final Amount, the date of receipt of the Arbiter's
report, by bank wire transfer of immediately available funds to an account
designated by Telecom or Surviving Corporation, as the case may be. In addition
to the foregoing, any cash reflected in the Closing Date Balance Sheet shall be
transferred to Telecom at the time of the cash payment referred to in this
Section 7.02, or if no such payment is made, as soon as practicable after
completion of the Closing Date Balance Sheet, together with interest thereon as
calculated above. If Raytheon determines that an error has
31
been made in the calculation of cash reflected on the Closing Date Balance Sheet
and provides to Telecom written support from its auditors for such
determination, the resolution of the exact amount of cash to be reflected on the
Closing Date Balance Sheet and therefore transferred to Telecom pursuant to the
preceding sentence shall be made by the Arbiter, who also shall adjust the
Closing Date Final Amount to reflect the impact (if any) of such determination
on the Closing Date Statement of Purchase Price Adjustment Amounts. Any
payments under this Section 7.02 shall be characterized for tax purposes as if
such payment were made immediately prior to the Spin-Off Merger Time.
Anything to the contrary contained herein notwithstanding, if ▇▇▇▇▇▇ or any
of its Affiliates, at any time from the date of the Merger Agreement through the
Effective Time, sells or transfers any significant amount of Assets pursuant to
Section 5.1(b) of the Merger Agreement for consideration which is (i) in excess
of the net amount at which such Assets were reflected on the ▇▇▇▇▇▇ Interim
Balance Sheet, the Target shall be increased by the amount of such excess or
(ii) less than the net amount at which such Assets were reflected on the ▇▇▇▇▇▇
Interim Balance Sheet, the Target shall be decreased by the amount of such
deficiency.
ARTICLE 8
Conditions
Section 8.01. Conditions to the Obligations of the Parties. The
obligations of each party hereto to consummate the transactions contemplated
hereby shall be subject to the condition that each of the conditions to the
closing of the Merger set forth in Article 6 (other than Section 6.1(f)) of the
Merger Agreement shall have been satisfied or waived by the party for whose
benefit such condition exists.
32
ARTICLE 9
Miscellaneous
Section 9.01. Entire Agreement. This Agreement and the other Transaction
Agreements constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof. The parties hereto acknowledge and agree that the form of this
Agreement (including the exhibits thereto) attached as an exhibit to the GM
Implementation Agreement has no force and effect and is superseded in its
entirety by the terms hereof.
Section 9.02. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware regardless of the
laws that might otherwise govern under principles of conflicts of laws
applicable thereto.
Section 9.03. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.04. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by telecopy with answer back, by express or overnight mail delivered
by a nationally recognized air courier (delivery charges prepaid), or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties as follows:
if to GM
c/o General Motors Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇▇:
c/o Raytheon Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
34
if to Telecom:
c/▇ ▇▇▇▇▇▇ Electronics Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to Delco:
Delco Electronics Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇/▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Any notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by telecopy or by air courier shall
be deemed effective on the first Business Day at the place at which such notice
or communication is received following the day on which such notice or
communication was sent. Any notice or communication sent by registered or
certified mail shall be deemed effective on the fifth Business Day at the place
from which such notice or communication was mailed following the day on which
such notice or communication was mailed.
Section 9.05. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement, except for Article 3 (which is intended to be for the benefit of the
Persons provided for therein and may be enforced by such Persons).
Section 9.06. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
Section 9.07. Binding Effect; Assignment. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective legal
representatives and successors including the Surviving Corporation as successor
to ▇▇▇▇▇▇ upon the consummation of the Merger. This Agreement may not be
assigned by any party hereto. The Schedules and Exhibits attached hereto are an
integral part of this Agreement and are incorporated into this Agreement and
made a part hereof.
Section 9.08. Dispute Resolution. Except with respect to the matters
described in Article 7, which shall be resolved in accordance with the terms
thereof, and except as
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otherwise set forth in the Definitive Agreements, resolution of any and all
disputes arising from or in connection with this Agreement, whether based on
contract, tort, or otherwise (collectively, "Disputes"), shall be exclusively
governed by and settled in accordance with the provisions of this Section 9.08.
The parties hereto shall use all commercially reasonable efforts to settle all
Disputes without resorting to mediation, arbitration or otherwise. If any
Dispute remains unsettled, a party hereto may commence proceedings hereunder by
delivering a written notice from a Senior Vice President or comparable executive
officer of such party (the "Demand") to the other parties providing reasonable
description of the Dispute to the others and expressly requesting mediation
hereunder. The parties hereby agree to submit all Disputes to non-binding
mediation before a mediator reasonably acceptable to all parties involved in
such Dispute. If, after such mediation, the parties subject to such mediation
disagree regarding the mediator's recommendation, such Dispute shall be
submitted to arbitration under the terms hereof, which arbitration shall be
final, conclusive and binding upon the parties, their successors and assigns.
The arbitration shall be conducted in Los Angeles, California by three
arbitrators acting by majority vote (the "Panel") selected by agreement of the
parties not later than ten (10) days after delivery of the Demand or, failing
such agreement, appointed pursuant to the commercial arbitration rules of the
American Arbitration Association, as amended from time to time (the "AAA
Rules"). If an arbitrator so selected becomes unable to serve, his or her
successors shall be similarly selected or appointed. The arbitration shall be
conducted pursuant to the Federal Arbitration Act and such procedures as the
parties subject to such arbitration (each, a "Party") may agree, or, in the
absence of or failing such agreement, pursuant to the AAA Rules.
Notwithstanding the foregoing: (i) each Party shall have the right to audit the
books and records of the other Party that are reasonably related to the Dispute;
(ii) each Party shall provide to the other, reasonably in advance of any
hearing, copies of all documents which a Party intends to present in such
hearing; and (iii) each Party shall be allowed to conduct reasonable discovery
through written requests for information, document requests, requests for
stipulation of fact and depositions, the nature and extent of which discovery
shall be determined by the Parties; provided that if the Parties cannot agree on
the terms of such discovery, the nature and extent thereof shall be determined
by the Panel which shall take into account the needs of the Parties and the
desirability of making discovery expeditious and cost effective. The award
shall be in writing and shall specify the factual and legal basis for the award.
The Panel shall apportion all costs and expenses of arbitration, including the
Panel's fees and expenses and fees and expenses of experts, between the
prevailing and non-prevailing Party as the Panel deems fair and reasonable. The
parties hereto agree that monetary damages may be inadequate and that any party
by whom this Agreement is enforce able shall be entitled to seek specific
performance of the arbitrators' decision from a court of competent jurisdiction,
in addition to any other appropriate relief or remedy. Notwithstanding the
foregoing, in no event may the Panel award consequential, special,
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exemplary or punitive damages. Any arbitration award shall be binding and
enforceable against the parties hereto and judgment may be entered thereon in
any court of competent jurisdiction.
Section 9.09. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the fullest
extent possible.
Section 9.10. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
Section 9.11. Amendment. No change or amendment will be made to this
Agreement or the Ancillary Separation Agreements except by an instrument in
writing signed on behalf of each of the parties hereto.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.
GENERAL MOTORS CORPORATION
By:
----------------------------
Name:
Title:
HE HOLDINGS, INC.
By:
----------------------------
Name:
Title:
DELCO ELECTRONICS CORPORATION
By:
----------------------------
Name:
Title:
▇▇▇▇▇▇ NETWORK SYSTEMS, INC.
By:
----------------------------
Name:
Title:
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