EXHIBIT 2
PURCHASE AGREEMENT
DATED AS OF JANUARY 22, 1998
BY AND BETWEEN
LOCKHEED ▇▇▇▇▇▇ CORPORATION
AND
BENCHMARK ELECTRONICS, INC.
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions.......................................................................... 1
ARTICLE II
PURCHASE AND SALE
Section 2.01 Purchase and Sale of CE Shares....................................................... 1
Section 2.02 Purchase Price and Payment for CE Shares............................................. 1
Section 2.03 Adjustment of Purchase Price......................................................... 2
Section 2.04 Closing.............................................................................. 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Section 3.01 Representations and Warranties of the Seller......................................... 4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 4.01 Representations and Warranties of the Purchaser...................................... 4
ARTICLE V
COVENANTS OF THE SELLER
Section 5.01 Conduct of Business.................................................................. 4
Section 5.02 Access to Information................................................................ 5
Section 5.03 Notices of Certain Events............................................................ 6
Section 5.04 Non-Solicitation of Offers........................................................... 7
Section 5.05 Non-Solicitation of Employees........................................................ 7
Section 5.06 Change of Lockbox Accounts........................................................... 7
Section 5.07 Access to Information; Cooperation After Closing..................................... 7
Section 5.08 Maintenance of Insurance Policies.................................................... 8
Section 5.09 Certain Indebtedness and Intercompany Accounts....................................... 8
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ARTICLE VI
COVENANTS OF THE PURCHASER
Section 6.01 Confidentiality...................................................................... 8
Section 6.02 Provision and Preservation of and Access to Certain Information;
Cooperation.......................................................................... 9
Section 6.03 Insurance; Financial Support Arrangements............................................ 9
Section 6.04 Non-Solicitation of Employees........................................................ 11
Section 6.05 Use of Certain Trademarks, etc....................................................... 12
Section 6.06 Intercompany Accounts................................................................ 12
ARTICLE VII
COVENANTS OF THE PARTIES
Section 7.01 Further Assurances................................................................... 12
Section 7.02 Certain Filings; Consents............................................................ 12
Section 7.03 Public Announcements................................................................. 13
Section 7.04 HSR Act.............................................................................. 13
Section 7.05 Environmental Insurance Claims....................................................... 13
ARTICLE VIII
TAX MATTERS
Section 8.01 Tax Matters.......................................................................... 14
ARTICLE IX
EMPLOYMENT AND EMPLOYEE BENEFIT MATTERS
Section 9.01 Employment and Employee Benefit Matters.............................................. 14
ARTICLE X
CONDITIONS TO CLOSING
Section 10.01 Conditions to the Obligations of Each Party.......................................... 14
Section 10.02 Conditions to Obligation of the Purchaser............................................ 15
Section 10.03 Conditions to Obligation of the Seller............................................... 16
Section 10.04 Updating Disclosure Schedules........................................................ 16
Section 10.05 Effect of Waiver..................................................................... 16
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ARTICLE XI
SURVIVAL; INDEMNIFICATION
Section 11.01 Survival............................................................................. 16
Section 11.02 Indemnification...................................................................... 18
Section 11.03 Procedures........................................................................... 19
Section 11.04 Limitations.......................................................................... 21
ARTICLE XII
TERMINATION
Section 12.01 Termination.......................................................................... 22
Section 12.02 Effect of Termination................................................................ 23
ARTICLE XIII
MISCELLANEOUS
Section 13.01 Notices.............................................................................. 24
Section 13.02 Amendments; Waivers.................................................................. 25
Section 13.03 Expenses............................................................................. 25
Section 13.04 Successors and Assigns............................................................... 25
Section 13.05 Disclosure........................................................................... 25
Section 13.06 Construction......................................................................... 26
Section 13.07 Entire Agreement..................................................................... 26
Section 13.08 Governing Law........................................................................ 26
Section 13.09 Counterparts; Effectiveness.......................................................... 27
Section 13.10 Jurisdiction......................................................................... 27
Section 13.11 Captions............................................................................. 27
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EXHIBITS
EXHIBIT A Definitions
EXHIBIT B Representations and Warranties of the Seller
EXHIBIT C Representations and Warranties of the Purchaser
EXHIBIT D Tax Matters
EXHIBIT E Employment and Employee Benefit Matters
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ATTACHMENTS
Attachment I Opening Statement
Attachment II Additional Matters Relating to the Calculation of
the Proposed Final Net Working Capital Amount and
the Final Net Working Capital Amount
Attachment III Form of Supply Agreement
Attachment IV Form of Interim Services Agreement
Attachment V Form of CE Facility Lease
Attachment VI Form of ▇▇▇▇▇▇▇ Sublease
Attachment VII Consents and Approvals Required Prior to Closing
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PURCHASE AGREEMENT
This Purchase Agreement (together with the Exhibits, Schedules and
Attachments hereto, this "Agreement") is entered into as of the 22nd day of
January 1998, by and among Lockheed ▇▇▇▇▇▇ Corporation, a Maryland corporation
(the "Seller"), and Benchmark Electronics, Inc., a Texas corporation (the
"Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller owns all of the issued and outstanding shares of
capital stock of Lockheed Commercial Electronics Company, a Delaware corporation
("CE"), and owns the CE Facility;
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, in accordance with the terms and conditions
of this Agreement, all of the issued and outstanding shares of capital stock of
CE; and
WHEREAS, in accordance with the terms and conditions of this Agreement,
the Seller and the Purchaser desire to enter into certain other agreements and
arrangements contemplated by this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. Defined terms used in this Agreement shall
have the meanings specified in this Agreement or in Exhibit A.
ARTICLE II
PURCHASE AND SALE
Section 2.01 PURCHASE AND SALE OF CE SHARES. Upon the terms and subject
to the conditions set forth in this Agreement, the parties agree that on the
Closing Date, among other things, the Seller will sell, transfer, assign and
deliver to the Purchaser all of the CE Shares, and the Purchaser will purchase
from the Seller all of the CE Shares.
Section 2.02 PURCHASE PRICE AND PAYMENT FOR CE SHARES. The
consideration to be paid by the Purchaser to the Seller in exchange for the
sale, transfer, assignment and delivery to the Purchaser of the CE Shares shall
be $70,000,000 (the "Purchase Price"), which shall be paid by the
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Purchaser to the Seller at the Closing by wire transfer of immediately available
funds. The Purchase Price shall be subject to adjustment as provided in Section
2.03.
Section 2.03 ADJUSTMENT OF PURCHASE PRICE.
(a) Promptly following the Closing Date, but in no event later than 60
days after the Closing Date, the Seller shall prepare and submit to the
Purchaser a statement of net working capital setting forth, in reasonable
detail, the Seller's calculation of the Net Working Capital of the Business as
of the close of business on the day prior to the Closing Date (the "Proposed
Final Net Working Capital Amount"). In the event the Purchaser disputes the
correctness of the Proposed Final Net Working Capital Amount, the Purchaser
shall notify the Seller of its objections within 30 days after receipt of the
Seller's calculation of the Proposed Final Net Working Capital Amount and shall
set forth, in writing and reasonable detail, the reasons for the Purchaser's
objections. If the Purchaser fails to deliver a notice of objections within such
time, the Purchaser shall be deemed to have accepted the Seller's calculation.
The Seller and the Purchaser shall endeavor in good faith to resolve any
disputed items within 20 days after the Seller's receipt of the Purchaser's
notice of objections. If they are unable to do so, the Purchaser and the Seller
shall select a nationally known independent accounting firm (other than Ernst &
Young LLP or KPMG Peat Marwick LLP to resolve the dispute (in a manner
consistent with Section 2.03(b) and with any items not in dispute), and the
determination of such firm in respect of the correctness of each item remaining
in dispute shall be conclusive and binding on the Seller and the Purchaser. The
Net Working Capital as of the close of business on the day prior to the Closing
Date as finally determined pursuant to this Section 2.03(a) (whether by failure
of the Purchaser to deliver notice of objection, by agreement of the Seller and
the Purchaser or by determination of the accountants selected as set forth
above) is referred to herein as the "Final Net Working Capital Amount."
(b) The Proposed Final Net Working Capital Amount and the Final Net
Working Capital Amount shall be determined on a basis consistent with the manner
in which the Opening Statement was prepared as disclosed in the notes to the
Opening Statement or as otherwise set forth in Attachment II.
(c) If the Final Net Working Capital Amount is greater than
$27,000,000, the difference between the Final Net Working Capital Amount and
$26,000,000 shall be paid to the Seller by the Purchaser with interest thereon
from the Closing Date to the date of payment at a rate per annum equal to the
per annum interest rate announced from time to time by ▇▇▇▇▇▇ Guaranty Trust
Company of New York as its prime rate in effect. If the Final Net Working
Capital Amount is less than $25,000,000, the difference between $26,000,000 and
the Final Net Working Capital Amount shall be paid to the Purchaser by the
Seller with interest thereon from the Closing Date to the date of payment at a
rate per annum equal to the per annum interest rate announced from time to time
by ▇▇▇▇▇▇ Guaranty Trust Company of New York as its prime rate in effect. If the
Final Net Working Capital Amount is equal to or within $1,000,000 of
$26,000,000, there shall be no adjustment to the Purchase Price. Such payment
shall be made in immediately available funds not later than two Business Days
after the determination of the Final Net Working Capital Amount by wire transfer
to a bank account designated by the party entitled to receive the payment. The
Purchase Price, as
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finally adjusted pursuant to this Section 2.3 (but without regard to any
interest paid by the Seller or the Purchaser pursuant to this Section 2.3(c)),
is referred to herein as the "Adjusted Purchase Price."
(d) The fees and expenses, if any, of the accounting firm selected to
resolve any disputes between the Seller and the Purchaser in accordance with
Section 2.03(a) shall be paid one-half by the Seller and one-half by the
Purchaser.
Section 2.04 CLOSING. The closing (the "Closing") of the Contemplated
Transactions shall take place at the offices of Miles & Stockbridge, a
Professional Corporation, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on
February 17, 1998; provided, however, that if all of the conditions to Closing
set forth in Article X have not been satisfied (or waived) as of that date and
if closing on that date therefore would be impractical, the Closing shall take
place on such other day as the parties to this Agreement may agree. The Closing
will occur at 9:00 a.m. on the Closing Date. At the Closing, among other things:
(i) the Purchaser shall pay and deliver to the Seller
$70,000,000 in immediately available funds by wire transfer to an
account designated by the Seller (which account shall be designated by
the Seller by written notice to the Purchaser at least two Business
Days prior to the Closing Date, or such shorter notice as the Purchaser
shall accept);
(ii) the Seller shall deliver to the Purchaser a
certificate or certificates representing all of the outstanding CE
Shares accompanied by a stock power or powers duly endorsed by the
Seller in blank;
(iii) the Seller and the Purchaser shall enter into a Supply
Agreement in the form of Attachment III;
(iv) the Seller and the Purchaser shall enter into an Interim
Services Agreement in the form of Attachment IV;
(v) the Seller and the Purchaser shall enter into (a) a lease
for the CE Facility (the "CE Facility Lease") in the form of Attachment
V, and (b) a sublease for that portion of the CE Facility currently
occupied by the Seller's ▇▇▇▇▇▇▇ business unit in the form of
Attachment VI (the "▇▇▇▇▇▇▇ Sublease"); and
(vi) the Seller and the Purchaser shall enter into any other
agreements reasonably necessary to give effect to the Contemplated
Transactions.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF THE SELLER
Section 3.01 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Purchaser as set forth in Exhibit B.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 4.01 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser represents and warrants to the Seller as set forth in Exhibit C.
ARTICLE V
COVENANTS OF THE SELLER
Section 5.01 CONDUCT OF BUSINESS. Except as contemplated by this
Agreement, from the date of this Agreement until the Closing Date, the Seller
shall cause CE to conduct the Business in the ordinary course consistent with
past practice and shall use reasonable commercial efforts to preserve in all
material respects the business of CE (except that CE may sell or otherwise
dispose of obsolete or discontinued Inventory, whether or not in the ordinary
course of business). Without limiting the generality of the foregoing, from the
date of this Agreement until the Closing Date, subject to any exceptions deemed
appropriate to ensure compliance with Applicable Laws and except as contemplated
by this Agreement or as consented to by the Purchaser in writing (which consent
shall not be unreasonably withheld), neither the Seller nor CE will:
(a) with respect to the Business acquire a material amount of assets
from any other Person other than (i) raw materials and Inventory in the ordinary
course of business or (ii) in connection with the transactions contemplated by
Section 5.09;
(b) sell, lease, license or otherwise dispose of a material amount of
CE's assets or the CE Facility (other than as contemplated by Section 5.09),
except (i) the sale or other disposition of finished products or obsolete or
discontinued Inventory in the ordinary course of business or (ii) for the sale,
lease, license or other disposition of obsolete Inventory, whether or not in the
ordinary course of business;
(c) amend its certificate of incorporation or by-laws in any respect;
(d) except (i) as required by law or regulation, Employee Plans, or
Benefit Arrangements, (ii) as is consistent with past practice, or (iii) as
contemplated by the Disclosure Schedule, enter into or amend in any material
respect any Employee Plan or Benefit Arrangement of CE;
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(e) cause or permit CE to merge or consolidate with any other business
entity;
(f) authorize for issuance, issue or sell any additional shares of the
capital stock of CE or any securities or obligations convertible into or
exchangeable for shares of the capital stock of CE or issue or grant any option,
warrant or other right to purchase any shares of the capital stock of CE;
(g) cause CE to incur long-term debt for borrowed money;
(h) agree or commit to do any of the things prohibited by the
foregoing; or
(i) take or agree or commit to take any action, or omit or agree or
commit to take any action, that would result in the failure of the condition to
the Purchaser's obligation to close set forth in Section 10.02(ii).
Section 5.02 ACCESS TO INFORMATION.
(a) Except as appropriate to ensure compliance with any Applicable Laws
(including, without limitation, any requirements with respect to security
clearances) and subject to any applicable privileges (including, without
limitation, the attorney-client privilege), from the date of this Agreement
until the Closing Date, the Seller will (a) give the Purchaser and its
Representatives reasonable access to the records of CE and the records of the
Seller relating to the Business during normal business hours and upon reasonable
prior notice, (b) furnish to the Purchaser and its Representatives such
financial and operating data and other information relating to the Business as
the Purchaser may reasonably request and (c) instruct the employees and
Representatives of the Seller and CE to cooperate with the Purchaser in its
investigation of the Business. Without limiting the generality of the foregoing,
subject to the limitations set forth in the first sentence of this Section 5.02,
(i) the Seller shall use reasonable commercial efforts to enable the Purchaser
and its Representatives to conduct, at the Purchaser's own expense, business and
financial reviews, investigations and studies as to the operation of the
Business, including any tax, operating or other efficiencies that may be
achieved and (ii) from the date of this Agreement to the Closing Date, the
Seller shall give the Purchaser and its Representatives access to information
relating to the Business of the type, and with the same level of detail, as in
the ordinary course of business is made available to the president or chief
financial officer of CE. Notwithstanding the foregoing, except with respect to
the records of CE after the Closing, the Purchaser shall not have access to
personnel records of the Seller or CE relating to individual performance or
evaluation records, medical histories or other information which in the Seller's
good faith opinion is sensitive or the disclosure of which could subject the
Seller to risk of liability. Except as otherwise contemplated by Section 10.04,
no investigation by the Purchaser or other information received by the Purchaser
shall operate as a waiver or otherwise affect any representation, warranty or
agreement given or made by the Seller hereunder.
(b) For a period of two years after the Closing, the Seller and its
Affiliates will hold, and will use reasonable commercial efforts to cause their
respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to hold, in confidence, unless compelled to
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disclose by judicial or administrative process or by other requirements of law,
all confidential documents and information concerning the Business, except to
the extent that such documents or information can be shown to have been (i) in
the public domain through no fault of the Seller or its Affiliates or (ii)
lawfully acquired by the Seller or its Affiliates (other than CE) from sources
other than those related to its prior ownership of the Business. Notwithstanding
the foregoing, the obligation of the Seller and its Affiliates to hold any such
information in confidence shall be satisfied if they exercise the same care with
respect to such information as they would take to preserve the confidentiality
of their own similar information.
Section 5.03 NOTICES OF CERTAIN EVENTS. The Seller shall, promptly
after obtaining knowledge of the following, notify the Purchaser of:
(a) any notice or other communication to the Seller or CE from any
Person alleging that the consent of such Person is required in connection with
the Contemplated Transactions;
(b) any notice or other communication to the Seller or CE from any
Governmental Authority in connection with the Contemplated Transactions;
(c) any actions, suits, claims, investigations or proceedings commenced
or, to its knowledge threatened against, relating to or involving or otherwise
affecting the Seller, CE or the Business that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Section
B.11 of Exhibit B that relate to the consummation of the Contemplated
Transactions; and
(d) the damage or destruction by fire or other casualty of any material
asset of CE, or of the CE Facility or any part thereof, or in the event that any
material asset of CE, or of the CE Facility or any part thereof, becomes the
subject of any proceeding or, to the knowledge of Seller, threatened proceeding
for the taking thereof or any part thereof or of any right relating thereto by
condemnation, eminent domain or other similar government action.
Section 5.04 NON-SOLICITATION OF OFFERS. Without the prior written
consent of the Purchaser, except as permitted by Section 5.01, from the date of
this Agreement to the earlier of the Closing Date or the termination of this
Agreement, the Seller shall not authorize or permit any of its Representatives
to, directly or indirectly, (i) solicit, initiate or take any action knowingly
to facilitate the submission of inquiries, proposals or offers from any Person
(other than the Purchaser) relating to any acquisition or purchase of all or
part of the Business (whether by asset or stock sale, business combination
transaction or otherwise), or (ii) enter into or participate in any discussions
or negotiations regarding any of the foregoing, or furnish to any other Person
any information with respect to the Business (other than in the ordinary course
of business) or otherwise cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any other Person to do or
seek any of the foregoing.
Section 5.05 NON-SOLICITATION OF EMPLOYEES. From and after the date of
this Agreement until the first anniversary of the Closing Date, except for those
employees identified in writing by
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the Seller prior to the date of this Agreement, the Seller and its Subsidiaries
shall not, without prior written approval of the Purchaser, directly or
indirectly solicit any individual who is an employee of CE on the Closing Date
to terminate his or her relationship with CE; provided, however, that the
foregoing shall not apply to individuals hired as a result of the use of an
independent employment agency (so long as the agency was not directed to solicit
a particular individual or a class of individuals that could only be satisfied
by employees of CE on the Closing Date) or as a result of the use of a general
solicitation (such as an advertisement) not specifically directed to employees
of CE.
Section 5.06 CHANGE OF LOCKBOX ACCOUNTS. Immediately after the Closing,
the Seller shall take such steps as the Purchaser may reasonably request to
cause the Purchaser to be substituted as the sole party having control over any
lockbox or similar bank account maintained exclusively by CE to which customers
of CE directly make payments in respect of the business of CE or to direct the
bank at which any such lockbox or similar account is maintained to transfer any
payments made thereto to an account established by the Purchaser.
Section 5.07 ACCESS TO INFORMATION; COOPERATION AFTER CLOSING. Except
as appropriate to ensure compliance with any Applicable Laws (including, without
limitation, any requirements with respect to security clearances) and subject to
any applicable privileges (including, without limitation, the attorney-client
privilege), on and after the Closing Date the Seller shall (i) at the Seller's
expense, afford the Purchaser and its Representatives reasonable access upon
reasonable prior notice during normal business hours, to all employees, offices,
properties, agreements, records, books and affairs of the Seller and its
Subsidiaries to the extent relating to the business of CE, (ii) at the Seller's
expense, provide copies of such information concerning the business of CE as the
Purchaser may reasonably request for any proper purpose, including, without
limitation, in connection with the preparation of any financial statements or in
connection with any judicial, quasi judicial, administrative or arbitration
proceeding and (iii) at the Purchaser's and CE's expense, cooperate fully with
the Purchaser for any proper purpose, including, without limitation, in the
defense or pursuit of any claim or action that relates to occurrences involving
the business of CE prior to the Closing Date.
Section 5.08 MAINTENANCE OF INSURANCE POLICIES. The Seller shall not
have any obligation to maintain the effectiveness of any insurance policy
relating to CE or its business after the Closing Date or to make any monetary
payment in connection with any such policy.
Section 5.09 CERTAIN INDEBTEDNESS AND INTERCOMPANY ACCOUNTS. On or
before the Closing Date, the Seller shall cause the Seller and each of its
Subsidiaries to contribute to the equity of CE all net intercompany amounts due
between the Seller and its Subsidiaries (other than CE) on the one hand, and CE
on the other hand (including but not limited to amounts relating to intercompany
accounts receivable and promissory notes, but excluding amounts relating to
intercompany accounts that are of a type included in the Opening Statement as
"Accounts Receivable--Affiliated Companies" or "Accounts Payable--Affiliated
Companies"), and shall cause such intercompany amounts to be eliminated or
cancelled on or prior to the Closing Date.
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ARTICLE VI
COVENANTS OF THE PURCHASER
Section 6.01 CONFIDENTIALITY. The Purchaser agrees that all information
provided or otherwise made available in connection with the Contemplated
Transactions to the Purchaser or its Representatives will be treated as if
provided under the Purchaser Confidentiality Agreement and that, notwithstanding
any provision of the Purchaser Confidentiality Agreement to the contrary, all
the provisions of the Purchaser Confidentiality Agreement shall survive the
execution of this Agreement.
Section 6.02 PROVISION AND PRESERVATION OF AND ACCESS TO CERTAIN
INFORMATION; COOPERATION.
(a) Prior to the Closing Date, the Purchaser shall provide to the
Seller promptly upon its receipt thereof written notice that the Purchaser has
knowledge of facts or circumstances that may constitute a breach of any of
Seller's representations, warranties, covenants or agreements under this
Agreement.
(b) On and after the Closing Date, the Purchaser shall preserve all
books and records of the business of CE for a period of six years commencing on
the Closing Date (or in the case of books and records relating to tax or
employee benefit matters, until such time as the Seller notifies the Purchaser
in writing that all statutes of limitations relating to tax periods to which
such records relate have expired), and thereafter, shall not destroy or dispose
of such records without giving notice to the Seller of such pending disposal and
offering the Seller the right to copy or take possession of such records. From
and after the Closing Date and subject to any applicable privileges (including,
without limitation, the attorney-client privilege), the Purchaser shall (i) at
the Purchaser's expense, afford the Seller and its Subsidiaries together with
their Representatives, reasonable access upon reasonable prior notice during
normal business hours, to all employees, offices, properties, agreements,
records, books and affairs of the Purchaser and CE, (ii) at the Purchaser's
expense, provide copies of such information concerning the business of CE as the
Seller or its Subsidiaries may reasonably request for any proper purpose,
including, without limitation, in connection with the preparation of any tax
returns or financial statements or in connection with any judicial, quasi
judicial, administrative, tax, audit or arbitration proceeding and in connection
with the preparation of any financial statements or reports in accordance with
past practices and procedures and (iii) at the Seller's expense, cooperate fully
with the Seller and its Subsidiaries for any proper purpose, including, without
limitation, the defense of or pursuit of any claim or action that relates to the
Seller or any of its Subsidiaries.
Section 6.03 INSURANCE; FINANCIAL SUPPORT ARRANGEMENTS.
(a) The Purchaser acknowledges and agrees that as of the Closing Date
neither the Purchaser, CE, any property owned or leased by the Purchaser or CE,
nor any of the directors, officers, employees or agents of the Purchaser or CE
will be insured under any insurance policies
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maintained by the Seller or any of its Affiliates, except (i) in the case of
certain policies, to the extent that a claim has been reported as of the Closing
Date and (ii) in the case of a policy that is an occurrence policy, to the
extent the accident, event or occurrence that results in an insurable loss
occurs prior to the Closing Date and has been, is or will be reported or noticed
to the respective carrier in accordance with the requirements of the policy.
From and after the Closing Date, neither the Seller nor any of its Affiliates
shall have any obligation of any kind to maintain any form of insurance covering
all or any part of CE or the assets, business or employees of CE.
(b) The Purchaser agrees to reimburse the Seller within 90 days of
receipt of an invoice, accompanied by a complete description of the event or
events on which the invoice is based and all documentation related thereto, for
the amount of any self insurance, and the amount of any retention, deductible,
retrospective premium, cash payment for reserves calculated or charged on an
incurred loss basis and similar items, including but not limited to associated
administrative expenses and allocated loss adjustment or similar out-of-pocket
expenses of third parties paid within three years of the Closing Date by the
Seller or any of its Affiliates to one or more of the companies insuring the
business of CE (collectively, "Insurance Liabilities") and which (i) under the
principles and practices with respect to such matters followed by CE and the
Seller prior to the Closing Date, as disclosed to the Purchaser in the
documentation submitted with the invoice, would have been allocated to CE by the
Seller, (ii) result from or arise under any and all current or former insurance
policies maintained by the Seller or any of its Affiliates with respect to the
activities of CE, and (iii) relate to or arise out of the business of CE prior
to the Closing Date; provided, that the Purchaser shall not be required to
reimburse the Seller for any Insurance Liabilities that relate to activities,
conduct or conditions with respect to which the Seller is responsible or liable
under the terms of this Agreement.
(c) The Purchaser agrees that, to the extent any of the insurers under
any of the insurance policies maintained by the Seller or any of its Affiliates,
in accordance with the terms of the insurance policies, requests or requires
collateral, deposits or other security to be provided with respect to claims
made against such insurance policies relating to or arising from the business of
CE, the Purchaser will provide the collateral, deposits or other security or,
upon request of the Seller, will replace any collateral, deposits or other
security provided by the Seller or any of its Affiliates.
(d) The Purchaser agrees that, not later than December 31, 1998, and in
a manner reasonably satisfactory to the Seller, the Purchaser will ensure that
the Seller and its Affiliates are released from all obligations of the Seller
and its Affiliates under all Financial Support Arrangements maintained by the
Seller or any of its Affiliates in connection with the Business of CE. A list of
all such Financial Support Arrangements in effect as of the date of this
Agreement is set forth in Schedule 6.03.
(e) The Seller will use reasonable commercial efforts to cause each
Financial Support Arrangement to remain in full force and effect in accordance
with its terms until the earliest of (i) the date (the "Release Date") on which
the Purchaser ensures that the Seller and its Affiliates are released from all
obligations of the Seller and its Affiliates under such Financial Support
Arrangement in accordance with Section 6.03(d), (ii) December 31, 1998 and (iii)
the date such
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Financial Support Arrangement terminates in accordance with its terms. After the
Closing Date and prior to the Release Date for any such Financial Support
Arrangement, the Seller will not waive any requirements of or agree to amend
such Financial Support Arrangement without the prior written consent of the
Purchaser.
(f) If, after the Closing Date, (i) any amounts are drawn on or paid
under any Financial Support Arrangement where the Seller or any of its
Affiliates is obligated to reimburse the Person making such payment or (ii) the
Seller or any of its Affiliates pays any amounts under, or any fees, costs or
expenses relating to, any Financial Support Arrangement, the Purchaser shall pay
the Seller such amounts promptly after receipt from the Seller of notice thereof
accompanied by written evidence of the underlying payment obligation.
(g) In the event that the Purchaser fails to ensure that the Seller and
its Affiliates are released from all obligations of the Seller and its
Affiliates under the Financial Support Arrangements not later than December 31,
1998, the Purchaser shall (i) promptly deposit with the Seller cash in an amount
equal to the aggregate principal or stated amount, as may be applicable, of the
Financial Support Arrangements not so released or (ii) subject to the prior
approval of the Seller, provide back-up letters of credit in form and substance
satisfactory to the Seller with respect to such Financial Support Arrangements.
Any cash deposited with the Seller in accordance with clause (i) shall be held
by the Seller in a segregated account and shall be used by the Seller solely to
satisfy its payment obligations in respect of such Financial Support
Arrangements, and the unused portion of any cash relating to a Financial Support
Arrangement shall be returned to the Purchaser promptly after the occurrence of
the Release Date with respect to, or any other termination of, the Financial
Support Arrangement.
Section 6.04 NON-SOLICITATION OF EMPLOYEES. From and after the date of
this Agreement until the first anniversary of the Closing Date, neither the
Purchaser nor CE shall, without prior written approval of the Seller, directly
or indirectly solicit any individual who is an employee of the Seller or any of
its Subsidiaries (other than CE) at any time on or after the date of this
Agreement to terminate his or her relationship with the Seller or any of its
Subsidiaries; provided, however, that the foregoing shall not apply to
individuals hired as a result of the use of an independent employment agency (so
long as the agency was not directed to solicit a particular individual or a
class of individuals that could only be satisfied by employees of the Seller or
any of its Subsidiaries (other than CE) on the Closing Date) or as a result of
the use of a general solicitation (such as an advertisement) not specifically
directed to employees of the Seller or any of its Subsidiaries.
Section 6.05 USE OF CERTAIN TRADEMARKS, ETC. The Purchaser acknowledges
and agrees that it is not obtaining any rights or licenses with respect to the
names "Lockheed ▇▇▇▇▇▇ Corporation," "Lockheed Corporation," "▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Corporation," "Loral Corporation," "▇▇▇▇▇▇▇" or any derivative thereof, or to
their logos or trade dress, or to any other Intellectual Property Rights not
owned by CE or licensed to CE. As soon as practicable following the Closing, the
Purchaser shall take all actions necessary to cause CE to change its corporate
name so as not to include the word "Lockheed." As soon as practicable following
the Closing, but no later than 90 days after the Closing Date, the Purchaser
shall remove and change signage, change and substitute promotional
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and advertising material in whatever medium, change stationery and packaging and
take all such other steps as may be required or appropriate to cease use of all
such Intellectual Property Rights not owned by CE. The Seller agrees that during
the 90-day period contemplated by the preceding sentence CE shall be authorized
to continue to use the words "Lockheed" and "Lockheed ▇▇▇▇▇▇" in connection with
the items referenced in such sentence, but only to the extent and for the
purposes for which such words are being used by CE on the date of this
Agreement.
Section 6.06 INTERCOMPANY ACCOUNTS. The Purchaser shall take, and shall
cause CE to take, all actions and to do, or cause to be done, all things
necessary, proper and appropriate to give effect to the contribution to the
equity of CE all net intercompany amounts contemplated to be contributed,
eliminated or cancelled on or prior to the Closing Date by Section 5.08.
ARTICLE VII
COVENANTS OF THE PARTIES
Section 7.01 FURTHER ASSURANCES. Subject to the terms and conditions of
this Agreement, each party shall use all reasonable commercial efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable under Applicable Laws to consummate the Contemplated
Transactions. The Seller and the Purchaser shall execute and deliver such other
documents, certificates, agreements and other writings and to take such other
actions as may be necessary or desirable in order to consummate or implement
expeditiously the Contemplated Transactions. Except as otherwise expressly set
forth in this Agreement, nothing in this Section 7.01 shall require the Seller
or the Purchaser to make any payments in order to obtain any consents or
approvals necessary or desirable in connection with the consummation of the
Contemplated Transactions.
Section 7.02 CERTAIN FILINGS; CONSENTS. The Seller and the Purchaser
shall cooperate with one another (i) in determining whether any action by or in
respect of, or filing with, any Governmental Authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material Contracts, in connection with the consummation of the
Contemplated Transactions and (ii) subject to the terms and conditions of this
Agreement, in taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers.
Section 7.03 PUBLIC ANNOUNCEMENTS. The Seller and the Purchaser shall
consult with each other before issuing any press release or making any public
statement with respect to this Agreement or the Contemplated Transactions and,
except as may be required by Applicable Law or any listing agreement with any
national or international securities exchange, will not issue any such press
release or make any such public statement prior to such consultation.
Notwithstanding the foregoing, no provision of this Agreement shall relieve the
Purchaser from any of its obligations under the Purchaser Confidentiality
Agreement or terminate any of the restrictions imposed by Section 6.01.
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Section 7.04 HSR ACT. The parties shall take all actions necessary or
appropriate to cause the prompt expiration or termination of any applicable
waiting period under the HSR Act in respect of the Contemplated Transactions,
including, without limitation, complying as promptly as practicable with any
requests for additional information.
Section 7.05 ENVIRONMENTAL INSURANCE CLAIMS. Notwith-standing any
provision to the contrary in this Agreement, this Section 7.05 shall constitute
the parties' agreement regarding the allocation of insurance proceeds with
respect to claims for liabilities that arise under or relate to Environmental
Laws that are comprised, in whole or in part, of Environmental Liabilities (the
"Environmental Insurance Claims"). The Purchaser acknowledges that the Seller
shall control the Environmental Insurance Claims and shall have the right to
compromise or settle any Environmental Insurance Claims; provided, however, that
without the prior written consent of the Purchaser, the Seller shall not have
the right to enter into, and the Purchaser and CE shall not be bound by, any
compromise or settlement of any Environmental Insurance Claim that (i) imposes
any liability, obligation or responsibility on CE or the Purchaser or (ii)
imposes any condition, restriction or limitation on the operation or conduct of
the business of CE or the Purchaser, or on CE's property or the CE Facility. The
Seller will act in good faith and with reasonable prudence to maximize recovery
with respect to the Environmental Insurance Claims and will allocate any
recovery received with respect to such Environmental Insurance Claims, first, to
the costs it incurred to collect such recovery, and second, to reimburse any
Governmental Authority, prime contractor or subcontractor pursuant to a contract
with the U.S. Government.
With respect to any recovery remaining (the "Remaining Recovery"):
(i) if the recovery applies to liabilities that are
liabilities of CE and to liabilities that are not liabilities of CE,
and the recovery was not designated as arising from specific
liabilities (e.g., a global settlement with an insurance carrier), the
Seller will pay the Purchaser an amount equal to the Remaining Recovery
multiplied by X multiplied by (one minus Y); where X equals the total
of the Environmental Insurance Claims (estimated in good faith and upon
a reasonable basis as of the date of recovery) under the applicable
insurance policies divided by the total environmental and other claims
by the Seller under said insurance policies; and Y equals the Seller's
past expenditures on said liabilities divided by the sum of (A) the
Seller's past expenditures on said liabilities and (B) the total
estimated expenditures to be made by the Seller or the Purchaser in
respect of said liabilities (estimated in good faith and upon a
reasonable basis as of the date of recovery), or
(ii) if the recovery was designated as arising from specific
liabilities of CE, the Seller will pay the Purchaser the Remaining
Recovery multiplied by (one minus Y).
To the extent that any Remaining Recovery is insufficient to satisfy any
Environmental Liabilities, the responsibility of the Seller, on the one hand,
and the Purchaser and CE, on the other hand, for such additional amounts shall
be governed by the other provisions of this Agreement, including, without
limitation, the proviso to the second sentence of this Section 7.05.
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ARTICLE VIII
TAX MATTERS
Section 8.01 TAX MATTERS. The parties agree as to tax matters as set
forth in Exhibit D.
ARTICLE IX
EMPLOYMENT AND EMPLOYEE BENEFIT MATTERS
Section 9.01 EMPLOYMENT AND EMPLOYEE BENEFIT MATTERS. The parties agree
as to employment and employee benefit matters as set forth in Exhibit E.
ARTICLE X
CONDITIONS TO CLOSING
Section 10.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of the Seller and the Purchaser to consummate the Closing are
subject to the satisfaction (or waiver) of the following conditions:
(i) Any applicable waiting period under the HSR Act relating
to the Contemplated Transactions shall have expired or been terminated;
(ii) No provision of any Applicable Law or regulation and no
judgment, injunction, order or decree shall prohibit the Closing, and
no action or proceeding shall be pending before any court, arbitrator
or governmental body, agency or official with respect to which counsel
reasonably satisfactory to the Seller and the Purchaser shall have
rendered a written opinion that there is a substantial likelihood of a
determination that would prohibit the Closing;
(iii) All actions by or in respect of or filings with any
Governmental Authority required to permit the consummation of the
Closing shall have been obtained;
(iv) The Seller and the Purchaser shall have executed and
delivered the Supply Agreement in the form attached as Attachment III
and the Interim Services Agreement in the form attached as Attachment
IV;
(v) The Seller shall have obtained the consents or approvals
contemplated by Attachment VII;
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(vi) The Seller and the Purchaser shall have entered into the
CE Facility Lease in the form attached as Attachment V and the ▇▇▇▇▇▇▇
Sublease in the form attached as Attachment VI; and
(vii) the Seller shall have delivered to the Purchaser a
certificate or certificates representing all of the outstanding CE
Shares accompanied by a stock power or powers duly endorsed by the
Seller in blank.
Section 10.02 CONDITIONS TO OBLIGATION OF THE PURCHASER. The
obligations of the Purchaser to consummate the Closing are subject to the
satisfaction (or waiver by the Purchaser) of the following further conditions:
(i) the Seller shall have performed in all material respects all of its
obligations under this Agreement required to be performed by it on or prior to
the Closing Date, (ii) the representations and warranties of the Seller
contained in this Agreement (except for representations and warranties that by
their terms speak only as of the date of this Agreement) shall be accurate at
and as of the Closing Date, as if made at and as of such date, except for any
inaccuracies which, individually or in the aggregate, have not had or may not
reasonably be expected to have, a Material Adverse Effect on CE and (iii) the
Purchaser shall have received a certificate signed by an officer of the Seller
to the foregoing effect.
Section 10.03 CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of
the Seller to consummate the Closing is subject to the satisfaction (or waiver
by the Seller) of the following further conditions: (i) the Purchaser shall have
performed in all material respects all of its obligations under this Agreement
required to be performed by it at or prior to the Closing Date, (ii) the
representations and warranties of the Purchaser contained in this Agreement
(except for representations and warranties that by their terms speak only as of
the date of this Agreement) shall be accurate at and as of the Closing Date, as
if made at and as of such date, except for such inaccuracies which, individually
or in the aggregate, have not had, and may not reasonably be expected to have, a
Material Adverse Effect on the Seller, and (iii) the Seller shall have received
a certificate signed by an officer of the Purchaser to the foregoing effect.
Section 10.04 UPDATING DISCLOSURE SCHEDULES. At any time prior to the
Closing the Seller shall be entitled to deliver to the Purchaser updates to or
substitutions of the Disclosure Schedules provided that such updates or
substitutions are clearly marked as such and are addressed to the Purchaser at
the address listed in Section 13.01. In the event that the Seller delivers
updated or substitute Disclosure Schedules on or after the third day before any
scheduled closing date, the Purchaser shall be entitled to extend the scheduled
closing date to the third day after it receives the updated or substitute
Disclosure Schedule, or if such day is not a Business Day, to the next Business
Day. The delivery by the Seller of updated or substitute Disclosure Schedules
shall not prejudice any rights of the Purchaser under this Agreement, including
but not limited to the right to claim that the representations and warranties of
the Seller, when made on the date of this Agreement, were untrue; provided,
however, that if the Purchaser decides not to assert any such claim and
consummates the Closing, the updated or substitute Disclosure Schedules shall
replace, in whole or in part as the case may be, the Disclosure Schedules
previously delivered hereunder for all purposes.
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Section 10.05 EFFECT OF WAIVER. Any waiver by the Purchaser of the
conditions specified in clause (ii) of Section 10.02 and any waiver by the
Seller of the conditions specified in clause (ii) of Section 10.03, if made
knowingly, shall also be deemed a waiver by such Person of any claim for Damages
as the result of any breaches of the representations referred to in such
clauses.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
Section 11.01 SURVIVAL.
(a) The covenants, agreements, representations and warranties of the
parties contained in this Agreement or in any certificate or other writing
delivered pursuant to this Agreement or in connection with this Agreement shall
survive the Closing, as follows:
(i) the representations and warranties in Sections ▇.▇▇, ▇.▇▇,
▇.▇▇, ▇.▇▇, ▇.▇▇ and B.14 shall survive indefinitely;
(ii) the representations and warranties in Section B.15 shall
not survive the Closing;
(iii) the representations and warranties in Exhibit B (other
than those Sections of Exhibit B referenced in the preceding clauses
(i) and (ii)) shall survive for a period of two years from the Closing
Date;
(iv) the representations and warranties in Exhibit D shall
survive until the expiration of the applicable statute of limitations;
(v) the representations and warranties in Sections ▇.▇▇, ▇.▇▇,
▇.▇▇, ▇.▇▇, ▇.▇▇ and C.08 shall survive indefinitely;
(vi) the representations and warranties in Exhibit C (other
than those Sections of Exhibit C referenced in the preceding clause
(v)) shall survive for a period of two years from the Closing Date; and
(vii) those covenants and agreements set forth in this
Agreement that, by their terms, are to have effect after the Closing
Date shall survive for the period contemplated by those covenants or
agreements, or if no period is expressly set forth, indefinitely.
The representations, warranties, covenants and agreements referenced in the
preceding clauses (i) and (iii) through (vii) are referred to herein as the
"Surviving Representations or Covenants." The Surviving Representations or
Covenants shall expire at the respective expiration dates stated above, except
for claims for any misrepresentation or breach of any Surviving Representation
or Covenant made in writing and received by the party against whom such
misrepresentation or breach is asserted
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prior to the applicable expiration date stated above. It is understood and
agreed that, except for liabilities based on fraud and except as expressly
provided in this Agreement, after the Closing there shall be no liability or
obligation in respect of a breach or alleged breach of any representation,
warranty, covenant and other agreement, and that after the Closing the exclusive
remedies as between the Purchaser and its Affiliates (including CE following the
Closing) on the one hand, and the Seller and its Affiliates on the other hand,
for Damages (whether by contract, in tort or otherwise, and whether in law, in
equity or otherwise) in respect of the Business or CE shall be those remedies
expressly provided in this Agreement.
(b) Except as otherwise provided in this Agreement, the Purchaser for
itself, its Affiliates (including CE following the Closing) and their respective
Representatives, effective as of the Closing, releases and discharges the
Seller, its Affiliates and their respective Representatives from any and all
Damages (whether by contract, in tort or otherwise, and whether in law, in
equity or otherwise), rights of subrogation and contribution and remedies of any
nature whatsoever, known or unknown, relating to or arising out of Environmental
Liabilities or Environmental Laws, in either case, arising in connection with or
in any way relating to the Business or CE.
Section 11.02 INDEMNIFICATION.
(a) Effective as of the Closing, the Purchaser hereby indemnifies the
Seller and its Affiliates and their respective directors, officers, employees
and agents against, and agrees to hold them harmless from, any and all Damages
incurred or suffered by any of them arising out of or related in any way to (i)
any misrepresentation or breach of any Surviving Representation or Covenant made
or to be performed by the Purchaser pursuant to this Agreement, (ii) any
Financial Support Arrangement referred to in Section 6.03, (iii) any matters for
which indemnification is provided under Exhibits D and E (it being understood
that such indemnification will be governed by and subject to the terms of such
Exhibits), or (iv) any liabilities arising in connection with or in any way
relating to the Business (but only as conducted on or after the Closing Date),
CE or the CE Facility (but only during a period in which the Purchaser or CE or
any of their Affiliates or successors owns or leases the CE Facility), or the
Purchaser's or CE's or any other Person's use, ownership or operation thereof
(but, with respect to the CE Facility, only during a period in which the
Purchaser or CE or any of their Affiliates or successors owns or leases the CE
Facility), whether vested or unvested, contingent or fixed, actual or potential,
which arise under or relate to Environmental Laws to the extent such liabilities
arise out of, relate to, are based on or result from any action taken (or a
failure to take action) or any event occurring on or after the Closing Date,
including, without limitation, (A) Remedial Actions, (B) personal injury,
wrongful death, economic loss or property damage claims, (C) claims for natural
resource damages, (D) violations of law or (E) any other Damages with respect
thereto.
(b) Effective as of the Closing and subject to the limitations set
forth in Section 11.04, the Seller hereby indemnifies the Purchaser and its
Affiliates and their respective directors, officers, employees and agents
against, and agrees to hold them harmless from, any and all Damages incurred or
suffered by any of them arising out of or related in any way to (i) any
misrepresentation or breach of any Surviving Representation or Covenant made or
to be performed by the Seller pursuant to this
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Agreement, (ii) any Environmental Liabilities to the extent arising out of,
relating to, based on or resulting from actions taken (or failure to take
action), conditions existing or events occurring prior to the Closing, (iii) any
Indemnified Pre-Closing Claims and any matters for which indemnification is
provided under Exhibits D and E (it being understood that such indemnification
will be governed by and subject to the terms of such Exhibits) or (iv) any (A)
workers compensation claims, (B) claims contemplated by Item 2 in Schedule B.10,
and (C) claims contemplated by Item 4 in Schedule B.11, but in each case only to
the extent attributable to a time, or arising out of, relating to, based on or
resulting from any action (or failure to act), conditions existing or events
occurring, prior to the Closing Date.
Section 11.03 PROCEDURES.
(a) If the Seller or any of its Affiliates or any of their directors,
officers, employees or agents shall seek indemnification pursuant to Section
11.02(a), or if the Purchaser or any of its Affiliates or any of their
directors, officers, employees or agents shall seek indemnification pursuant to
Section 11.02(b), such Person seeking indemnification (the "Indemnified Party")
shall give written notice to the party from whom such indemnification is sought
(the "Indemnifying Party") promptly after the Indemnified Party (or, if the
Indemnified Party is a corporation, any officer of the Indemnified Party)
becomes aware of the facts giving rise to such claim for indemnification (an
"Indemnified Claim") specifying in reasonable detail the factual basis of the
Indemnified Claim, stating the amount of the Damages, if known, the method of
computation thereof, and containing a reference to the provision of this
Agreement in respect of which such Indemnified Claim arises. The failure of an
Indemnified Party to provide notice pursuant to this Section 11.03 shall not
constitute a waiver of that party's claims to indemnification pursuant to
Section 11.02 in the absence of material prejudice to the Indemnifying Party. If
the Indemnified Claim arises from the assertion of any claim, or the
commencement of any suit, action or proceeding brought by a Person that is not a
party hereto (a "Third Party Claim") any such notice to the Indemnifying Party
shall be accompanied by a copy of any papers theretofore served on the
Indemnified Party in connection with such Third Party Claim.
(b) (i) Upon receipt of notice of a Third Party Claim from an
Indemnified Party pursuant to Section 11.03(a), the Indemnifying Party
will, subject to the provisions of Section 11.03(b)(ii) and (iii),
assume the defense and control of such Third Party Claim but shall
allow the Indemnified Party a reasonable opportunity to participate in
the defense thereof with its own counsel and at its own expense. The
Indemnifying Party shall select counsel, contractors and consultants of
recognized standing and competence after consultation with the
Indemnified Party; shall take all steps necessary in the defense or
settlement thereof; and shall at all times diligently and promptly
pursue the resolution thereof. In conducting the defense thereof, the
Indemnifying Party shall at all times act as if all Damages relating to
such Third Party Claim were for its own account and shall act in good
faith and with reasonable prudence to minimize Damages therefrom. The
Indemnified Party shall, and shall cause each of its Affiliates,
directors, officers, employees, and agents to, cooperate fully with the
Indemnifying Party in the defense of any Third Party Claim defended by
the Indemnifying Party.
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(ii) Subject to the provisions of Section 11.03(b)(iii), the
Indemnifying Party shall be authorized to consent to a settlement of,
or the entry of any judgment arising from, any Third Party Claims,
without the consent of any Indemnified Party; provided, that the
Indemnifying Party shall (1) pay or cause to be paid all amounts
arising out of such settlement or judgment concurrently with the
effectiveness thereof; (2) shall not encumber any of the assets of any
Indemnified Party or agree to any restriction or condition that would
apply to such Indemnified Party or to the conduct of that party's
business; and (3) obtain, as a condition of any settlement or other
resolution, a complete release of each Indemnified Party.
(iii) An Indemnified Party may elect to share the defense of a
Third Party Claim the defense of which has been assumed by the
Indemnifying Party pursuant to Section 11.03(b)(i). In that event, the
Indemnified Party will so notify the Indemnifying Party in writing.
Thereafter, the Indemnifying Party and the Indemnified Party shall
participate on an equal basis in the defense, management and control of
any such claim. The Indemnifying Party and the Indemnified Party shall
select mutually satisfactory counsel, contractors and consultants to
conduct the defense or settlement thereof, and shall at all times
diligently and promptly pursue the resolution thereof. The Indemnifying
Party and the Indemnified Party shall each be responsible for one-half
of all Damages incurred after the Indemnified Party has provided notice
as provided in this clause (iii), including costs of defense and
investigation, in respect of any such claim, provided that the election
of the Indemnified Party to share in the defense of a Third Party Claim
as to which indemnity is available pursuant to Section 11.02(b)(i) or
Section 11.02(b)(ii) shall not increase the Seller's liability beyond
that contemplated by Section 11.04.
(iv) In the case of the indemnification contemplated by clause
(ii) of Section 11.02(b), in the event that either the Indemnified
Party or the Indemnifying Party desires to settle the matters
referenced therein or consent to the entry of any judgment arising
thereunder and the other party does not wish to consent to such
settlement, the other party shall have no obligation to consent to the
settlement provided that it agrees in writing to pay and be responsible
for 100% of any Damages thereafter incurred; provided that no
Indemnified Party shall be required to consent to any settlement or
agree to be responsible for the payment of Damages thereafter incurred
with respect to any matter the settlement of which would require the
consent of such Indemnified Party pursuant to Section 11.03(b)(ii). The
obligation of the party that rejects any proposed settlement offer or
entry of any such judgment to pay and be responsible for 100% of any
Damages thereafter incurred in accordance with this Section
11.03(b)(iv) shall be conditioned upon and subject to the payment,
within five Business Days of the date such party provides the written
agreement contemplated by the preceding sentence, of an amount, in
immediately available funds, equal to the portion of the total
settlement that would have been payable by the party desiring to settle
the matter or consent to the entry of any such judgment according to
the percentage sharing arrangement contemplated by Section 11.04(ii).
Thereafter, the party that rejects the proposed settlement shall be
solely responsible for the defense of the matter that is the subject of
the proposed settlement.
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(c) If the Indemnifying Party and the Indemnified Party are unable to
agree with respect to a procedural matter arising under Section 11.03(b)(iii),
the Indemnifying Party and the Indemnified Party shall, within 10 days after
notice of disagreement given by either party, agree upon a third-party referee
("Referee"), who shall be an attorney and who shall have the authority to review
and resolve the disputed matter. The parties shall present their differences in
writing (each party simultaneously providing to the other a copy of all
documents submitted) to the Referee and shall cause the Referee promptly to
review any facts, law or arguments either the Indemnifying Party or the
Indemnified Party may present. The Referee shall be retained to resolve specific
differences between the parties within the range of such differences. Either
party may request that all oral arguments presented to the Referee by either
party be in each other's presence. The decision of the Referee shall be final
and binding unless both the Indemnifying Party and the Indemnified Party agree
otherwise. The parties shall share equally all costs and fees of the Referee.
Section 11.04 LIMITATIONS. Notwithstanding anything to the contrary in
this Agreement, except for liability based on fraud, the Seller shall only have
liability to the Purchaser or any other Person hereunder:
(i) with respect to the matters described in Section
11.02(b)(i), to the extent that the aggregate Damages suffered by an
Indemnified Party as the result thereof exceed $1,000,000; and
(ii) with respect to the matters described in Section
11.02(b)(ii), to the extent of 60% of the first $20,000,000 in
aggregate Damages incurred by all Indemnified Parties as the result
thereof, provided that (A) with respect to a Remedial Action, the
Indemnified Party shall have notified the Seller in writing pursuant to
Section 11.03(a) on or prior to the fourth anniversary of the Closing
Date of any Indemnified Claim and, to the extent Damages relating to
such Indemnified Claim are incurred after the fourth anniversary of the
Closing Date, (y) a Remedial Action has been commenced, or written
notice that threatens or seeks to compel Remedial Action or payment for
costs of a Remedial Action by the Indemnified Party or alleges a
violation of Environmental Law that would constitute an Environmental
Liability, is received from a Governmental Authority, on or prior to
such fourth anniversary, and (z) the Damages relate to Remedial Actions
that arise from the same condition addressed by the initial Remedial
Action and all of the Remedial Actions are taken under legal compulsion
of an Environmental Law, (B) with respect to a Third Party Claim, the
Indemnified Party shall have received a written assertion of such Third
Party Claim from a Person other than an Indemnified Party and shall
have notified the Seller of the Indemnified Claim arising from the
Third Party Claim pursuant to Section 11.03(a) on or prior to the
fourth anniversary of the Closing Date, and the Damages relate to the
matters described in the written assertion of such Third Party Claim,
and (C) with respect to matters not covered by the foregoing clauses
(A) or (B), the Indemnifying Party shall only be responsible for (y)
Damages incurred on or prior to the fourth anniversary of the Closing
Date and (z) Damages in respect of which the Indemnified Party shall
have notified the Seller of an Indemnified Claim pursuant to Section
11.03(a) on or prior to the fourth anniversary of the Closing Date, to
the extent but only to the extent of 60% of the amount of such Damages
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accrued for in audited financial statements of the Purchaser or any
unaudited financial statements of the Purchaser filed with the SEC, in
each case that are dated as of a date on or prior to the fourth
anniversary of the Closing Date;
provided, however, that the Seller shall only have liability under Sections
11.02(b)(i) and 11.02(b)(ii) or this Section 11.04 for Damages incurred in
excess of the amount of any reserves for such matters reflected as a current
liability or as a reduction in or reserve against current assets in the
calculation of the Final Net Working Capital Amount, and provided further that
the Seller's maximum aggregate liability under Sections 11.02(b)(i) and
11.02(b)(ii) and this Section 11.04 shall be equal to the Adjusted Purchase
Price.
ARTICLE XII
TERMINATION
Section 12.01 TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(i) by mutual written agreement of the Seller and the
Purchaser;
(ii) by the Seller or the Purchaser if the Closing shall not
have been consummated by March 16, 1998; provided, however, that
neither the Seller nor the Purchaser may terminate this Agreement
pursuant to this clause (ii) if the Closing shall not have been
consummated by March 16, 1998, by reason of the failure of such party
or any of its Affiliates to perform in all material respects any of its
or their respective covenants or agreements contained in this
Agreement; provided further, that either the Seller and the Purchaser
shall be entitled to terminate this Agreement prior to March 16, 1998,
if such party or parties, as the case may be, shall reasonably conclude
that any condition to such party's or parties' obligations hereunder
(as set forth in Section 10.01 with respect to the Seller and the
Purchaser, Section 10.02 with respect to the Purchaser, and Section
10.03 with respect to the Seller) cannot reasonably be expected to be
satisfied prior to March 16, 1998; and provided, further, that as a
condition to the right of a party to elect to terminate this Agreement
pursuant to the immediately preceding proviso, the party shall first
provide 10 Business Days prior notice to the other party specifying in
reasonable detail the nature of the condition that such party has
concluded will not be satisfied, and the other party shall be entitled
during such 10 Business Day period to take any actions it may elect
consistent with the terms of this Agreement such that the condition
reasonably could be expected to be satisfied prior to the expiration of
such time period; and
(iii) by either the Seller or the Purchaser if there shall be
any law or regulation that makes consummation of the Contemplated
Transactions illegal or otherwise prohibited or if consummation of the
Contemplated Transactions would violate any nonappealable final
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order, decree or judgment of any court or Governmental Authority having
competent jurisdiction.
Any party desiring to terminate this Agreement pursuant to this Section 12.01
shall give written notice of such termination to the other parties to this
Agreement.
Section 12.02 EFFECT OF TERMINATION. If this Agreement is terminated as
permitted by Section 12.01, such termination shall be without liability of any
party (or any Affiliate, stockholder, director, officer, employee, agent,
consultant or Representative of such party) to any other party to this
Agreement; provided, however, that if the Contemplated Transactions fail to
close as a result of a breach of a representation, warranty, covenant or
agreement under this Agreement by the Seller or the Purchaser, such party shall
be fully liable for any and all Damages incurred or suffered by any other party
as a result of all such breaches. The provisions of Sections 6.01 and 13.03 and
this Section 12.02 shall survive any termination hereof pursuant to Section
12.01.
ARTICLE XIII
MISCELLANEOUS
Section 13.01 NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to the Seller:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and
Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and
General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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and
Miles & Stockbridge P.C.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser:
Benchmark Electronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify for the purpose by notice to the other parties. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section 13.01 and evidence of receipt is received or (ii) if given by any
other means, upon delivery or refusal of delivery at the address specified in
this Section 13.01.
Section 13.02 AMENDMENTS; WAIVERS.
(a) Any provision of this Agreement may be amended or waived prior to
the Closing Date if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Seller and the Purchaser, or in the
case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
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and remedies herein provided shall be cumulative and not exclusive of any rights
or remedies provided by law.
Section 13.03 EXPENSES. Except as otherwise provided in this Agreement,
all costs and expenses incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense. None of the costs and expenses
incurred in connection with this Agreement shall be paid by CE. All Taxes (other
than Taxes on, relating to or measured by income or gains), stamp duty,
notarial, registration and reporting fees and similar taxes resulting from or
relating to the transfer of the CE Shares to the Purchaser shall be borne by the
Purchaser.
Section 13.04 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its right or obligations under this Agreement
without the consent of the Seller, in the case of the Purchaser, and the
Purchaser in the case of the Seller.
Section 13.05 DISCLOSURE. Notwithstanding any provision to the contrary
contained in this Agreement, any information disclosed in one Disclosure
Schedule shall be deemed to be disclosed in all Disclosure Schedules. Certain
information set forth in the Disclosure Schedules has been included and
disclosed solely for informational purposes and may not be required to be
disclosed pursuant to the terms and conditions of this Agreement. The disclosure
of any such information shall not be deemed to constitute an acknowledgement or
agreement that the information is required to be disclosed in connection with
the representations and warranties made in this Agreement or that the
information is material, nor shall any information so included and disclosed be
deemed to establish a standard of materiality or otherwise used to determine
whether any other information is material.
Section 13.06 CONSTRUCTION. As used in this Agreement, any reference to
the masculine, feminine or neuter gender shall include all genders, the plural
shall include the singular, and the singular shall include the plural. With
regard to each and every term and condition of this Agreement, the parties
understand and agree that the same have or has been mutually negotiated,
prepared and drafted, and that if at any time the parties desire or are required
to interpret or construe any such term or condition or any agreement or
instrument subject hereto, no consideration shall be given to the issue of which
party actually prepared, drafted or requested any term or condition of this
Agreement.
Section 13.07 ENTIRE AGREEMENT.
(a) This Agreement and any other agreements contemplated
hereby (including, to the extent contemplated herein, the Purchaser
Confidentiality Agreement, the Supply Agreement, the Interim Services
Agreement, the CE Facility Lease and the ▇▇▇▇▇▇▇ Sublease) constitute
the entire agreement among the parties with respect to the subject
matter of such documents and supersede all prior agreements,
understandings and negotiations, both written and oral, between the
parties with respect to the subject matter thereof.
- 23 -
(b) The parties hereto acknowledge and agree that no
representation, warranty, promise, inducement, understanding, covenant
or agreement has been made or relied upon by any party hereto other
than those expressly set forth in this Agreement. Without limiting the
generality of the disclaimer set forth in the preceding sentence,
neither the Seller nor any of its Affiliates has made or shall be
deemed to have made any representations or warranties, in any
presentation or written information relating to CE or the business of
CE given or to be given in connection with the Contemplated
Transactions, in any filing made or to be made by or on behalf of the
Seller or any of its Affiliates with any Governmental Authority, and no
statement, made in any such presentation or written materials, made in
any such filing or contained in any such other information shall be
deemed a representation or warranty hereunder or otherwise. No Person
has been authorized by the Seller or any of its Affiliates to make any
representation or warranty in respect of the Business or in connection
with the Contemplated Transactions, unless in writing and contained in
this Agreement.
(c) Except as expressly provided herein, no provision thereof
is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
Section 13.08 GOVERNING LAW. Except as otherwise provided elsewhere in
this Agreement, this Agreement shall be construed in accordance with and
governed by the law of the State of Delaware (without regard to the choice of
law provisions thereof).
Section 13.09 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other parties hereto.
Section 13.10 JURISDICTION. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the Contemplated Transactions shall be brought in the
United States District Court for the District of Delaware, and each of the
parties hereby consents to the exclusive jurisdiction of such court (and of the
appropriate appellate court) in any such suit, action or proceeding and waives
any objection to venue laid therein. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the State of Delaware. Without limiting the foregoing, the Seller and
the Purchaser agree that service of process upon such party at the address
referred to in Section 13.01, together with written notice of such service to
such party, shall be deemed effective service of process upon such party.
Section 13.11 CAPTIONS. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
- 24 -
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed by their respective authorized officers on the day and year first above
written.
LOCKHEED ▇▇▇▇▇▇ CORPORATION
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:Vice President
BENCHMARK ELECTRONICS, INC.
By: ▇▇▇▇ ▇. ▇▇
Name: ▇▇▇▇ ▇. ▇▇
Title:Executive Vice President
- 25 -
EXHIBIT A
DEFINITIONS
(a) The following terms have the following meanings:
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person. For purposes of determining whether a Person is an Affiliate, the term
"control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of securities, contract or otherwise.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority (including any Environmental
Law) applicable to such Person or any of their respective properties, assets,
officers, directors, employees, consultants or agents (in connection with such
officer's, director's, employee's, consultant's or agent's activities on behalf
of such Person).
"Bid" means any quotation, bid or proposal made by CE that if accepted
or awarded would lead to a Contract with any Person for the design, manufacture
or sale of products or the provision of services by CE.
"Business" means the businesses conducted by CE together with the
assets and liabilities associated with the CE Facility.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"CE Facility" means the land and building currently used by CE located
in Hudson, New Hampshire and identified in Exhibit A to Attachment V to the
Agreement.
"CE Shares" means all of the issued and outstanding shares of Common
Stock, par value $1.00 per share, of CE.
"Closing Date" means the date of the Closing.
"Contemplated Transactions" means the transactions contemplated by this
Agreement, the Supply Agreement, the Interim Services Agreement, the CE Facility
Lease and the ▇▇▇▇▇▇▇ Sublease.
A-1
"Contracts" means all contracts, agreements, leases, licenses,
commitments, sales and purchase orders, internal work orders (with respect to
work by or for the Seller or any of its Subsidiaries) and other instruments of
any kind as to which CE is a party.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties, charges and amounts paid in settlement, including,
without limitation, reasonable costs, fees and expenses of attorneys, experts,
accountants, appraisers, consultants, witnesses, investigators and any other
agents or representatives of such Person (with such amounts to be determined net
of any resulting tax benefit and net of any refund or reimbursement of any
portion of such amounts, including, without limitation, reimbursement by way of
insurance, third party indemnification or the inclusion of any portion of such
amounts as a cost under Government Contracts), but specifically excluding (i)
any costs incurred by or allocated to an Indemnified Party with respect to time
spent by employees of the Indemnified Party or any of its Affiliates, (ii) any
consequential, exemplary or punitive damages, except to the extent that a Person
actually is liable to a third party in respect of such damages, and (iii) the
decrease in the value of any asset to the extent that such valuation is based on
a use of such asset other than its use as of the Closing Date.
"Disclosure Schedule" means the Disclosure Schedule delivered to the
Purchaser pursuant to the Agreement.
"Environmental Laws" means any and all past, present or future federal,
state, local and foreign statutes, laws, regulations, ordinances, judgments,
orders, codes, injunctions, judicial decisions, permits or governmental
restrictions or agreements with any Governmental Authority, which relate to the
environment, human health and safety, or to pollutants, contaminants, wastes or
chemicals or any toxic, radioactive, ignitable, corrosive, reactive or otherwise
hazardous substances, wastes or materials or which impose liability for or
standards of conduct concerning the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or handling
of Hazardous Substances including, the Resource Conservation and Recovery Act of
1976, as amended, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, the Superfund Amendment and Reauthorization
Act of 1984, as amended, the Toxic Substances Control Act, as amended, any other
so-called "Superfund" or "Superlien" law, and the Occupational Safety and Health
Act of 1970, as amended.
"Environmental Liabilities" means all liabilities arising in connection
with or in any way relating to the Business, CE, the CE Facility, the ▇▇▇▇▇▇▇
Campus or to the Seller's or its Affiliates' use or ownership thereof, whether
vested or unvested, contingent or fixed, actual or potential, which arise under
or relate to Environmental Laws to the extent such liabilities arise out of,
relate to, are based on or result from an action taken (or a failure to take
action), a condition existing or an event occurring prior to the Closing,
including, without limitation, (i) Remedial Actions, (ii) personal injury,
wrongful death, economic loss or property damage claims, (iii) claims for
natural resource damages, (iv) violations of law or (v) any other Damages with
respect thereto.
A-2
"Financial Support Arrangements" means any obligations, contingent or
otherwise, of a Person in respect of any indebtedness, obligation or liability
(including assumed indebtedness, obligations or liabilities) of another Person,
including but not limited to remaining obligations or liabilities associated
with indebtedness, obligations or liabilities that are assigned, transferred or
otherwise delegated to another Person, if any, letters of credit and standby
letters of credit (including any related reimbursement or indemnity agreements),
direct or indirect guarantees, endorsements (except for collection or deposit in
the ordinary course of business), notes co-made or discounted, recourse
agreements, take-or-pay agreements, keep-well agreements, agreements to purchase
or repurchase such indebtedness, obligation or liability or any security
therefor or to provide funds for the payment or discharge thereof, agreements to
maintain solvency, assets, level of income or other financial condition,
agreements to make payment other than for value received and any other financial
accommodations.
"GAAP" shall mean generally accepted accounting principles.
"Government Contract" means any prime contract, subcontract, teaming
agreement or arrangement, joint venture, basic ordering agreement, letter
contract, purchase order, delivery order, change order, Bid or other arrangement
of any kind relating exclusively to the Business between the Seller and (i) the
U.S. Government (acting on its own behalf or on behalf of another country or
international organization), (ii) any prime contractor of the U.S. Government or
(iii) any subcontractor with respect to any contract of a type described in
clauses (i) or (ii) above.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"Hazardous Substances" means substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," pollutants," or
"contaminants," and any toxic, radioactive, ignitable, corrosive, reactive or
otherwise hazardous substance, waste, or material, including, without
limitation, asbestos and petroleum, its derivatives, by-products and other
hydrocarbons, in each case as regulated under any Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Indemnified Pre-Closing Claim" means any Damages of or relating to CE
or the CE Facility or to the Business, but in each case only to the extent
attributable to a time, or arising out of, relating to, based on or resulting
from any action (or failure to act), conditions existing or events occurring,
prior to the Closing Date (a "Pre-Closing Damage"), but excluding (i) any
Pre-Closing Damage in respect of any of the matters disclosed in the Disclosure
Schedule, (ii) any Pre-Closing Damage in respect of any of the matters
contemplated by Exhibit D or Exhibit E (which shall be governed by the
provisions of such Exhibits), (iii) any Pre-Closing Damage arising under
Contracts or relating to warranty obligations or services, or claims of
manufacturing, product or design defects with respect to any product or service
sold or provided by CE, (iv) any Pre-Closing Damage as to matters
A-3
(other than those contemplated by the preceding clause (iii)) of a type for
which reserves against or accruals for such Damages are included in the
calculation of Net Working Capital as of the Closing Date regardless of whether
such reserves or accruals are adequate, (v) Damages attributable to, arising out
of, relating to, based on or resulting from the validity or collectability of
any accounts receivable of CE or the existence or value of any Inventory of CE,
(vi) any Environmental Liabilities, and (vii) any Damages to the extent arising
out of, relating to, based on or resulting from an action (or failure to act),
conditions existing or events occurring on or after the Closing Date, provided
in the case of an action (or failure to act) that such action (or failure) did
not occur prior to the Closing.
"Intellectual Property Rights" means patents, copyrights, trademarks,
trade names, mask work, servicemarks, service names, technology, know-how,
processes, trade secrets, inventions, proprietary data, formulae, research and
development data, computer software programs and other intellectual property
(excluding "Lockheed ▇▇▇▇▇▇ Corporation," "Lockheed Corporation," "▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Corporation," "Loral Corporation," "▇▇▇▇▇▇▇" and any marks and names
derivative thereof) and applications for the same, including any registrations
or applications for registration of any of the foregoing.
"Interim Services Agreement" means the Interim Services Agreement dated
the Closing Date by and between the Purchaser and the Seller (in the form of
Attachment IV to the Agreement), as the same may be amended from time to time.
"Inventory" means all items of inventory notwithstanding how classified
in CE's financial records, including all raw materials, work-in-process and
finished goods.
"Lien" means, with respect to any asset, any mortgage, lien,
encumbrance, pledge, or security interest of any kind in respect of such asset.
"Material Adverse Effect" means (i) with respect to CE or the Business,
a material adverse effect on the financial condition or results of operations of
the Business taken as a whole, or (ii) with respect to any other Person, a
material adverse effect on the financial condition or results of operations of
such Person and its Subsidiaries taken as a whole.
"Net Working Capital" means total current assets minus total current
liabilities calculated in accordance with the provisions of Attachment II.
"Opening Statement" means the unaudited statement of net assets of the
Business at December 28, 1997, together with the notes thereto, as set forth in
Attachment I to the Agreement.
"Person" means an individual, a corporation, a general partnership, a
limited partnership, a limited liability company, an association, a trust or any
other entity or organization, including a government or political subdivision or
an agency or instrumentality thereof.
A-4
"Purchaser Confidentiality Agreement" means the letter agreement dated
November 6, 1997, by and between the Seller and the Purchaser, as the same may
be amended from time to time.
"Remedial Action(s)" means the investigation, clean-up or remediation
of contamination or environmental degradation or damage caused by, related to or
arising from the generation, use, handling, treatment, storage, transportation,
disposal, discharge, release, or emission of Hazardous Substances, including,
without limitation, investigations, response and remedial actions under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, corrective action under the Resource Conservation and Recovery Act of
1976, as amended, and clean-up requirements under similar state Environmental
Laws.
"Representatives" means with respect to the Seller and the Purchaser,
each of their respective advisors, attorneys, accountants, employees or agents.
"▇▇▇▇▇▇▇ Campus" means the parcel or adjacent parcels of real property
owned by the Seller in Hudson, New Hampshire that currently are used by the
Seller's ▇▇▇▇▇▇▇ business unit and CE, which parcel or parcels include the CE
Facility.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" as it relates to any Person, shall mean a corporation more
than 50% of whose outstanding securities the Person has the right, other than as
affected by events of default, directly or indirectly, to vote for the election
of directors.
"Supply Agreement" means the Supply Agreement dated the Closing Date by
and between the Purchaser and the Seller (in the form of Attachment III to the
Agreement), as the same may be amended from time to time.
"U.S. Government" means the United States Government and any agencies,
instrumentalities and departments thereof.
(b) "To the knowledge," "known by" or "known" (and any similar phrase) means
with respect to the Seller, to the actual knowledge of Senior Vice Presidents or
higher ranking officers of the Seller, and the Vice President, Financial
Strategies of the Seller, the President, Chief Financial Officer and General
Counsel of the Seller's Operating Sector to which CE reports, and the President
and Chief Financial Officer of CE. No individual may deny having actual
knowledge by reason of such individual in bad faith having failed to review or
obtain information reasonably available to such individual.
(c) Each of the following terms is defined in the Section set forth opposite
such term:
A-5
TERM SECTION
Adjusted Purchase Price....................................................2.03
Agreement..............................................................Preamble
Benefit Arrangement........................................................E.01
CE.....................................................................Recitals
CE Beneficiary.............................................................E.01
CE Benefit Arrangements....................................................E.01
CE Employee................................................................E.01
CE Employee Plans..........................................................E.01
CE Facility Lease..........................................................2.04
CE Financial Statements....................................................B.20
CE Savings Plan............................................................E.05
Closing....................................................................2.04
Code.......................................................................D.01
Company Securities.........................................................B.03
Employee Plan..............................................................E.01
Environmental Insurance Claims.............................................7.05
ERISA......................................................................E.01
Final Determination........................................................D.01
Final Net Working Capital Amount...........................................2.03
Group......................................................................D.01
Income Taxes...............................................................D.01
Indemnified Claim.........................................................11.03
Indemnified Party.........................................................11.03
Indemnifying Party........................................................11.03
Insurance Liabilities......................................................6.03
Permits....................................................................B.13
Permitted Liens............................................................B.09
Post-Closing Tax Period....................................................D.01
Pre-Closing Damage............................................................A
Pre-Closing Tax Period.....................................................D.01
Proposed Final Net Working Capital Amount..................................2.03
Purchase Price.............................................................2.02
Purchaser..............................................................Preamble
Real Property..............................................................B.09
Referee...................................................................11.03
Release Date...............................................................6.03
Remaining Recovery.........................................................7.05
Returns....................................................................D.01
▇▇▇▇▇▇▇ Sublease...........................................................2.04
Seller.................................................................Preamble
Seller's Savings Plan......................................................E.05
Surviving Representations or Covenants....................................11.01
A-6
Tax........................................................................D.01
Third Party Claim.........................................................11.03
WARN.......................................................................E.02
A-7
EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser that:
B.01. CORPORATE EXISTENCE AND POWER. Each of the Seller and CE is a
corporation duly incorporated, validly existing and in good standing under the
laws of its state of incorporation and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. Each of the Seller and CE is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary, except for those
jurisdictions where the failure to be so qualified would not have a Material
Adverse Effect on CE. Each of the Seller and CE has heretofore delivered to the
Purchaser true and complete copies of its charter or certificate of
incorporation and bylaws as currently in effect.
B.02. CORPORATE AUTHORIZATION. The execution, delivery and performance
by the Seller of this Agreement, the Supply Agreement, the Interim Services
Agreement, the CE Facility Lease and the ▇▇▇▇▇▇▇ Sublease, and the consummation
by the Seller and CE of the Contemplated Transactions, are within its corporate
powers and have been duly authorized by all necessary corporate action on the
part of the Seller. Each of this Agreement, the Supply Agreement, the Interim
Services Agreement, the CE Facility Lease and the ▇▇▇▇▇▇▇ Sublease constitutes
or, in the case of agreements to be executed at Closing, will constitute at the
Closing a legal, valid and binding agreement of the Seller enforceable against
the Seller in accordance with its terms (i) except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and (ii) subject to the limitations
imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
B.03. CAPITALIZATION.
(a) The authorized capital stock of CE consists of 10,000
shares of Common Stock, par value $1.00 per share, 1,000 of which are
outstanding.
(b) All outstanding CE Shares have been duly authorized and
validly issued and are fully paid and non-assessable. Except as set
forth in Schedule B.03 of the Disclosure Schedule, there are no (i)
outstanding shares of capital stock or voting securities of CE, (ii)
securities of CE convertible into or exchangeable for shares of capital
stock or voting securities of CE or options or other rights to acquired
from CE, or (iii) other obligations of CE to issue, any capital stock,
voting securities or securities convertible into or exchangeable for
capital stock or voting securities of CE (the items in the foregoing
clauses (i), (ii) and (iii) being referred to collectively as the
"Company
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Securities"). There are no outstanding obligations of CE to repurchase,
redeem or otherwise acquire any Company Securities.
B.04. OWNERSHIP OF CE SHARES. The Seller is the record and beneficial
owner of the CE Shares, free and clear of any Lien and any other contractual
limitation or restriction (including the right to vote, sell or otherwise
dispose of the CE Shares), and will transfer to the Purchaser at the Closing
valid title to the CE Shares.
B.05. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by the Seller of this Agreement, the Supply Agreement, the Interim
Services Agreement, the CE Facility Lease and the ▇▇▇▇▇▇▇ Sublease, and the
Contemplated Transactions, require no action by or in respect of, or consent or
approval of, or filing with, any Governmental Authority other than:
(i) compliance with any applicable requirements of the HSR
Act;
(ii) those actions, consents, approvals or filings set forth
on Schedule B.05 of the Disclosure Schedule; and
(iii) any actions, consents, approvals or filings the failure
to make or obtain could not reasonably be expected to have a Material
Adverse Effect on the Business.
B.06. NON-CONTRAVENTION. Except as set forth in Schedule B.06 of the
Disclosure Schedule, the execution, delivery and performance by the Seller of
this Agreement, the Supply Agreement, the Interim Services Agreement, the CE
Facility Lease and the ▇▇▇▇▇▇▇ Sublease, and the consummation of the
Contemplated Transactions, do not and will not (i)(A) contravene or conflict
with the charter (or certificate of incorporation, as the case may be) or bylaws
of the Seller or CE, (B) assuming compliance with the matters referred to in
Section B.05, contravene or conflict with or constitute a violation of any
provisions of any Applicable Law, rule, regulation, judgment, injunction, order
or decree binding upon or applicable to the Business; (C) assuming compliance
with the matters referred to in Section B.05, constitute a default under or give
rise to any right of termination, cancellation or acceleration of, or to a loss
of any benefit relating to the Business to which the Seller or CE is entitled
under any provision of any Contract, agreement or other instrument binding upon
the Seller or CE, or by which any of the assets of CE is or may be bound,
except, in the case of clauses (i)(B) and (i)(C), for any such contravention,
conflict, violation, default, termination, cancellation, acceleration or loss
that could not reasonably be expected to have a Material Adverse Effect on the
Business or (ii) result in the creation or imposition of any Lien on any assets
of CE, other than Permitted Liens.
B.07. OPENING STATEMENT. The Opening Statement presents fairly, in all
material respects, the net assets of the Business as of December 28, 1997, in
conformity with GAAP (except as otherwise contemplated by Attachment II under
the heading "Exceptions to GAAP in the Opening Statement") and the manner in
which CE currently reports its financial position for consolidation in the
financial statements of the Seller.
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B.08. ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule B.08
of the Disclosure Schedule, since September 26, 1997 the business of CE has been
conducted in the ordinary course consistent with past practice and there has not
been:
(a) any incurrence, assumption or guarantee by the Seller or
CE of any indebtedness for borrowed money with respect to the Business;
(b) any creation or other incurrence of any Lien (other than
Permitted Liens) on any asset of CE other than in the ordinary course
of business consistent with past practices;
(c) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the Business, the CE Facility or
any asset of CE which, individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect on CE;
(d) any transaction or commitment made, or any Contract or
agreement entered into, by Seller or CE relating to the Business, the
CE Facility or any asset of CE (including the acquisition or
disposition of any assets) or any relinquishment by Seller or CE of any
contract or other right, in either case, other than (i) transactions
and commitments in the ordinary course of business consistent with past
practices, (ii) those contemplated by this Agreement, and (iii) those
that could reasonably be expected to have a Material Adverse Effect on
the Business;
(e) any change in any method of accounting or accounting
practice by Seller or CE with respect to the Business, except for
changes required by GAAP; or
(f) any capital expenditure, or commitment for a capital
expenditure, for additions or improvements to property, plant and
equipment involving an amount in the aggregate in excess of $2,000,000.
B.09. SUFFICIENCY OF AND TITLE TO ASSETS.
(a) The assets of the Business (including the CE Facility),
together with the services to be provided to the Purchaser pursuant to
the Interim Services Agreement, constitute, and on the Closing Date
will constitute, all of the assets and services that are necessary to
permit the operation of the Business in substantially the same manner
as such operations have heretofore been conducted.
(b) Schedule B.09 of the Disclosure Schedule correctly
describes all real property used or held for use primarily in the
Business (the "Real Property"), which the Seller or CE owns, leases,
operates or subleases, and any Liens thereon (other than Permitted
Liens), specifying in the case of leases or subleases, the name of the
lessor or sublessor, the lease term and basic annual rent.
(c) The Seller or CE, as the case may be, has good and
marketable title to, or in case of leased Real Property or personal
property, has valid leasehold interests in the CE Facility and the
assets of CE (whether real, personal, tangible or intangible) reflected
on the Opening Statement
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or acquired after the date of the Opening Statement and owned or leased
as of the Closing Date, except for properties and assets sold since the
date of the Opening Statement in the ordinary course of business
consistent with past practices. None of the assets of CE or the CE
Facility is subject to any Lien, except:
(i) Liens disclosed on Schedule B.09 of the
Disclosure Schedule;
(ii) Liens disclosed on the Opening Statement;
(iii) Liens for Taxes not yet due or being contested
in good faith by appropriate proceedings;
(iv) rights and licenses granted to others in
Intellectual Property; and
(v) Liens that do not materially detract from the
value of such asset of CE or the CE Facility, or materially
interfere with any present or intended use of such asset of CE
or the CE Facility (clauses (i)-(v) of this Section B.09(c)
are, collectively, the "Permitted Liens").
(d) Except as set forth on Schedule B.09 of the Disclosure
Schedule, the material plants, buildings, structures and equipment
included in the assets of CE and the CE Facility have no material
defects, are in good operating condition and repair and have been
reasonably maintained consistent with standards generally followed in
the industry (giving due account to the age and length of use of same,
ordinary wear an tear excepted), are adequate and suitable for their
present uses and, in the case of plants, buildings and other
structures, are structurally sound.
(e) Except as set forth on Schedule B.09 of the Disclosure
Schedule, the material plants, buildings and structures included in the
assets of CE and the CE Facility currently have access to public roads
or valid easements over private streets or private property for such
ingress to and egress from all such plants, buildings and structures
and water supply, storm and sanitary sewer facilities, telephone, gas
and electrical connections, fire protection, drainage and other public
utilities, in each case as is necessary for the conduct of the Business
as it has heretofore been conducted. None of the structures on the Real
Property encroaches upon real property of another Person, and no
structure of any other Person substantially encroaches upon any Real
Property.
B.10. NO UNDISCLOSED MATERIAL LIABILITIES. There are no liabilities of
the Business of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a liability, other than:
(a) liabilities disclosed or provided for in the Opening
Statement;
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(b) liabilities (i) disclosed in Schedule B.10 of the
Disclosure Schedule, (ii) related to any Contract disclosed in the
Disclosure Schedule or (iii) related to any Employee Plan or Benefit
Arrangement disclosed in the Disclosure Schedule;
(c) liabilities incurred in the ordinary course of business
since December 28, 1997, that in the aggregate have not had, and may
not reasonably be expected to have, a Material Adverse Effect on CE;
(d) liabilities not required to be accrued for or reserved
against in accordance with GAAP either as of December 28, 1997 or as of
the Closing Date; and
(e) liabilities other than those referred to in the foregoing
clauses (a) through (d) that have not had, and may not reasonably be
expected to have, a Material Adverse Effect on CE.
B.11. LEGAL PROCEEDINGS. Except as set forth in Schedule B.11 of the
Disclosure Schedule, there is no action, suit, investigation or proceeding
pending against, or to the knowledge of the Seller threatened against or
affecting, the Business or any asset of CE before any court or arbitrator or any
Governmental Authority as to which there is a substantial likelihood of a
determination or resolution adverse to the Business and which, individually or
in the aggregate, if so adversely determined or resolved, (i) may reasonably be
expected to have a Material Adverse Effect on the Business or (ii) in any manner
challenges or seeks to prevent, enjoin, alter or delay the Contemplated
Transactions.
B.12. MATERIAL CONTRACTS.
(a) Except for the Contracts disclosed in Schedule B.12 of the
Disclosure Schedule, with respect to the Business, as of the date of
this Agreement each of the Seller and CE is not a party to or bound by:
(i) any lease (whether of real or personal property)
providing for annual rentals of $100,000 or more;
(ii) any agreement for the purchase of materials,
supplies, goods, services, equipment or other assets providing
for either annual payments by the Seller or CE of $1,000,000
or more;
(iii) any sales, distribution or other similar
agreement providing for the sale by Seller or CE of materials,
supplies, goods, services, equipment or other assets that
provides for either annual payments to the Seller or CE of
$1,000,000 or more;
(iv) any partnership, joint venture or other similar
agreement or arrangement;
(v) any agreement relating to the acquisition or
disposition of any business (whether by merger, sale or
purchase of stock, sale or purchase of assets or otherwise);
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(vi) any agreement relating to indebtedness for
borrowed money or the deferred purchase price of property (in
either case, whether incurred, assumed, guaranteed or secured
by any asset), except any such agreement with an aggregate
outstanding principal amount not exceeding $100,000 and which
may be prepaid on not more than 60 days notice without the
payment of any penalty;
(vii) any license, franchise or similar agreement;
(viii) any agency, dealer, sales representative,
marketing or other similar agreement; or
(ix) any agreement that limits the freedom of CE to
compete in any line of business or with any Person or in any
area or to own, operate, sell, transfer, pledge or otherwise
dispose of or encumber any asset of CE, the CE Facility or
which would so limit the freedom of the Purchaser after the
Closing Date.
(b) Except as set forth in Schedule B.12 of the Disclosure
Schedule, each Contract disclosed in Schedule B.12 of the Disclosure
Schedule or required to be disclosed pursuant to this Section is a
valid and binding agreement of Seller or CE and is in full force and
effect (except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally, including
the effect of statutory and other laws regarding fraudulent conveyances
and preferential transfers, and subject to the limitations imposed by
general equitable principles regardless of whether such enforceability
is considered in a proceeding at law or in equity), and none of the
Seller or CE or, to the knowledge of the Seller, any other party
thereto is in default or breach under the terms of any such contract,
and, to the knowledge of Seller, no event or circumstance has occurred
that, with notice or lapse of time or both, would constitute any event
of default thereunder, except for defaults, breaches, events or
circumstances that could reasonably be expected to have a Material
Adverse Effect on the Business.
B.13. LICENSES AND PERMITS. Schedule B.13 of the Disclosure Schedule
accurately lists and correctly describes each material license, franchise,
permit, certificate, approval or other similar authorization affecting, or
relating in any way to, the CE Facility or the Business and in effect on the
date of this Agreement (the "Permits"). Except as set forth in Schedule B.13 of
the Disclosure Schedule, (i) the Permits are valid and in full force and effect,
(ii) neither Seller nor CE is in default, and no condition exists that with
notice or lapse of time or both would constitute a default, under the Permits
and (iii) none of the Permits will, assuming compliance with the matters
referred to in Section B.05 prior to the Closing Date, be terminated or impaired
or become terminable, in whole or in part, as a result of the transactions
contemplated hereby.
B.14. FINDERS' FEES. Except for ▇.▇. ▇▇▇▇▇▇ Securities Inc., whose fees
or commissions and expenses are obligations of the Seller, there is no
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of the Seller who might be entitled to any
fee or commission upon consummation of the Contemplated Transactions.
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B.15. ENVIRONMENTAL COMPLIANCE. Except as disclosed in Schedule B.15 of
the Disclosure Schedule, CE is now and always has been in compliance with all
applicable Environmental Laws, has developed, obtained and maintained as valid
all permits, licenses and other authorizations and plans that are required under
applicable Environmental Laws, has maintained adequate reserves for
Environmental Liabilities and Remedial Actions, and has no knowledge of
conditions at the CE Facility requiring Remedial Action, investigation or notice
to any Governmental Authority, except where the failure to be in compliance, the
failure to obtain such permits, licenses and other authorizations or the failure
to maintain adequate reserves has not had and may not reasonably be expected to
have a Material Adverse Effect on CE on or after December 28, 1997. Except as
disclosed in Schedule B.15 of the Disclosure Schedule, CE is in compliance with
the terms and conditions under which the permits, licenses and other
authorizations referenced in the preceding sentence were issued or granted,
except where the failure to be in compliance has not had and may not reasonably
be expected to have a Material Adverse Effect on CE.
B.16. COMPLIANCE WITH LAWS. Except for matters that have been settled
or otherwise resolved, neither the Seller nor CE is in violation of, and to the
knowledge of the Seller and CE, neither the Seller nor CE is under investigation
with respect to or has been threatened to be charged with or given notice of any
violation of, any Applicable Law (other than Environmental Laws) relating to the
assets of CE, the CE Facility or the conduct of the Business, except for
violations that have not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
B.17. INTELLECTUAL PROPERTY. With respect to Intellectual Property
Rights owned by CE, except as set forth in Schedule B.17 of the Disclosure
Schedule, to the knowledge of the Seller:
(i) CE owns, free and clear of all Liens other than Permitted
Liens, and subject to any licenses granted by CE prior to the Closing
Date, all right, title and interest in such Intellectual Property
Rights, and the use of such Intellectual Property Rights in connection
with the operation of the Business as heretofore conducted does not
conflict with, infringe upon or violate any patent, patent license,
patent application, trademark, tradename, trademark or tradename
registration, copyright, copyright registration, service ▇▇▇▇, service
name, brand ▇▇▇▇ or brand name or any pending application relating
thereto, or any trade secret, know-how, programs or processes of any
third Person, firm or corporation, except for conflicts, infringements
or violations that have not had and may not reasonably be expected to
have a Material Adverse Effect on the Business; and
(ii) CE has the right to use all inventions, processes,
computer programs, know-how, formulae, trade secrets, patents, chip
design, mask works, trademarks, tradenames, service marks, service
names, brandnames, copyrights and other Intellectual Property Rights
which are used by the Business and which are necessary for the
continued operation of the Business in substantially the same manner as
its operations have heretofore been conducted, except where the failure
to have any such right has not had, and may not reasonably be expected
to have, a Material Adverse Effect on the Business.
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B.18. EMPLOYEES. Schedule B.18 of the Disclosure Schedule sets forth a
true and complete list of the names and titles of all employees of the Business
whose annual base salary exceeds $100,000.
B.19. EMPLOYEE BENEFITS. Except as set forth in Schedule B.19 of the
Disclosure Schedule:
(i) Schedule B.19 of the Disclosure Schedule contains a true
and complete list of each Employee Plan and each material Benefit
Arrangement that currently covers any CE Employee and indicates which
of such plans, if any, cover CE Employees exclusively. The Seller has
made available to the Purchaser a true and complete copy of the most
recent version of each Employee Plan and the current summary plan
description for each Employee Plan and a description of each material
Benefit Arrangement.
(ii) No CE Employee Plan is a multiemployer plan (as defined
in Section 3(37) of ERISA). Neither the Seller nor any of the Seller's
Affiliates has incurred any liability under Title IV of ERISA arising
in connection with the termination of any plan covered or previously
covered by Title IV of ERISA that could reasonably be expected to
become, after the Closing Date, an obligation of the Purchaser, CE or
any of their Affiliates.
(iii) Each Employee Plan that is intended to be qualified
under Section 401(a) of the Code has received a determination letter
from the IRS that it is so qualified and the Seller has no knowledge of
any reason why such determination letter would be revoked. Each CE
Employee Plan has been maintained in substantial compliance with its
material terms and with the material requirements prescribed by any and
all statutes, orders, rules and regulations, including but not limited
to ERISA and the Code, which are applicable to such plan.
(iv) CE is not a party to, and has not in the past 10 years
been a party to, any collective bargaining agreement under which the
Seller or any of its Affiliates (including CE) have any existing or
contingent liabilities or obligations.
(v) Except as disclosed in writing to the Purchaser prior to
the date hereof, there has been no amendment by the Seller or any of
its Affiliates relating to any CE Employee Plan that would increase the
expense of maintaining such plan, or any CE Benefit Arrangement that
would increase materially the expense of maintaining such arrangement,
above the level of the expense incurred in respect thereof for the most
recent fiscal year.
(vi) No payments will be made by the Seller pursuant to the
Benefit Arrangements as a result of this transaction alone or in
connection with another event that would not be deductible by CE or the
Purchaser pursuant to Code Sections 162(m) or 280G.
(vii) To the knowledge of the Seller, there is no issue with
respect to any CE Employee Plan that is now or has been under
examination by the Internal Revenue Service or the Department of Labor
and no audit with respect to any CE Employee Plan by either the
Internal Revenue Service
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or the Department of Labor has occurred. To the knowledge of the
Seller, as of the date of this Agreement there are no (x) pending or
threatened investigations by any Governmental Authority involving or
relating to any CE Employee Plan, (y) pending or threatened claims
(except for claims for benefits payable in the normal operations of the
CE Employee Plans), or (z) suits or proceedings against CE or the CE
Employee Plans asserting any rights or claims to benefits under any CE
Employee Plans.
(viii) Neither CE nor the Purchaser will be required to
provide security to any CE Employee Plan pursuant to Section 401(a)(29)
of the Code.
(ix) No circumstance exists that could reasonably be expected
to result in the imposition of any lien under Code Section 412(n) by
reason of the failure of the Seller or its Affiliates to make timely
installments or other payments required by Code Section 412.
(x) The CE Employee Plans provide the right to amend or
terminate such CE Employee Plans.
B.20. FINANCIAL STATEMENTS. The Seller has made available to the
Purchaser true and complete copies of the balance sheets of CE as of December
31, 1996 and 1995, and the related statements of income and cash flows for each
of the three years in the period ended December 31, 1996, including the notes
thereto and accompanied by the report of Ernst & Young LLP (collectively, the
"CE Financial Statements"). The CE Financial Statements (taken together) fairly
present (i) the financial position of CE as of the respective dates of such
balance sheets and (ii) the results of operations and changes in cash flows of
CE for the periods ended on such dates, all in conformity with GAAP applied on a
consistent basis, except as otherwise herein or therein or in the notes thereto
stated throughout the periods involved.
B.21. PRODUCT WARRANTY CLAIMS. All existing warranty, product liability
and similar claims have been adequately accrued for or reserved against in the
Opening Statement or the CE Financial Statements, as appropriate, or will be
adequately accrued for or reserved against in the calculation of the Final Net
Working Capital Amount, and no warranty, product liability or other claims of a
similar nature are now outstanding against CE, except in each case to the extent
such warranty, product liability or similar claims could not reasonably be
expected to have a Material Adverse Effect on the Business. To the knowledge of
the Seller, except as set forth in Schedule B.21 of the Disclosure Schedule,
there are no existing or threatened claims, or any facts upon which a claim
could be based, that any product sold or leased by CE is or was defective,
defectively designed or otherwise fails or failed to meet the terms of any
product warranty, except to the extent such claim or claims could not reasonably
be expected to have a Material Adverse Effect on the Business. To the knowledge
of the Seller, except as set forth in Schedule B.21 of the Disclosure Schedule,
no claim has been asserted against CE for renegotiation or price redetermination
in any business transaction, and Seller knows of no facts upon which any such
claim could be based, except to the extent such claim or claims could not
reasonably be expected to have a Material Adverse Effect on the Business.
B-9
B.22. CERTAIN DISCLOSURE MATTERS. The Seller has not knowingly omitted
any information from the Disclosure Schedules in reliance on its right to
supplement the Disclosure Schedules pursuant to Section 10.04.
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EXHIBIT C
REPRESENTATION AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller that:
C.01. ORGANIZATION AND EXISTENCE. The Purchaser is a corporation
validly existing and in good standing under the laws of the State of Texas and
has all corporate powers and all governmental licenses, authorizations, consents
and approvals required to carry on its business as now conducted, except where
the failure to have such licenses, authorizations, consents and approvals has
not had and may not reasonably be expected to have, a Material Adverse Effect on
the Purchaser. The Purchaser is duly qualified to do business as a foreign
corporation in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities make such qualification necessary
to carry on its business as now conducted, except for those jurisdictions where
failure to be so qualified has not had, and may not reasonably be expected to
have, a Material Adverse Effect on the Purchaser.
C.02. CORPORATE AUTHORIZATIONS. The execution, delivery and performance
by the Purchaser of this Agreement, the Supply Agreement, the Interim Services
Agreement, the CE Facility Lease and the ▇▇▇▇▇▇▇ Sublease, and the consummation
by the Purchaser of the Contemplated Transactions, are within the corporate
powers of the Purchaser and have been duly authorized by all necessary corporate
action on the part of the Purchaser. Each of this Agreement, the Supply
Agreement, the Interim Services Agreement, the CE Facility and the ▇▇▇▇▇▇▇
Sublease constitutes or, in the case of agreements to be executed at Closing,
will constitute at the Closing a legal, valid and binding agreement of the
Purchaser, enforceable against the Purchaser in accordance with its terms (i)
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally, including the effect of statutory and
other laws regarding fraudulent conveyances and preferential transfers and (ii)
subject to the limitations imposed by general equitable principles (regardless
of whether such enforceability is considered in a proceeding at law or in
equity).
C.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by the Purchaser of this Agreement, the Supply Agreement, the
Interim Services Agreement, the CE Facility Lease and the ▇▇▇▇▇▇▇ Sublease
require no action by or in respect of, consents or approvals of, or filing with,
any Governmental Authority other than compliance with any applicable
requirements of the HSR Act.
C.04. NON-CONTRAVENTION. The execution, delivery and performance by the
Purchaser of this Agreement, the Supply Agreement, the Interim Services
Agreement, the CE Facility Lease and the ▇▇▇▇▇▇▇ Sublease do not and will not
(i) contravene or conflict with the charter or bylaws of the Purchaser, (ii)
assuming compliance with the matter referred to in Section C.03, contravene or
conflict with or constitute a violation of any provision of any law, regulation,
judgment, injunction,
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order or decree binding upon or applicable to the Purchaser, or (iii) constitute
a default under or give rise to any right of termination, cancellation or
acceleration of any right or obligation of the Purchaser or to a loss of any
benefit to which the Purchaser is entitled under any provision of any agreement,
contract or other instrument binding upon the Purchaser or any license,
franchise, permit or other similar authorization held by the Purchaser, except,
in the case of clauses (ii) and (iii), for any such contravention, conflict,
violation, default, termination, cancellation, acceleration or loss that would
not have a Material Adverse Effect on the Purchaser.
C.05. FINDERS' FEES. Except for ▇▇▇▇▇▇▇▇ Inc., whose fees or
commissions and expenses are obligations of the Purchaser, there is no
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of the Purchaser who might be entitled to
any fee or commission upon consummation of the Contemplated Transactions.
C.06. LITIGATION. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of the Purchaser, threatened against or
affecting, the Purchaser before any court or arbitrator or any governmental
body, agency or official which in any matter challenges or seeks to prevent,
enjoin, alter or materially delay the Contemplated Transactions.
C.07. INSPECTIONS. The Purchaser is an informed and sophisticated
participant in the Contemplated Transactions, and has engaged such expert
advisors, experienced in the evaluation and purchase of enterprises such as the
Business, as the Purchaser deems appropriate. The Purchaser has undertaken such
investigation, and will undertake prior to Closing such further investigation
and request such additional documents and information, as it deems necessary to
enable the Purchaser to make an informed and intelligent decision with respect
to the Contemplated Transactions. The Purchaser acknowledges that the Seller has
made no representation or warranty as to the prospects, financial or otherwise,
of the Business. The Purchaser agrees that the Seller shall accept the CE Shares
and the Business as they exist on the Closing Date based upon the Purchaser's
inspection, examination and determination with respect thereto as to all
matters, and without reliance upon any express or implied representations or
warranties of any nature, whether in writing, orally or otherwise, made by or on
behalf of or imputed to the Seller, except as expressly set forth in this
Agreement.
C.08. INVESTMENT REPRESENTATION. The Purchaser is aware that the CE
Shares are not registered under the Securities Act. The Purchaser possesses such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment hereunder. The Purchaser is
acquiring the CE Shares for its own account, for investment purposes only and
not with a view to the distribution thereof. The Purchaser understands that the
CE Shares may not be sold, transferred, offered for sale, pledged, hypothecated
or otherwise disposed of without registration under the Securities Act, except
pursuant to a valid exemption from registration under the Securities Act.
C.09. FINANCING. The Purchaser has available to it cash, marketable
securities or other investments, or presently available sources of credit, to
enable it to purchase the CE Shares and
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satisfy all of its other obligations under the terms of this Agreement, the
Supply Agreement, the Interim Services Agreement and the CE Facility Lease.
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EXHIBIT D
TAX MATTERS
D.01. TAX DEFINITIONS. The following terms shall have the following
meanings:
"Code" means the Internal Revenue Code of 1986, as amended.
"Final Determination" means a determination, as defined in Section
1313(a) of the Code, or any other event that finally and conclusively
establishes the amount of any liability for Taxes.
"Group" means, with respect to federal Taxes, the affiliated group of
corporations (as defined in Section 1504(a) of the Code) of which the Seller is
a member, and with respect to combined state taxes, the consolidated, combined
or unitary group of which the Seller or any of its Affiliates is a member.
"Income Taxes" means any Taxes determined by reference to net income.
"Post-Closing Tax Period" means any Tax period or portion thereof
ending after the close of business on the Closing Date.
"Pre-Closing Tax Period" means any Tax period or portion thereof ending
on or before the close of business on the Closing Date.
"Returns" means all reports, estimates, declarations of estimated tax,
information statements and returns relating to, or required to be filed in
connection with, any Taxes, including information returns or reports with
respect to backup withholding and other payments to third parties.
"Tax" means any tax imposed of any nature including federal, state,
local or foreign net income tax, alternative or add-on minimum tax, profits or
excess profits tax, franchise tax, gross income, adjusted gross income or gross
receipts tax, employment related tax (including employee withholding or employer
payroll tax, FICA, or FUTA), real or personal property tax or ad valorem tax,
sales or use tax, excise tax, stamp tax or duty, any withholding or backup
withholding tax, value added tax, severance tax, prohibited transaction tax,
premiums tax, occupation tax, together with any interest or any penalty,
addition to tax or additional amount imposed by any governmental authority
responsible for the imposition of any such tax.
D.02. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller makes the following representations and warranties with
respect to tax matters:
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D.02.A. RETURNS FILED. All material Income Tax Returns
required to be filed by or on behalf of members of the Group have been duly
filed and such Income Tax Returns are true, complete and correct in all material
respects. All material Tax Returns required to be filed by or on behalf of CE
have been duly filed and such Tax Returns are true, complete and correct in all
material respects.
D.02.B. TAXES PAID. All Taxes shown to be payable on the
Returns or on subsequent assessments with respect thereto have been paid in full
on a timely basis, and no other Income Taxes are payable by the Group (or Taxes
are payable by CE), other than Taxes being contested in good faith, with respect
to items or periods covered by such Returns (whether or not shown on or
reportable on such Returns) or with respect to any period prior to the date of
this Agreement, except where the failure to make payment could not reasonably be
expected to have a Material Adverse Effect on CE. CE has withheld and paid over
all Taxes required to have been withheld and paid over, and complied with all
information reporting and backup withholding requirements, including maintenance
of required records with respect thereto, in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other third party,
except where the failure to withhold or make payment could not reasonably be
expected to have a Material Adverse Effect on CE. There are no liens on any of
the assets of CE with respect to Taxes, other than liens for Taxes not yet due
and payable or for Taxes that CE is contesting in good faith through appropriate
proceedings and for which appropriate reserves have been established.
D.03. TAX COVENANTS AND INDEMNIFICATION.
D.03.A. RETURNS. The Seller (on behalf of CE) shall timely and
accurately file or cause to be filed all federal and state Income Tax Returns of
CE and the Group for all Pre-Closing Tax Periods. The Purchaser shall be
responsible for (i) the timely preparation and filing of all Tax Returns of CE
for Post-Closing Tax Periods, and (ii) the preparation and filing of all Tax
Returns required to be filed by CE after the Closing Date for Pre-Closing Tax
Periods other than those Tax Returns for Income Taxes described in this Section
D.03.A.
D.03.B. INDEMNIFICATION BY THE SELLER. The Seller shall pay
and be responsible for, shall indemnify and hold harmless the Purchaser and CE
against, and shall be entitled to all refunds and credits of, (i) Taxes (other
than (a) deferred Income Taxes and (b) Income Taxes reserved for on the balance
sheet of CE as of the Closing Date) (together with reasonable attorneys' fees
and any legal or other expenses for investigating or defending any actions with
respect to such Income Taxes) with respect to CE for any Pre-Closing Tax Period,
including any liability for Income Taxes arising out of the inclusion of CE in
any consolidated or combined returns of the Group, and (ii) all Taxes (together
with reasonable attorneys' fees and any legal or other expenses for
investigating or defending any actions with respect to Taxes) with respect to
the Seller and any member of the Group (other than CE) for all taxable periods
whatsoever. The Purchaser shall, promptly after the receipt thereof, remit to
the Seller any Income Tax refund received by the Purchaser or CE to the extent
such refund relates to a Pre-Closing Tax Period. The Seller shall promptly,
after the receipt thereof, remit to the Purchaser any Tax refund received by the
Seller to the extent such refund relates to any Tax paid by or on behalf of CE,
other than an Income Tax
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refund related to a Pre-Closing Tax Period. Notwithstanding the provisions of
this D.03.B, the Seller shall not be responsible for and shall not be required
to indemnify or hold harmless the Purchaser or CE for any Taxes that are
reimbursed under any Contracts of CE; and, the Purchaser shall cause CE to use
its reasonable best efforts to seek reimbursement for such Taxes under the
applicable Contract.
D.03.C. INDEMNIFICATION BY THE PURCHASER. The Purchaser shall
be responsible for, and shall indemnify and hold harmless the Seller from, (i)
the timely preparation and filing of all Tax Returns of CE for Post-Closing Tax
Periods, and (ii) the preparation and filing of all Tax Returns required to be
filed by CE after the Closing Date for Pre-Closing Tax Periods other than those
Tax Returns for Income Taxes described in D.03.A. The Purchaser shall pay and be
responsible for, shall indemnify and hold harmless the Seller against, and shall
be entitled to all refunds and credits of, all Taxes (together with reasonable
attorneys' fees and any legal or other expenses for investigating or defending
any actions with respect to Taxes) with respect to CE for any Post-Closing Tax
Period, except as otherwise provided in D.06.
D.03.D. CONTROL OF CERTAIN TAX CONTESTS BY THE SELLER. The
Seller shall have exclusive control over and responsibility to conduct any
contest for a Pre-Closing Tax Period. In any such contest, the Purchaser will
take, and will cause CE to take, such action as the Seller may by written notice
reasonably request in connection with such contest (including the payment of a
Tax preparatory to filing a claim for refund of such Tax; provided that the
Seller shall first pay the amount of such Tax to the Purchaser).
D.03.E. NOTICE. The Purchaser shall notify the Seller in
writing promptly upon receipt by CE of notice of any contest or assessment
relating thereto for a Pre-Closing Tax Period. The Seller shall notify the
Purchaser in writing promptly upon receipt by the Seller of notice of any
contest or assessment relating to a Post-Closing Tax Period if it affects CE.
D.03.F. PAYMENT OF INDEMNIFICATION. Upon payment of any Taxes
with respect to which a party is entitled to receive indemnification hereunder,
such party shall submit an invoice to the indemnifying party stating that such
Taxes have been paid and giving in reasonable detail the particulars relating
thereto. The indemnifying party shall remit payment for such Taxes promptly upon
receipt of such notice.
D.03.G. ASSISTANCE AND COOPERATION. After the Closing Date,
each of the Seller and the Purchaser shall:
(a) assist (and cause its respective Affiliates and
Representatives to assist) the other party in preparing any Returns and
statements which such other party is responsible for preparing and filing;
(b) cooperate fully in preparing for any Tax audits
of, or disputes, contests or proceedings with, taxing authorities regarding any
Taxes;
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(c) make available to the other and to any taxing
authority as reasonably requested all information, records and documents
relating to Tax liabilities that are attributable to CE and relate to or affect
periods beginning prior to the Closing Date;
(d) preserve all such information, records and
documents until the expiration of any applicable statues of limitations or
extensions thereof and as otherwise required by law;
(e) make available to the other, as reasonably
requested, personnel responsible for preparing or maintaining information,
records and documents in connection with Tax matters;
(f) furnish the other with copies of all
correspondence received from any taxing authority in connection with any Tax
audit or information request with respect to any such period;
(g) keep confidential any information obtained
pursuant to this D.03.G., except as may otherwise be necessary in connection
with the filing of returns or claims for refund or in conducting any audit or
other Tax proceeding; and
(h) furnish the other with adequate information which
would enable the other party to determine its entitlement to, and the amount of,
any refund or credit to which either party reasonably believes the other party
may be entitled.
D.03.H. TAX CHANGES. Without the prior written consent of the
Seller, neither the Purchaser nor CE, or any Affiliate of the Purchaser shall,
to the extent it may affect or relate to CE, make or change any tax election,
change any annual tax accounting period, adopt or change any method of tax
accounting, file any amended Return, enter into any closing agreement, settle
any Tax claim or assessment, surrender any right to claim a Tax refund, consent
to any extension or waiver of the limitations period applicable to any Tax claim
or assessment or take or omit to take any other action, if any such action or
omission could reasonably be expected to have the effect of increasing the
Pre-Closing Period Tax liability of CE or the Seller.
D.04. TAX SHARING AGREEMENTS. All Tax sharing and similar agreements
(other than the provisions of this Agreement) between CE and the Seller or any
other corporation or corporations shall be terminated as of the Closing Date,
and neither the Seller nor CE shall have liability from and after the Closing
Date under any such agreement.
D.05. SURVIVAL OF OBLIGATIONS. The obligations of the parties set forth
in this Exhibit D shall be unconditional and absolute and shall remain in effect
until the expiration of the applicable Tax statute of limitation.
D.06. PAYMENT FOR TAX SAVINGS. In the event that with respect to any
Pre-Closing Tax Period a change in CE's or the Seller's Tax treatment of an item
occurs which results in a Final
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Determination that causes a Tax savings for the Purchaser or CE, the Seller
shall notify the Purchaser of such change and Tax savings and the Purchaser
shall pay to the Seller within 10 days of receiving such notice, an amount equal
to the present value of the Tax savings achieved by CE or the Purchaser as a
result of such change by the Seller calculated using a discount rate equal to
the prime rate of interest published in THE WALL STREET JOURNAL, Eastern Edition
on the date of receipt of such notice. In the event of any dispute with respect
to any amount owed under this D.06, such dispute shall be settled by a mutually
selected independent public accounting firm.
D.07. TAX RETURN PACKAGES. The Purchaser will use reasonable commercial
efforts to cause appropriate employees of CE to prepare usual and customary Tax
return packages (in the form provided to CE for the 1996 calendar year) with
respect to the Tax period beginning January 1, 1997 and ending as of the Closing
Date. The Purchaser will use reasonable commercial efforts to cause the Tax
return packages for the period beginning on January 1, 1997 and ending as of the
Closing Date to be delivered to the Seller no later than the last day of the
third calendar month succeeding the month in which the Closing occurs.
D.08. ALLOCATION OF INCOME, DEDUCTIONS AND OTHER ITEMS. For purposes of
the Agreement, income, deductions, and other items will be allocated between the
Pre-Closing Tax Period and the Post-Closing Tax Period based on an actual
closing of the books of CE on the Closing Date.
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EXHIBIT E
EMPLOYMENT AND EMPLOYEE BENEFIT MATTERS
E.01. EMPLOYEE BENEFITS DEFINITIONS. The following terms shall have the
following meanings:
"Benefit Arrangement" means each employment, severance, continuation
pay, termination pay, layoff, or other similar written contract, arrangement or
policy and each written plan or arrangement providing for health, medical, life
or other welfare or fringe benefit coverage (including any insurance,
self-insurance or other arrangements), workers' compensation, severance pay,
retention agreements, disability benefits, supplemental unemployment benefits,
holiday, education or vacation benefits, retirement benefits or deferred
compensation, profit-sharing, benefits in the event of a sale of CE or other
change in the control, management or the ownership of CE, bonuses, stock
options, stock appreciation rights and other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (i) is not an Employee
Plan, (ii) is or has been entered into, maintained, administered or contributed
to, as the case may be, by the Seller or any of its Affiliates (including CE)
and (iii) covers any CE Employee and/or CE Beneficiary or for which a CE
Employee would be eligible upon retirement or other termination of service.
"CE Beneficiary" means any Person who, at Closing, is not a CE Employee
but who is the spouse, former spouse, dependent or beneficiary of a CE Employee
if that spouse, dependent or beneficiary is or may become entitled to any
coverage or benefit (whether or not contingent) provided under any Employee Plan
or Benefit Arrangement as a result of that Person's relationship to a CE
Employee.
"CE Benefit Arrangements" means Benefit Arrangements that are
identified as CE Benefit Arrangements on Schedule B.19, other than the Special
Retention Agreements for the CE Employees listed on Schedule E.02.
"CE Employee" means any Person who on the Closing Date is actively
employed by CE, or who, with respect to CE, is on vacation, approved illness
absence, long-term disability, authorized leave of absence (including leave
under the Family and Medical Leave Act) or military service leave of absence as
of the Closing Date.
"CE Employee Plans" means Employee Plans that are identified as CE
Employee Plans on Schedule B.19, other than Employee Plans providing
post-retirement medical or life insurance benefits.
"Employee Plan" means each "employee benefit plan", as such term is
defined in Section 3(3) of ERISA, which (i) is subject to any provision of
ERISA, (ii) is or has been entered into,
E-1
maintained, administered or contributed to by the Seller or any of its
Affiliates (including CE), and (iii) covers any CE Employee and/or CE
Beneficiary.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
E.02. EMPLOYEES AND EMPLOYEE BENEFITS.
(a) Immediately following the Closing, each CE Employee shall
continue to be employed by CE in a position similar to his or her position
immediately prior to the Closing, at the same job and same salary or wage
levels, and at the same respective location as that at which such CE Employee is
employed immediately prior to the Closing. Subject to Applicable Law, CE shall
have the right to dismiss any CE Employee at any time, with or without cause,
and to change the terms of employment of any CE Employee.
(b) CE shall provide any notices to CE Employees that may be
required under the Worker Adjustment Retraining and Notification Act, 29 U.S.C.
ss. 2101 et seq., ("WARN") with respect to events which occur on or after the
Closing Date.
(c) Commencing on the Closing Date, CE shall assume all
responsibility and liability for (i) accrued but unpaid wages, bonuses, salary
and accrued vacation of CE Employees; (ii) all claims by CE Employees and CE
Beneficiaries for severance or other termination benefits based on the events
occurring after the Closing; and (iii) all claims relating to the terms and
conditions of employment, hiring, firing, supervision, occupational safety and
health, workplace, wages and hours promotion, employment practices or treatment
of CE Employees or CE Beneficiaries, arising from or relating to events on or
after the Closing Date and, if accrued for or reserved against in the
calculation of the Final Net Working Capital Amount, claims arising from or
relating to events prior to the Closing Date. Effective as of the Closing Date
and at all times thereafter, CE shall be responsible for the payment,
sponsorship, funding, operation, investment and administration of all
compensation, employee plans and benefit arrangements provided for any CE
Employees or CE Beneficiaries. Notwithstanding the foregoing, the Seller shall
remain responsible for payment of the Special Retention Agreements for the CE
Employees listed on Schedule E.02.
(d) The Purchaser agrees that, to the extent bonus and
incentive payments in respect of the year ended December 31, 1997 have not been
paid as of the Closing Date, it will cause CE to make such bonus and incentive
payments in accordance with the terms of the bonus and incentive plans in
existence as of the date of this Agreement.
E.03. PLANS FOLLOWING THE CLOSING.
(a) Immediately following the Closing, the Purchaser shall
provide CE Employees Employee Plans and Benefit Arrangements that are
substantially equivalent to the Employee Plans and Benefit Arrangements
maintained by the Purchaser on behalf of its other employees who are employed in
comparable positions. CE Employees shall be credited for purposes of
participation, eligibility and vesting for the service credited under Benefit
Arrangements and
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Employee Plans which are similar to Employee Plans and Benefit Arrangements
maintained by the Purchaser for CE Employees; provided however that no service
for the Seller and its Affiliates shall be required to be recognized for any
benefit accrual purposes; and provided, further, that layoff and severance shall
be identical to those provided under the Seller's Employee Plans and Benefit
Arrangements for any CE Employee terminated or laid off in the 180-day period
following the Closing.
(b) Effective as of the Closing Date, the Seller and its
Affiliates (other than CE) shall retain liability to provide post-retirement
medical and life insurance benefits to CE Employees and CE Beneficiaries and CE
shall have no liability or obligation to provide post-retirement life and
medical benefits to CE Employees and CE Beneficiaries. Nothing contained herein
is intended to limit or restrict the Seller's ability to amend or terminate its
or CE's post-retirement life and medical plans before, on or after the Closing.
(c) CE's plans that are welfare plans (as defined in Section
3(1) of ERISA) shall not contain a clause excluding coverage for preexisting
conditions of CE Employees or CE Beneficiaries (unless and only to the extent
and for the period that such pre-existing condition as of the Closing Date would
be excluded from coverage under the welfare plans of CE) and shall provide that
any expenses incurred by a CE Employee or CE Beneficiary under the Employee
Plans and Benefit Arrangements during the calendar year in which the Closing
occurs shall be taken into account under the welfare plans covering CE Employees
or CE Beneficiaries after the Closing for the purposes of deductible and
coinsurance requirements and satisfaction of maximum out-of-pocket provisions to
the same extent as if such expenses had been incurred after the Closing.
E.04. COLLECTIVE BARGAINING AGREEMENTS. CE is not a party to, and none
of the CE Employees are covered by, collective bargaining agreements.
E.05. 401(K) SAVINGS PLAN OBLIGATIONS.
(a) CE Employees currently participate in the Lockheed ▇▇▇▇▇▇
Corporation Salaried Savings Plan (the "Seller's Savings Plan"). The CE
Employees shall cease to be eligible to participate in, or to accrue benefits
and service credits under the Seller's Savings Plan as of the Closing Date.
Effective as of the Closing Date, the Purchaser shall designate an existing
401(k) savings plan or CE shall establish a new 401(k) savings plan (the "CE
Savings Plan") and an associated trust under which the CE Employees will be
eligible to participate, to be effective as of the Closing Date. The Purchaser
shall provide to the Seller evidence reasonably satisfactory to the Seller that
the CE Savings Plan and the associated trust have been established and that the
CE Savings Plan qualifies under the requirements of Section 401(a) of the Code,
and that the associated trust is exempt from tax under Section 501(a) of the
Code.
(b) To the extent permitted by the Seller's Savings Plan,
ERISA and the Code, and with respect to elective deferrals made by CE Employees
under Section 401(k) of the Code, in accordance with Treasury Regulation
1.401(k)-1(d)(4), and provided the Seller has received evidence reasonably
satisfactory to it in accordance with the preceding paragraph, the Seller shall
take or
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cause to be taken, such action as is required to permit CE Employees to receive
a distribution of their account balances under the Seller's Savings Plan as soon
as is reasonably practicable following the Closing Date. To the extent permitted
by the Code, CE Employees shall be permitted to roll over (or, pursuant to
Section 401(a)(31) of the Code, directly transfer) distributions to the CE
Savings Plan (other than the portion of the distribution which constitutes
participant after-tax contributions, if any). The distribution or direct
transfer shall be made in cash in an amount equal to the value of the account
balances to be distributed, determined as of the close of business on the last
business day immediately preceding the distribution, except that to the extent a
participant's or beneficiary's account balance in the Seller's Savings Plan
includes one or more promissory notes evidencing a participant loan or loans,
such promissory notes shall be distributed in kind and, if applicable, directly
transferred for the participant's or beneficiary's credit under the CE Savings
Plan. For the period from the Closing Date until the distribution or direct
transfer with respect to a particular CE Employee, CE shall collect by payroll
deduction and promptly pay over to the Seller's Savings Plan all loan payments
required on participant loans made by the Seller's Savings Plan to any CE
Employee.
E.06. OTHER EMPLOYEE PLANS AND BENEFIT ARRANGEMENTS.
(a) Except with respect to the Special Retention Agreements
referenced in Section E.02(c), as of the Closing Date, CE Employees and CE
Beneficiaries shall cease to accrue or enjoy benefits under any Employee Plans
and Benefit Arrangements and shall commence accrual of benefits and
participation in those compensation and employee benefit plans and benefit
arrangements maintained by CE (or the Purchaser) pursuant to Section E.03.
(b) With respect to any CE Employee Plan or CE Benefit
Arrangement, effective as of the Closing, the Seller shall cease to sponsor,
administer or contribute to such CE Employee Plans and CE Benefit Arrangements.
CE shall assume all obligations and liabilities (including, without limitation,
all obligations and liabilities attributable to the period prior to the Closing
and obligations with respect to individuals who are not CE Employees or CE
Beneficiaries) of the Seller and its Affiliates with respect to such CE Employee
Plans and CE Benefit Arrangements. To the extent necessary, the Seller,
effective as of the Closing, shall cause each CE Employee Plan and CE Benefit
Arrangement to be amended to provide that sponsorship and maintenance thereof
shall be transferred as of the Closing Date to CE.
E.07. NECESSARY ACTION. CE, the Purchaser and the Seller agree to take
all action which may be necessary in order to effectuate the transactions
contemplated by this Exhibit E, including, without limitation, adopting any
necessary amendments to the Employee Plans and Benefit Arrangements and making
all filings and submissions to the appropriate governmental agencies required to
be made.
E.08. THIRD PARTY BENEFICIARIES. No provision of this Exhibit E shall
create any third party beneficiary rights in any CE Employee or CE Beneficiary,
including, without limitation, any right to continued employment or employment
in any particular position by CE for any specified period of time after the
Closing Date.
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E.09. MUTUAL ASSISTANCE. At all times after the Closing Date, CE, the
Purchaser and the Seller agree to make reasonably available to each other and
each other's agents, employees, accountants and other representatives such
actuarial, financial, personnel and related information as may be requested with
respect to any CE Employee.
E.10. INDEMNIFICATION BY CE AND THE PURCHASER. CE and the Purchaser
shall indemnify, defend and hold harmless (i) the Seller, (ii) each Affiliate of
the Seller (other than CE), (iii) each Employee Plan or Benefit Arrangement
maintained by the Seller or its Affiliates (other than CE), and (iv) the
fiduciaries of each such Employee Plan or Benefit Arrangement from and against
any and all Damages of any kind or nature, caused by, resulting from or arising
in connection with:
(x) the sponsorship, operation or administration on and after
the Closing Date of, and the payment of benefits to CE Employees and CE
Beneficiaries under the CE Employee Plans and CE Benefit Arrangements
as well as under all employee plans and benefit arrangements
established by CE (or the Purchaser) hereunder;
(y) any responsibility, obligation or liability assumed by or
remaining with CE and described in Sections E.02, E.03, E.05 or
E.06(b); and
(z) any breach of any covenant or agreement regarding employee
benefit matters made in this Agreement.
E.11. INDEMNIFICATION BY THE SELLER. The Seller shall indemnify, defend
and hold harmless (i) the Purchaser, (ii) CE, (iii) each Affiliate of the
Purchaser and CE, (iv) each CE Employee Plan and CE Benefit Arrangement, and (v)
the fiduciaries of each CE Employee Plan and CE Benefit Arrangement from and
against any and all Damages of any kind or nature, caused by, resulting from or
arising in connection with:
(x) the sponsorship, operation or administration before the
Closing Date of, and the payment of benefits for claims incurred prior
to the Closing to CE Employees and CE Beneficiaries under, any Benefit
Arrangement or Employee Plan (other than a CE Employee Plan or CE
Benefit Arrangement);
(y) any responsibility, obligation or liability assumed by or
remaining with the Seller and its Affiliates (other than CE) and
described in the last sentence of Section E.02(c) or in Section
E.03(b).
(z) any breach of any covenant or agreement regarding employee
benefit matters made in this Agreement.
E-5
ATTACHMENT I
OPENING STATEMENT(1)
AS OF DECEMBER 28, 1997
Dollars in 000's
(unaudited)
Assets Liabilities
------ -----------
Final Final
------------------------------------------------------- ------------------------------------------------------
Cash 49 Accounts Payable - General 18,259
Accounts Receivable - Customer 29,162 Accounts Payable - Affiliated Companies 520
Accounts Receivable - Affiliated Companies 1,560 Accounts Payable - Negative Cash 3,841
Accrued Receivable - Unbilled (331) Accrued Salaries, Wages & PR Taxes 1,142
Allow Uncollected Receivables (1,758) Warranty Reserve 200
Inventories (Net) 23,587 Accrued Current Liabilities 1,433
Prepayments (Net) 37 Customer Advance Payments 330
------ -------
TOTAL CURRENT ASSETS 52,307 TOTAL CURRENT LIABILITIES 25,725
Fixed Assets 42,404 OTHER LONG TERM LIABILITIES --
------
Accumulated Depreciation (25,711)
--------
FIXED ASSETS (Net) 16,693 TOTAL LIABILITIES 25,725
------
Goodwill 46,946 NET ASSETS 76,822
------
Accumulated Amortization (13,399)
------
Intangibles (Net) 33,547
TOTAL ASSETS 102,547
----------------------------------------------
Total Current Assets $52,307
Less: Total Current Liabilities 25,725
-------
Working Capital $26,582
----------------------------------------------
(1) See paragraph entitled "Exceptions to GAAP in the Opening Statement" in
Attachment II.
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ATTACHMENT II
ADDITIONAL MATTERS RELATING TO THE CALCULATION OF
THE PROPOSED FINAL NET WORKING CAPITAL AMOUNT AND
THE FINAL NET WORKING CAPITAL AMOUNT
The Proposed Final Net Working Capital Amount and the Final Net Working
Capital Amount shall be determined on a basis consistent with the manner in
which the Opening Statement was prepared as disclosed in the notes to the
Opening Statement or as otherwise set forth in this Attachment II. Consistency
of preparation shall mean that, except as otherwise set forth in this Attachment
II (including under the heading "Exceptions to GAAP in the Opening Statement"),
all principles, classifications, methods, practices, assumptions and policies
used in the preparation of the Opening Statement shall be used or applied in the
determination of the Proposed Final Net Working Capital Amount and the Final Net
Working Capital Amount. In addition, since the use of estimates is an integral
part of the preparation of financial statements generally, and was an integral
part of the preparation of the Opening Statement, and since accounting estimates
are inherently subjective, often accompanied by a range of reasonable outcomes,
except as otherwise set forth in this Attachment II, the estimates used in the
determination of the Proposed Final Net Working Capital Amount and the Final Net
Working Capital Amount shall be prepared on a basis consistent with the
estimates used in the preparation of the Opening Statement.
Following are additional agreements and clarifications with respect to
the determination of the Proposed Final Net Working Capital Amount and the Final
Net Working Capital Amount:
ADJUSTMENT OF RESERVES AND VALUATION ACCOUNTS. In the determination of
the Proposed Final Net Working Capital Amount and the Final Net Working Capital
Amount, except as otherwise set forth in this Attachment II, the amount of any
reserves or valuation accounts shall be determined by applying methods,
practices, classifications, assumptions, estimates, policies, factors and
underlying data consistent with those used in determining the reserves or
valuation accounts included in the Opening Statement, and there shall be no
changes made to any reserves or valuation accounts (including, without
limitation, contract reserves, purchase accounting reserves, allowances for bad
debts, inventory reserves, warranty reserves and other reserves), except to the
extent that such changes are required by changes in facts and events occurring
after December 28, 1997 and before the Closing Date.
INVENTORY. For purposes of determining the Proposed Final Net Working
Capital Amount and the Final Net Working Capital Amount, the parties have agreed
contractually that an inventory observation as of the Closing Date, will not be
conducted. Furthermore, in the determination of the Proposed Final Net Working
Capital Amount and the Final Net Working Capital Amount, the raw materials and
finished goods inventory of CE shall be recorded at an amount equal to their net
book value as included in the Opening Statement (which was calculated on a basis
consistent with the inventory policy set forth in the notes to the CE Financial
Statements), except to the extent that
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changes are required by normal business activities (purchases, transfers to/from
work in process or cost of sales relief resulting from shipment of products)
occurring after December 28, 1997 but before the close of business on the day
before the Closing Date, in each case calculated in accordance with the policies
and practices reflected in the Opening Statement.
EXCLUSION OF CERTAIN RESERVES AND LIABILITIES. There shall not be
considered in the determination of the Proposed Final Net Working Capital Amount
and the Final Net Working Capital Amount any reserve or any liability to the
extent such reserve or liability (i) arises out of, results from or relates to
any action taken by the Purchaser, including but not limited to any actions
taken in connection with the Contemplated Transactions, (ii) arises out of,
results from or relates to any actions taken or contemplated to be taken by the
Purchaser, the Seller, CE or any of their Affiliates contemporaneously with or
subsequent to the Closing, (iii) arises out of, results from or relates to a
reserve or liability that CE will not under any circumstances be obligated to
make payment on or otherwise settle at or subsequent to the Closing, (iv)
relates to or is in respect of Taxes, or (v) is indemnified against by the
Seller.
DUE DILIGENCE COSTS. There shall be no amount accrued or reserved for
in connection with the determination of the Proposed Final Net Working Capital
Amount and the Final Net Working Capital Amount for any obligations or
liabilities incurred in connection with the Purchaser's due diligence efforts in
connection with the Contemplated Transactions, including without limitation any
fees and expenses of the counsel, independent accountants or other agents,
advisors or consultants of the Purchaser.
CERTAIN SHARED EXPENSES. There shall not be considered in the
determination of the Proposed Final Net Working Capital Amount and the Final Net
Working Capital Amount any reserve or any liability to the extent such reserve
or liability relates to fees or expenses that, in accordance with the Agreement,
are to be shared by the Seller and the Purchaser including, without limitation,
the fees and expenses contemplated by Section 2.03(d) and Section 13.03 of the
Agreement.
GOING CONCERN. For purposes of determining the Proposed Final Net
Working Capital Amount and the Final Net Working Capital Amount, CE and the
businesses conducted and to be conducted by CE, will be considered a "going
concern" and all of the assets owned by CE shall be deemed to be actively used
in the business of CE and not held for sale or disposal.
CALCULATION OF NET WORKING CAPITAL. Net Working Capital shall be
calculated by subtracting current liabilities from current assets based on the
general ledger accounts maintained by CE and included in the Opening Statement.
EXCEPTIONS TO GAAP IN THE OPENING STATEMENT. The following represent
items which are or may be considered deviations from GAAP in the Opening
Statement:
o Comparative amounts are not presented.
II-2
o While certain explanatory footnotes are presented, such footnotes do
not represent the full complement of disclosures required by GAAP.
o No provision for federal, state or local current or deferred Tax
assets/liabilities has been reflected in the Opening Statement.
o No liability for workers' compensation or provision for pension or
retirement (including supplemental pension or retirement plans)
assets/liabilities or other post employment benefits or restructuring
liabilities has been reflected in the Opening Statement.
o No stockholders' equity is reflected in the Opening Statement.
o No liabilities for self-insurance for auto, casualty, etc. are
included in the Opening Statement.
o No liabilities for incurred but not reported medical claims are
included in the Opening Statement.
o No Environmental Liabilities are included in the Opening Statement.
o No interest liability is provided for on intercompany loans in the
Opening Statement.
II-3
ATTACHMENT III
SUPPLY AGREEMENT
This Supply Agreement is entered into as of the ____ day of ________
1998, by and between Lockheed ▇▇▇▇▇▇ Corporation, a Maryland corporation
("Lockheed ▇▇▇▇▇▇"), and Benchmark Electronics, Inc., a Texas corporation
("Benchmark").
W I T N E S S E T H:
WHEREAS, Lockheed ▇▇▇▇▇▇ and Benchmark have entered into a Purchase
Agreement dated as of January 22, 1998 (as amended from time to time, the
"Agreement"); and
WHEREAS, the Agreement contemplates, among other things, that Lockheed
▇▇▇▇▇▇ will sell all of the outstanding shares of capital stock of Lockheed
Commercial Electronics Company, a Delaware corporation ("CE"), to Benchmark upon
the terms and subject to the conditions set forth in the Agreement;
WHEREAS, Lockheed ▇▇▇▇▇▇ and certain of its Subsidiaries have existing
relationships with CE pursuant to which Lockheed ▇▇▇▇▇▇ and those Subsidiaries
from time to time purchase materials and products from Benchmark;
WHEREAS, Benchmark desires to continue to supply certain materials and
products to Lockheed ▇▇▇▇▇▇ and its Subsidiaries from time to time following the
closing of the Contemplated Transactions;
WHEREAS, Lockheed ▇▇▇▇▇▇ and certain of its Subsidiaries will continue,
in the ordinary course of their business, to have a need for materials and
products of the type previously purchased from Benchmark; and
WHEREAS, Section 10.01 of the Agreement contemplates that Lockheed
▇▇▇▇▇▇ and Benchmark will enter into a supply agreement on the terms and subject
to the conditions set forth in this Supply Agreement;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties contained herein, Lockheed ▇▇▇▇▇▇ and
Benchmark agree as follows:
1. Capitalized terms used but not defined in this Supply Agreement
shall have the meanings ascribed to them in the Agreement.
III-1
2. Lockheed ▇▇▇▇▇▇ covenants and agrees that in the event its ▇▇▇▇▇▇▇
Business Unit ("▇▇▇▇▇▇▇"), in the ordinary course of its business, needs
materials or products of a type currently being purchased by ▇▇▇▇▇▇▇ from CE,
Lockheed ▇▇▇▇▇▇ will give CE an opportunity to submit a proposal to supply such
materials or products. Lockheed ▇▇▇▇▇▇ will consider in good faith any proposal
submitted by CE and in evaluating the proposal will consider, among other
relevant factors, price, quality, service levels, workmanship, manufacturing
controls, security or confidentiality requirements, timeliness, single or
multiple sourcing needs, prior relationships with suppliers and relationships
between ▇▇▇▇▇▇▇' customers and CE or other suppliers. Notwithstanding the
foregoing, however, ▇▇▇▇▇▇▇' decision to purchase materials or products from CE
shall be at the sole and absolute discretion of Lockheed ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇.
3. Lockheed ▇▇▇▇▇▇ covenants and agrees that it will advise its
business units (other than ▇▇▇▇▇▇▇) and its wholly owned Subsidiaries of the
materials and products manufactured by CE and will encourage such business units
and wholly owned Subsidiaries to consider purchasing materials and products from
CE. Lockheed ▇▇▇▇▇▇ agrees to assist CE in its efforts to market materials and
products to business units (other than ▇▇▇▇▇▇▇) and wholly owned Subsidiaries of
Lockheed ▇▇▇▇▇▇ by making introductions of appropriate personnel to CE. In the
event CE desires to seek assistance from Lockheed ▇▇▇▇▇▇ in marketing its
materials and products in accordance with the preceding sentence, CE agrees to
coordinate its efforts with the Vice President of Operations of Lockheed
▇▇▇▇▇▇'▇ Electronics Sector.
4. This Supply Agreement, unless earlier terminated or extended in
writing signed by Lockheed ▇▇▇▇▇▇ and Benchmark, shall terminate at the close of
business on December 31, 2000.
5. Lockheed ▇▇▇▇▇▇ and Benchmark agree that, if any provision of this
Supply Agreement shall be adjudicated to be invalid or unenforceable, such
provision shall be deemed deleted herefrom with respect, but only with respect,
to the operation of such provision in the particular jurisdiction in which the
adjudication was made. To the extent any such provisions may be made valid and
enforceable in such jurisdiction by limitations on the scope of the provision,
Lockheed ▇▇▇▇▇▇ and Benchmark agree that such provision instead shall be deemed
limited to the extent, but only to the extent, necessary to make the provision
enforceable to the fullest extent permissible under the laws and public policies
in such jurisdiction.
6. All notices, requests and other communications to any party
hereunder shall be in writing (including telecopy or similar writing) and shall
be given,
if to Lockheed ▇▇▇▇▇▇:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and
Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
III-2
with copies to:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and
General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Miles & Stockbridge P.C.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Benchmark:
Benchmark Electronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief
Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify for the purpose by notice to the other parties. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Paragraph 6 and evidence of receipt is received or (ii) if given by any
other means, upon delivery or refusal of delivery at the address specified in
this Paragraph 6.
7. Any provision of this Supply Agreement may be amended or waived if,
and only if, such amendment or waiver is in writing and signed, in the case of
an amendment, by Lockheed ▇▇▇▇▇▇ and Benchmark, or in the case of a waiver, by
the party against whom the waiver is to be
III-3
effective. No failure or delay by any party in exercising any right, power or
privilege under this Supply Agreement shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
8. The provisions of this Supply Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns;
provided that no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Supply Agreement without the consent of
Lockheed ▇▇▇▇▇▇, in the case of Benchmark, and Benchmark, in the case of
Lockheed ▇▇▇▇▇▇.
9. As used in this Supply Agreement, any reference to the plural shall
include the singular, and the singular shall include the plural. With regard to
each and every term and condition of this Supply Agreement, the parties
understand and agree that the same have or has been mutually negotiated,
prepared and drafted, and that if at any time the parties desire or are required
to interpret or construe any such term or condition or any agreement or
instrument subject hereto, no consideration shall be given to the issue of which
party actually prepared, drafted or requested any term or condition of this
Supply Agreement.
10. Except as expressly provided herein, this Supply Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof, and supersedes all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter hereof.
11. This Supply Agreement shall be construed in accordance with and
governed by the law of the State of Delaware (without regard to the choice of
law provisions thereof).
12. This Supply Agreement may be signed in counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Supply Agreement shall become
effective when each party hereto shall have received a counterpart hereof signed
by the other party hereto.
III-4
IN WITNESS WHEREOF, the parties hereto have executed this Supply
Agreement as of the date first set forth above.
LOCKHEED ▇▇▇▇▇▇ CORPORATION
By:________________________________
BENCHMARK ELECTRONICS, INC.
By:________________________________
III-5
ATTACHMENT IV
INTERIM SERVICES AGREEMENT
This Interim Services Agreement (this "Agreement") is entered into as
of the ____ day of ___________ 1998, by and between Lockheed ▇▇▇▇▇▇ Corporation,
a Maryland corporation ("Lockheed ▇▇▇▇▇▇"), and Benchmark Electronics, Inc., a
Texas corporation ("Benchmark").
W I T N E S S E T H:
WHEREAS, Lockheed ▇▇▇▇▇▇ and Benchmark have entered into a Purchase
Agreement dated as of January 22, 1998 (the "Purchase Agreement"), pursuant to
which Lockheed ▇▇▇▇▇▇ has agreed to sell, and Benchmark has agreed to buy, all
of the issued and outstanding shares of capital stock of Lockheed Commercial
Electronics Company, a Delaware corporation ("CE"); and
WHEREAS, pursuant to Section 2.04(iii) of the Purchase Agreement,
Lockheed ▇▇▇▇▇▇ has agreed to provide to CE certain services of a type provided
by Lockheed ▇▇▇▇▇▇ and its Affiliates as of the date of the Purchase Agreement,
at costs consistent with past practices; and
WHEREAS, Lockheed ▇▇▇▇▇▇ and Benchmark desire to enter into this
Agreement to give effect to the provisions of Section 2.04(iii) of the Purchase
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
1. DEFINITIONS. Capitalized terms used in this Agreement but not
defined herein shall have the meanings given to them in the Purchase Agreement.
2. SERVICES PROVIDED. During the term of this Agreement, Lockheed
▇▇▇▇▇▇ shall provide to CE, or at its option shall cause one or more of its
Affiliates to provide to CE, those services (the "Services") described in
Exhibit A to this Agreement that CE requests to be performed from time to time.
3. CONSIDERATION. Benchmark shall pay to Lockheed ▇▇▇▇▇▇, or shall
cause CE to pay to Lockheed ▇▇▇▇▇▇, in consideration for the Services provided
hereunder, amounts determined on the basis of the fees referenced in Exhibit A
to this Agreement. In addition, Benchmark shall pay to Lockheed ▇▇▇▇▇▇, or shall
cause CE to pay to Lockheed ▇▇▇▇▇▇, such amounts as may be necessary to
reimburse Lockheed ▇▇▇▇▇▇ for any reasonable out-of-pocket expenses incurred by
Lockheed ▇▇▇▇▇▇ or its Affiliates in performing the Services. Lockheed ▇▇▇▇▇▇
shall invoice Benchmark for the Services provided hereunder on a monthly basis
and Benchmark shall pay, or
IV-1
cause CE to pay, the amount of such invoice in immediately available funds
within 15 days of the date thereof.
4. INFORMATION TO BE PROVIDED TO LOCKHEED ▇▇▇▇▇▇. Where input or other
information has been provided by CE to Lockheed ▇▇▇▇▇▇ or its Affiliates in the
past in connection with the provision of a Service, CE shall provide Lockheed
▇▇▇▇▇▇ or any Affiliate designated by Lockheed ▇▇▇▇▇▇ with information in the
same general format and level of detail and in accordance with the same schedule
followed previously by CE in furnishing such information to Lockheed ▇▇▇▇▇▇ or
its Affiliates.
5. PERFORMANCE STANDARD; CONFIDENTIALITY. Nothing in this Agreement
shall require or be interpreted to require Lockheed ▇▇▇▇▇▇ to provide a Service
to CE beyond the scope and content of such Service as provided by Lockheed
▇▇▇▇▇▇ to CE immediately prior to the date of this Agreement. Lockheed ▇▇▇▇▇▇
will perform, or cause its Affiliates to perform, each Service in the same
general manner that the Service was performed for CE immediately prior to the
date of this Agreement. Lockheed ▇▇▇▇▇▇ will handle, and will cause its
Affiliates to handle, all information disclosed to it or them by CE that CE
identifies as proprietary and confidential in the same general manner as
Lockheed ▇▇▇▇▇▇ handles its own information that it considers proprietary and
confidential.
6. FORCE MAJEURE; REDUCTION OF SERVICES. Neither party shall be liable
for any loss or damage whatsoever arising out of any delay or failure in the
performance of its obligations pursuant to this Agreement to the extent such
delay or failure results from events beyond the control of that party, including
but not limited to acts of God, acts or regulations of any Governmental
Authority, war, accident, fire, flood, strikes, industrial disputes or shortages
of fuel, nor shall any party be entitled to terminate this Agreement in respect
of any such delay or failure resulting from any such event.
7. DISPUTE RESOLUTION. In the event of any dispute between Lockheed
▇▇▇▇▇▇ and Benchmark with respect to the provision of any Service pursuant to
this Agreement, each of Lockheed ▇▇▇▇▇▇ and Benchmark shall designate an
employee as its representative to attempt to resolve the dispute and each such
representative will use reasonable commercial efforts to resolve the dispute
promptly. If the individuals designated by Lockheed ▇▇▇▇▇▇ and Benchmark are
unable to resolve the dispute promptly, the dispute will be submitted to a
member of senior management of each party. Such members of senior management
will meet in person or by telephone conference at least once in the 10-day
period following the submission of the dispute to them and will use reasonable
commercial efforts to resolve the dispute promptly. If such members of senior
management are unable to resolve the dispute within 15 days of the submission of
the dispute to them, the parties may exercise any rights or remedies available
to them in the Purchase Agreement or otherwise.
8. LIMITED LIABILITY. Lockheed ▇▇▇▇▇▇ and its Affiliates shall not be
liable, whether in negligence, breach of contract or otherwise, for any Damages
suffered or incurred by CE, Benchmark or a related Person arising out of or in
connection with the rendering of a Service or any
IV-2
failure to provide a Service, except to the extent that such Damages are caused
by the willful misconduct or gross negligence of Lockheed ▇▇▇▇▇▇ or any of its
Affiliates. In no event shall Lockheed ▇▇▇▇▇▇ or any of its Affiliates be liable
for special, incidental or consequential losses, Damages or expenses, including,
without limitation, loss of profits.
9. TERM AND TERMINATION.
(a) This Agreement shall become effective on the date hereof
and, unless sooner terminated pursuant to the terms hereof, shall continue in
effect until December 31, 1998.
(b) Benchmark may terminate any Service (provided that related
Services may not be terminated in part) prior to the expiration of the term
thereof by providing to Lockheed ▇▇▇▇▇▇ written notice of termination not less
than 30 days before the date of such earlier termination and the provision of
such Service shall terminate at the end of the period of notice.
(c) This Agreement may be terminated in whole or in part
(provided that related Services may not be terminated in part) by either party
if:
(i) such party reasonably and in good faith
determines that the other party is generally unable to pay its debts as they
become due;
(ii) the other party is in material breach of any
provision of this Agreement, provided that the party seeking to terminate this
Agreement for breach shall notify the other party of such breach and provide
such other party with 30 days to cure such breach; or
(iii) the provision or receipt of any such Service is
prohibited by Applicable Law, subjects Lockheed ▇▇▇▇▇▇ or any of its Affiliates,
Benchmark or CE (as the case may be) to increased regulation by any Governmental
Authority or requires Lockheed ▇▇▇▇▇▇ to obtain any license or permit not
otherwise required of Lockheed ▇▇▇▇▇▇.
10. NO AGENCY. Nothing in this Agreement shall be deemed in any way or
for any purpose to constitute either party an agent of the other party in the
conduct of such party's business.
11. SOLE AGREEMENT. This Agreement, including Exhibit A attached
hereto, represents the sole agreement of the parties with respect to the
Services, and no waiver, alteration, or modification of any provision hereof
shall be effective unless in writing and signed by authorized representatives of
both Lockheed ▇▇▇▇▇▇ and Benchmark.
12. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy or similar writing) and
shall be given,
IV-3
if to Lockheed ▇▇▇▇▇▇:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and
Chief Financial Officer
Telecopy (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and
General Counsel
Telecopy (▇▇▇) ▇▇▇-▇▇▇▇
and
Miles & Stockbridge P.C.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to Benchmark:
Benchmark Electronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief
Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
IV-4
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify for the purpose by notice to the other parties. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and evidence of receipt is received or (ii) if given by any other
means, upon delivery or refusal of delivery at the address specified in this
Section.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that this Agreement may not be assigned in whole or in part
(except in the case of an assignment to a purchaser of all or a portion of the
business of the Lockheed ▇▇▇▇▇▇ or Benchmark) without the prior written consent
of the other party hereto, which consent shall not be unreasonably withheld.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LOCKHEED ▇▇▇▇▇▇ CORPORATION
By:__________________________(SEAL)
BENCHMARK ELECTRONICS, INC.
By:__________________________(SEAL)
IV-5
EXHIBIT A
SERVICES
A. Ground maintenance support in connection with the use of the ▇▇▇▇▇▇▇ Campus.
Basis of Service Fee: *
B. Employee badge encoding.
Basis of Service Fee: *
C. Telecommunications services (e.g. remote access phone lines, remote
access modems, services (installations, repairs and disconnects),
interim access, basic phone services and class B network (e-mail)).
Basis of Service Fee: *
D. Offsite storage for data tapes.
Basis of Service Fee: *
E. Utilization of master fire and security protection system for CE Facility.
Basis of Service Fee: *
F. Access to ▇▇▇▇▇▇▇ company physician for management physicals.
Basis of Service Fee: *
G. Support services provided by the following ▇▇▇▇▇▇▇ employee: ▇▇▇▇▇ ▇▇▇▇▇▇.
Basis of Services Fee: *
--------------------
* The costs charged for each of the services will be determined using
cost methodologies consistent with past practices.
IV-6
ATTACHMENT V
CE FACILITY LEASE
This Lease Agreement (this "Lease") is made this ____ day of _________
1998, by and between Lockheed ▇▇▇▇▇▇ Corporation, a Maryland corporation
("Landlord"), and Benchmark Electronics, Inc., a Texas corporation ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord is the owner of the real property and an office
building consisting of approximately 250,000 square feet, located within the
▇▇▇▇ Technical Park in Hillsborough County, New Hampshire, commonly known as
Building #2, ▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Premises"), a map
of which is attached hereto as Exhibit A;
WHEREAS, pursuant to the terms of the Purchase Agreement between
Landlord and Tenant dated as of January 22, 1998 (together with all Exhibits,
Schedules and Attachments thereto, the "Purchase Agreement"), Tenant has agreed
to lease the Premises from Landlord on the terms and conditions set forth in
this Lease; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein and contained in the Purchase Agreement, the
parties agree as follows:
ARTICLE I
TERM
Section 1.01 TERM. The term (the "Prime Term") of this Lease shall
commence on the date hereof (the "Commencement Date") and shall continue for a
period of two years thereafter (the "Expiration Date").
Section 1.02 ADDITIONAL TERM. In the event that Tenant shall desire to
extend this Lease at the end of the Prime Term, Tenant shall be permitted to
extend this Lease for one additional term for a period of up to four years
following the expiration of the Prime Term (the "Additional Term"). Tenant shall
provide Landlord written notice of the intent to lease the Premises for the
Additional Term at least 90 days before the expiration of the Prime Term. Upon
receipt of such written notice by Landlord, Landlord and Tenant shall negotiate
in good faith a lease for the Premises for the Additional Term on terms and
conditions consistent with the general market for the lease of commercial
facilities of the type, location and size of the Premises at that time (the
"General Market Rate"). Notwithstanding the foregoing, in the event that despite
such good faith negotiations
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Landlord and Tenant are unable to agree on the General Market Rate for the
Additional Term, the General Market Rate shall be determined in accordance with
the provisions of Section 1.03 below.
Section 1.03. APPRAISAL.
(a) In the event that Landlord and Tenant cannot agree on the General
Market Rate within 60 days of the Expiration Date, then either party may invoke
its right to appraisal as set forth in this Section 1.03.
(b) To invoke its right to appraisal, the invoking party (the "Invoking
Party") shall send written notice to the other party (the "Non-Invoking Party")
stating that it is invoking its right to appraisal and naming an appraiser with
substantial experience in commercial real estate matters in the general area in
which the CE Facility is located, who shall be a member of the Appraisal
Institute or some other comparable organization. Within 10 days after such
notice, the Non-Invoking Party shall name an appraiser who is also so qualified
and shall provide the Invoking Party with written notice of the same. Within 10
days thereafter, the two appraisers so selected (the "First Appraisers") shall
select a third appraiser (the "Outside Appraiser").
(c) The appraisers (the First Appraisers and the Outside Appraiser)
shall attempt to determine the General Market Rate for the Premises. In making
such determination, the appraisers shall take into account that the Additional
Rent set forth in Section 3.02 of this Lease shall continue without
interruption. In the event that the First Appraisers are unable to determine a
single General Market Rate within 20 days after the date the Outside Appraiser
was selected, each of the First Appraisers shall set his or her own General
Market Rate. In the event that the General Market Rate determined by either of
the First Appraisers is within 10% (a "Close Appraisal") of the General Market
Rate established by the Outside Appraiser (the "Outside Appraisal"), the average
of the Close Appraisal or the Close Appraisals, as the case may be, and the
Outside Appraisal shall be the General Market Rate. In the event that neither
appraisal by the First Appraisers is a Close Appraisal, the General Market Rate
shall be (i) the Outside Appraisal if it falls between the other two appraisals,
(ii) the average of the Outside Appraisal and the lower of the other two
appraisals if the Outside Appraisal is lower than both of the other two
appraisals, and (iii) the average of the Outside Appraisal and the higher of the
other two appraisals if the Outside Appraisal is higher than both of the other
two appraisals. The General Market Rate so determined shall be conclusive and
binding upon the parties.
(d) Each party shall bear all of the costs and expenses of the
appraiser selected by it and the parties shall share equally the costs of the
Outside Appraiser.
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ARTICLE II
THE PREMISES
Section 2.01 USE OF PREMISES. Tenant may use and occupy the Premises
during the term of this Lease for offices or light manufacturing and for no
other purposes except with the prior written consent of Landlord, provided that
any such use of the Premises shall at all times comply in all material respects
with all applicable laws and regulations, including zoning and land use laws and
regulations.
Section 2.02 ACCESS, UTILITIES, AND PARKING. Landlord shall provide
Tenant with adequate rights (i) of ingress and egress from a publicly dedicated
road to the Premises and (ii) to public utilities in order to operate the
Premises in the manner currently being utilized. Additionally, Tenant shall be
entitled to the use of the parking lots located within the Premises sufficient
to accommodate (i) those employees that work for Lockheed Commercial Electronics
Company immediately prior to the Commencement Date and (ii) a reasonable number
of additional employees that may be employed by Tenant at the Premises in the
future.
Section 2.03 SERVICES PROVIDED BY LANDLORD. Landlord shall provide
Tenant electric power, water, sewer, fire protection (consisting only of
sprinklers, fire extinguishers and smoke detectors), outside maintenance
services (including plowing for the roads and parking lots of the Premises) for
the Premises, in the manner that these services have been supplied to Lockheed
Commercial Electronics Company by Landlord prior to the execution of this Lease.
Tenant shall reimburse Landlord for expenses incurred in providing these
services pursuant to the terms of Section 3.02.
Section 2.04 SERVICES NOT PROVIDED BY LANDLORD. Tenant, at its own
expense, shall be responsible for plant engineering services (including, but not
limited to, procuring heating and air conditioning maintenance and repair,
ordinary interior repair, maintenance and security for the Premises), janitorial
services, trash removal and interior window washing for the Premises.
ARTICLE III
RENT
Section 3.01 BASE RENT. Tenant shall pay Landlord $382,000 per year as
rent for the Premises during the Prime Term in equal, consecutive, monthly
installments of $31,834 (the "Prime Term Rent"). The first monthly payment of
the Prime Term Rent shall be due and payable on the Commencement Date. Each
subsequent payment of the Prime Term Rent shall be due and payable on the same
calendar day of each month for the term of this Lease. In the event any such
Prime Term Rent shall not have been paid by the close of business on the fifth
calendar day following the due date for such Prime Term Rent, Tenant shall pay
to Landlord a late fee equal to 5% of the overdue amount.
Section 3.02 ADDITIONAL RENT. Tenant shall pay as additional rent the
costs associated with real property taxes, casualty and liability insurance
policies, and the services provided by Landlord
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pursuant to Section 2.03 for the Premises (the "Additional Rent"). The
Additional Rent shall be pro rated based on Tenant's percentage occupancy of the
Premises. Tenant acknowledges that for the purposes of this Lease, Tenant shall
be deemed to occupy 74% of the Premises for so long as a portion of the Premises
is subleased pursuant to that certain sublease between Tenant (as Sublessor) and
▇▇▇▇▇▇▇, a Lockheed ▇▇▇▇▇▇ Company ("▇▇▇▇▇▇▇") and a division of Landlord (as
Sublessee) dated of even date herewith (the "Sublease"). If at any time during
the term of this Lease ▇▇▇▇▇▇▇ ceases to occupy a portion of the Premises
pursuant to the Sublease, then Tenant shall be deemed to occupy 100% of the
Premises for the purposes of calculating the Additional Rent pursuant to this
Section 3.02. Notwithstanding any provision of this Section 3.02 to the
contrary, Tenant shall also pay as Additional Rent 89% of the cost of electric
power for the Premises during the term of this Lease on the condition that
▇▇▇▇▇▇▇ occupies a portion of the Premises under the Sublease. In the event
▇▇▇▇▇▇▇ does not occupy a portion of the Premises, pursuant to the Sublease, at
any time during the term of this Lease, then Tenant shall pay 100% of the cost
of electric power for the Premises. The provisions of the preceding sentence
shall be altered by agreement of the parties, if accomplishing the foregoing
presents unreasonable difficulties under, or is otherwise required by,
applicable State of New Hampshire utilities laws. Any such Additional Rent shall
be due and payable within 10 days of receipt by Tenant of a written request for
payment thereof and reasonable documentation regarding such Additional Rent.
ARTICLE IV
SIGNS
Section 4.01 SIGNS. Tenant shall have the right, at its expense, to
maintain within or on the exterior of the Building, or at its entrance to the
Premises, such signs, directories or marquees as shall serve to identify Tenant
and to direct guests to Tenant's place of business. Such signs, directories, or
marquees shall be subject to Landlord's approval, which shall not be
unreasonably withheld. Landlord agrees to identify Tenant prominently, at
Tenant's expense, by a sign located at the entrance to the Premises as soon as
reasonably practicable after the Commencement Date, such sign to be of a design
mutually approved by Landlord and Tenant and subject to compliance with local
zoning ordinances.
ARTICLE V
TRANSFER AND SUBLETTING
Section 5.01 TRANSFER AND SUBLETTING. Tenant shall not sublet, assign,
transfer, vacate or in any manner dispose of the Premises or any part thereof
for all or any part of the term of this Lease, other than pursuant to the
▇▇▇▇▇▇▇ Sublease, without the prior written consent of Landlord. Notwithstanding
the above, Tenant may assign this Lease to Lockheed Commercial Electronics
Company its successors and assigns, without first obtaining the prior written
consent of Landlord. In the event Tenant assigns this Lease to Lockheed
Commercial Electronics Company, Tenant shall remain at all times liable for any
amounts owed to Landlord pursuant to this Lease.
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ARTICLE VI
SURRENDER OF PREMISES
Section 6.01 SURRENDER OF PREMISES. On the Expiration Date, Tenant
shall peaceably surrender the Premises in its current condition, reasonable wear
and tear excepted, and ensure that the Premises are broom clean. Prior to the
Expiration Date, Tenant shall remove from the Premises all Hazardous Substances
(as defined in Section 13.01) used within, in, or as part of its business that
were placed in or on the Premises on or after the Closing Date. However, nothing
in this Lease shall require either Landlord or Tenant to remove asbestos
containing building materials present upon the Premises prior to the
Commencement Date. Any personal property left upon the Premises on the
Expiration Date shall be deemed to be abandoned by Tenant.
ARTICLE VII
SALE OF PREMISES
Section 7.01 COOPERATION BETWEEN PARTIES. Tenant acknowledges that
Landlord may actively market the Premises for sale to a third party at any time
during the Prime Term or the Additional Term of this Lease.
ARTICLE VIII
IMPROVEMENTS TO PREMISES
Section 8.01 ALTERATIONS AND ADDITIONS. Tenant shall not make any
alterations, additions, or improvements over $25,000 to the Premises without the
prior written consent of Landlord. In no event shall any structural change or
any change or modification to the structure of the Premises' heating,
electrical, or plumbing services be undertaken by Tenant or an employee or agent
of Tenant without Landlord's prior written consent. Any approved alterations,
additions, or improvements, shall be done in accordance with the applicable
county, city and State laws and ordinances and building and zoning rules and
regulations. Tenant hereby expressly assumes full responsibility for all damages
and for injuries which may result to any person or property by reason of or
resulting from said alterations, additions, or improvements, and shall hold
Landlord harmless with respect thereto, except with respect to those injuries
and damages arising out of Landlord's fault or negligence. On the Expiration
Date, all alterations, additions, and improvements to the Premises shall become
the property of Landlord.
Section 8.02 APPROVAL OF LANDLORD REQUIRED. No such alterations,
additions or improvements over $25,000 may be commenced in the Premises, until
Tenant has prepared or had prepared plans and specifications for the work and
obtained Landlord's written approval therefor.
Section 8.03 PAYMENT BY TENANT. Tenant shall pay, when due, any and all
sums of money that may be due for any labor services, materials, supplies or
equipment alleged to have been
V-5
furnished or to be furnished to or for Tenant in, on, or about the Premises and
which may be secured by any mechanics, material or other liens against the
Premises or of Landlord's interest therein, and Tenant shall cause each such
lien to be fully discharged and released at the time the performance of any
obligation secured by any such lien matures or becomes due. Landlord reserves
the right at any or all times to alter the Premises or add thereto so long as it
does not have an adverse effect on Tenant's right to quiet enjoyment of the
Premises.
ARTICLE IX
LIABILITY
Section 9.01 LIABILITY. Landlord in no event shall be liable for, and
Tenant shall indemnify and hold harmless Landlord from, any damage or injury to
Tenant or any agent or employee of Tenant including, without limitation,
business invitees and contract laborers, or to any person or persons coming upon
the Premises in connection with the occupancy by Tenant of the Premises, or to
any goods, chattels or other property of Tenant, or any other person or persons
which may during the term of this Lease be located in the Premises, unless
Landlord was responsible for such injury through Landlord's own negligence or
intentional act. Landlord shall not be liable for, and Tenant shall indemnify
and hold harmless Landlord from, any damage to Tenant's personal property and to
personal property of others in Tenant's possession or under Tenant's care and
control located within the Premises whether such damage is caused or contributed
to by fire, water, rain, snow, breakage of pipes, Acts of God, leakage, or in
the event that such damage is due to the fault or negligence of Tenant, its
agents or employees, business invitees, and contract laborers, unless Landlord
was responsible for such damage through Landlord's own negligence or intentional
act. Tenant shall carry insurance to cover damage by fire or other casualty to
Tenant's personal property.
ARTICLE X
INSPECTION
Section 10.01 LANDLORD'S INSPECTION. Upon prior notice, Landlord and
persons designated by Landlord have the right to enter the Premises at
reasonable hours to examine the same and to do such work as Landlord is
obligated to do under the terms of this Lease, or to do such work as Landlord
shall deem necessary for the safety or preservation of the Premises; provided
however, that the same shall not interfere unreasonably with the conduct of
Tenant's business.
Section 10.02 QUIET ENJOYMENT. Subject to the terms of this Lease,
Landlord covenants that if Tenant pays the rent pursuant to Section 3.01 and the
Additional Rent, performs all of its obligations provided for hereunder and
observes all of the other provisions hereof, Tenant shall at all times during
the Prime Term peaceably and quietly have, hold and enjoy the Premises, without
any interruption or disturbance from Landlord.
ARTICLE XI
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INDEMNIFICATION
Section 11.01 INDEMNIFICATION. Tenant shall defend and indemnify
Landlord and agrees to hold Landlord harmless from any injury, cost or damage to
Landlord or Landlord's agents or employees and from any and all liability for
injury to third persons or damage to the property of third persons, including
expenses, and reasonable counsel fees occurring by reason of any negligent or
unlawful acts or omissions of Tenant, Tenant's agents, consultants, contract
laborers and invitees or employees.
Section 11.02. ENVIRONMENTAL INDEMNIFICATION. Tenant shall defend and
indemnify Landlord and agrees to hold Landlord harmless from any and all Damages
(as defined below) arising during or after the term of this Lease from or in
connection with the use, storage, generation, disposal, discharge, release or
emission of Hazardous Substances (as defined in Section 13.01) in, on or about
the Premises by Tenant, Tenant's agents, employees, contractors or invitees.
This indemnification shall expressly include, without limitation, any and all
such Damages due to any Remedial Action (as defined below), and shall survive
indefinitely after the expiration or termination of this Lease.
For the purposes of this Section 11.02, "Damages" means all demands,
claims, actions or causes of action, assessments, losses, damages, costs,
expenses, liabilities, judgments, awards, fines, sanctions, penalties, charges
and amounts paid in settlement, including, without limitation, reasonable costs,
fees and expenses of attorneys, experts, accountants, appraisers, consultants,
witnesses, investigators and any other agents or representatives of such person
(with such amounts to be determined net of any resulting tax benefit and net of
any refund or reimbursement of any portion of such amounts, including, without
limitation, reimbursement by way of insurance, third party indemnification or
the inclusion of any portion of such amounts as a cost under Government
Contracts), but specifically excluding (i) any costs incurred by or allocated to
Landlord with respect to time spent by employees of Landlord or any of its
affiliates, (ii) any consequential, exemplary or punitive damages and (iii) the
decrease in the value of any asset to the extent that such valuation is based on
a use of such asset other than its use as of the Commencement Date.
For the purposes of this Section 11.02, "Remedial Action(s)" means the
investigation, clean-up or remediation of contamination or environmental
degradation or damage caused by, related to or arising from the generation, use,
handling, treatment, storage, transportation, disposal, discharge, release, or
emission of Hazardous Substances, including, without limitation, investigations,
response and remedial actions under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, corrective action under the
Resource Conservation and Recovery Act of 1976, as amended, and clean-up
requirements under similar state Environmental Laws (as defined in Section
13.01).
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ARTICLE XII
MAINTENANCE
Section 12.01 MAINTENANCE OF PREMISES. Tenant agrees to maintain the
Premises, including the heating and electrical systems for the Premises, in
substantially the same condition as they are on the Commencement Date,
reasonable wear and tear, and damage by fire and other casualty excepted,
acknowledging that the Premises are now in good condition. Tenant shall not
permit the Premises to be overloaded, damaged, stripped or defaced, nor suffer
any waste.
ARTICLE XIII
ENVIRONMENTAL SAFETY
Section 13.01 HAZARDOUS SUBSTANCES. Tenant shall not cause or permit
any Hazardous Substances (as defined below) to be used, stored, generated or
disposed of in, on or about the Premises by Tenant, its agents, employees,
contractors or invitees, except for such Hazardous Substances as are normally
utilized in an office or light manufacturing environment. Any such Hazardous
Substances permitted on the Premises as hereinabove provided, and all containers
therefor, shall be used, kept, stored and disposed of in a manner that complies
with all Environmental Laws. Tenant shall not discharge, release or emit
Hazardous Substances on or about the Premises so as to pollute or contaminate
air, soil (including sediment and subsurface soil), or water (including
groundwater). Any testing, control, or treatment of discharges, releases or
emissions of Hazardous Substances required as a result of Tenant's use and
occupancy of the Premises shall be solely the responsibility of Tenant, and
costs incurred by Landlord in effecting any such tests, controls, or treatment
shall be reimbursed by Tenant to Landlord upon demand as Additional Rent.
Landlord reserves the right to enter upon the Premises at any time throughout
the term of this Lease to assure compliance with this Section 13.01.
For the purposes of this Section 13.01 and Sections 6.01 and 11.02,
"Hazardous Substances" means substances defined as "hazardous substances,"
"hazardous materials," "hazardous wastes," pollutants," or "contaminants," and
any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous
substance, waste, or material, including, without limitation, asbestos and
petroleum, its derivatives, by-products and other hydrocarbons, in each case as
regulated under any Environmental Law.
For the purposes of this Section 13.01 and Section 11.02,
"Environmental Laws" means any and all past, present or future federal, state,
local and foreign statutes, laws, regulations, ordinances, judgments, orders,
codes, injunctions, judicial decisions, permits or governmental restrictions or
agreements with any governmental authority, which relate to the environment,
human health and safety, or to pollutants, contaminants, wastes or chemicals or
any toxic, radioactive, ignitable,
V-8
corrosive, reactive or otherwise hazardous substances, wastes or materials or
which impose liability for or standards of conduct concerning the manufacture,
processing, generation, distribution, use, treatment, storage, disposal,
cleanup, transport or handling of Hazardous Substances including, the Resource
Conservation and Recovery Act of 1976, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendment and Reauthorization Act of 1984, as amended, the Toxic
Substances Control Act, as amended, any other so-called "Superfund" or
"Superlien" law, and the Occupational Safety and Health Act of 1970, as amended.
ARTICLE XIV
BREACH
Section 14.01 BREACH OR DEFAULT BY TENANT. Any breach by Tenant of any
conditions of this Lease, other than payment of the rent pursuant to Section
3.01, may be cured by Landlord for the account of and at the expense of Tenant,
and any sums so advanced shall be paid to Landlord 14 days after Landlord
provides Tenant of notice thereof. Further, if Tenant shall fail to pay the rent
pursuant to Section 3.01 or the Additional Rent within 14 days after being due
and receiving a written demand therefor, Landlord shall have the right to
recover the rent owed (together with any applicable late fee) and to reenter and
take possession of the Premises and cancel and annul the remainder of this
Lease. If Tenant defaults in any condition or covenant of the Lease or in
performing the same, and fails to correct such default within 14 days of
receiving the written notice of Landlord thereof, Landlord may, at its option,
terminate this Lease; provided that such default is a default that by its nature
is curable within such 14-day period.
Section 14.02 BREACH OR DEFAULT BY LANDLORD. If Landlord defaults in
any condition or covenant of the Lease or in performing the same, and fails to
correct such default within 14 days of receiving written notice of Tenant
thereof, Tenant may, at its option, terminate this Lease on the condition that
such default is by its nature curable within such 14-day period.
ARTICLE XV
TAXES
Section 15.01 REALTY TAXES. Landlord shall pay all real property taxes
which have been or may be assessed by any lawful authority against the Premises.
Tenant shall reimburse Landlord for the real property taxes related to the
Premises as Additional Rent as provided for in Section 3.02.
Section 15.02 PERSONAL PROPERTY TAXES. Tenant shall be liable for the
payment of all taxes levied against any of Tenant's personal property or trade
fixtures placed in, on, or about the Premises, including, without limitation,
the shelves, counters, vaults, vault doors, wall safes, partitions, machinery,
and electrical or electronic equipment. If Landlord is required to pay any of
such taxes, Tenant upon demand shall promptly reimburse Landlord therefor.
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ARTICLE XVI
INSURANCE
Section 16.01 LIABILITY INSURANCE. From the Commencement Date until the
expiration of this Lease, Tenant shall carry and keep in full force and effect
at all times for the protection of Landlord and Tenant, comprehensive general
liability insurance for bodily injury, death and damage to the property of
others, including Tenant's legal liability for damage to the Premises and
blanket contractual liability, with respect to all business conducted from the
Premises and the use and occupancy thereof, including the activities, operations
and work conducted or performed by Tenant, by any other person on behalf of
Tenant, by those for whom Tenant is in law responsible, and by any other person
on the Premises and/or accessing the recreational facilities, with minimum
limits of coverage of at least $1,000,000 for each occurrence of property damage
and bodily injury with an aggregate of $3,000,000. Notwithstanding the
foregoing, Landlord shall have the right to require Tenant to increase the
minimum limits of coverage set forth above, from time to time, to the standard
limits of coverage required for comparable property in the Hudson, New Hampshire
area.
Section 16.02 FIRE AND CASUALTY INSURANCE. Tenant shall obtain and
maintain in full force and effect at all times insurance policies against fire,
theft, vandalism, malicious mischief, leakage and such additional perils as now
are or hereafter may be included in a standard extended coverage endorsement
from time to time in general use in the Hudson, New Hampshire area, insuring all
of the improvements comprising the Premises, as well as Tenant's improvements in
the Premises, in an amount equal to not less than the full replacement value
thereof.
Section 16.03 POLICY REQUIREMENTS. All insurance policies carried by
Tenant pursuant to this Article XVI, and any other insurance policies carried by
Tenant with respect to the Premises, shall: (i) be designated as "Primary" and
be issued in form acceptable to Landlord by good and solvent insurance companies
licensed to do business in the State of New Hampshire and reasonably
satisfactory to Landlord; (ii) name Landlord and any other parties in interest,
from time to time designated by notice from Landlord to Tenant, as an additional
insured; (iii) provide for at least 30 days prior written notice to Landlord of
any cancellation or material alteration of such policy or of any defaults
thereunder; (iv) contain an express waiver of any right of subrogation by the
insurance company against Landlord and Landlord's employees and agents; (v)
contain an automatic increase in insurance endorsement providing appropriate
inflation protection; and (vi) have such other form and content as Landlord may
reasonably require. On the commencement Date, Tenant shall provide Landlord with
a Certificate of Insurance reciting the foregoing as evidence of such coverage.
ARTICLE XVII
BANKRUPTCY, WAIVER OR DEFAULT
Section 17.01 BANKRUPTCY, WAIVER OR DEFAULT. In the event Tenant files
a voluntary petition in bankruptcy, makes assignment for the benefit of
creditors, or is adjudged a bankrupt, or if a receiver, trustee or custodian is
appointed for Tenant by any court, or if Tenant files any petition for relief
under any section of the bankruptcy laws of the United States now in force or
hereafter
V-10
enacted, or if Tenant takes advantage of any insolvency act, or if the interest
of Tenant shall be sold under any execution or other legal process issued out of
any court, or if Tenant shall abandon or vacate the Premises during the term of
this Lease, or if Tenant shall breach any promise or covenant herein, then in
any such event it shall be lawful for Landlord at any time thereafter, at its
option upon 10 days written notice to Tenant, to re-enter said premises and
again have possession thereof and occupy the same as if this Lease had not been
made, and thereupon this Lease shall cease and become null and void.
ARTICLE XVIII
SUBORDINATION
Section 18.01 SUBORDINATION. This Lease shall be subject and
subordinate to any and all mortgages, deeds of trust and other instruments in
the nature of a mortgage, now or at any time hereafter recorded, other than the
Mortgage and Promissory Note dated July 28, 1982 between Hi-Tension Realty
Corporation, Mortgagor, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, Mortgagees, which Landlord has represented and does represent to
Tenant is invalid, and Tenant shall, when requested, promptly execute and
deliver such written instruments as shall be necessary to show the subordination
of this Lease to said mortgages, deeds of trust or other such instruments in the
nature of a mortgage. Notwithstanding anything in this Lease to the contrary, a
condition precedent to the effectiveness of the subordination described in this
paragraph, shall be that the holder of any mortgage, ground lease or other
security instrument to which this Lease is to be subordinated or to whom Tenant
is to attorn, shall agree pursuant to a written agreement (hereinafter referred
to as a "Non-Disturbance Agreement") delivered to Tenant, that (i) so long as
Tenant is not in default under this Lease (beyond any period given to Tenant
hereunder to cure such default), Tenant's use and occupancy of the Premises and
its rights under this Lease shall not be disturbed or affected by the
termination of such ground or underlying lease prior to the expiration or
termination of this Lease or by any foreclosure or other action (or by the
delivery or acceptance of a deed or other conveyance or transfer in lieu
thereof) which may be instituted or undertaken in order to enforce any right or
remedy available to the holder of such instrument, (ii) Tenant shall not be
named as a party defendant in any foreclosure, summary or any other action
commenced by any such ground or underlying lessor or secured party, and (iii)
any party succeeding to the interest of Landlord as a result of any such
enforcement action or otherwise shall be bound to Tenant, and Tenant shall be
bound to it, under all of the terms, covenants and conditions of this Lease with
the same force and effect as if such party were the original Landlord under this
Lease. Landlord covenants and agrees that it will obtain and deliver to Tenant a
Non-Disturbance Agreement in accordance with the foregoing provisions from the
then holder(s) of any mortgage, deed of trust, ground lease or other security
instrument affecting the Premises on or before the date the Premises are ready
for occupancy, failing which tenant may, at its option, terminate this Lease
whereupon any prepaid rent or other prepaid charges or deposits paid by Tenant
to Landlord shall be immediately refunded.
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ARTICLE XIX
MISCELLANEOUS
Section 19.01 NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given:
if to Landlord:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and
Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and
General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Miles & Stockbridge P.C.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to Tenant:
Benchmark Electronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief
Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
V-12
with a copy to:
Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such addresses or telecopy numbers and with such other copies, as such
party may hereafter specify for the purpose of notice to the other parties. Each
such notice, request or other communication shall be effective (I) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section 19.01 and evidence of receipt is received or (ii) if given by any
other means, upon delivery or refusal of delivery at the address specified in
this Section 19.01.
Section 19.02 EMINENT DOMAIN. If the whole or any part of the Premises
shall be taken by public authority under the power of eminent domain, then the
term of this Lease shall cease on the part so taken from the day that possession
of that part shall be required for any purpose by said public authority, and the
rent and the Additional Rent shall be paid up to that day, and if such portion
of the Premises are so taken as to, in Tenant's opinion, destroy the usefulness
of the Premises for the purpose for which the Premises were leased, then, from
that day, Tenant shall have the right either to terminate this Lease and declare
the same null and void, or to continue in the possession of the remainder of the
same under the terms herein provided, except that the rent shall be reduced in
proportion to the amount of the Premises taken based on the value of the portion
taken to the value of the remaining part. All damages awarded for such taking
shall belong to and be the property of Landlord, including such damages as shall
be awarded as compensation for diminution in value to the leasehold, provided,
however, that Landlord shall not be entitled to any portion of the award made to
Tenant for Tenant's furnishings or Tenant's business relocation expenses.
Section 19.03 DESTRUCTION OF PREMISES. If, during the term of this
Lease, the Premises are totally or partially destroyed from any cause, rendering
the Premises totally or partially inaccessible or unusable, Landlord shall
restore the destruction if the restoration can be made under the existing laws
and can be completed within 120 working days after the destruction. Such
destruction shall not terminate the Lease. During the period that the Premises
are being restored Tenant shall neither pay nor owe the rent pursuant to either
Section 3.01 or the Additional Rent to Landlord. If the restoration cannot be
made within 120 days, then within 10 days after such destruction Tenant or
Landlord can terminate this Lease immediately by giving written notice and
neither party shall have any further obligation to the other with respect to
this Lease.
Section 19.04 ENTIRE AGREEMENT. Except as otherwise expressly
contemplated by the Purchase Agreement, this Lease and the Purchase Agreement
contain all representations, understandings, agreements and commitments of
Landlord and Tenant. The Lease between Lockheed ▇▇▇▇▇▇▇, Inc. and CE dated
September 26, 1987, as amended and any other written or oral
V-13
statements or promises of any type whatsoever shall be null and void and of no
effect whatsoever in the interpretation of this Lease.
Section 19.05 APPLICABLE LAW; JURISDICTION. This Lease shall be
construed in accordance with the laws of the State of New Hampshire without
reference to the conflicts of laws principles thereof. The forum for any
disputes arising hereunder shall be a court of competent jurisdiction sitting in
the State of New Hampshire, and by executing this Lease, Landlord and Tenant
consent to such jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed on the date first above written.
LANDLORD:
LOCKHEED ▇▇▇▇▇▇
CORPORATION, by LMC
Properties, Inc.,
attorney-in-fact under
irrevocable power of
attorney dated June 5, 1996
By:__________________________(SEAL)
Name:
Title:
TENANT:
BENCHMARK ELECTRONICS, INC.
By:__________________________(SEAL)
Name:
Title:
V-14
ATTACHMENT VI
▇▇▇▇▇▇▇ SUBLEASE
This Sublease (this "Sublease") is made this ____ day of _________
1998, by and between Benchmark Electronics, Inc., a Texas corporation
("Sublessor"), and ▇▇▇▇▇▇▇, a Lockheed ▇▇▇▇▇▇ Company and a division of Lockheed
▇▇▇▇▇▇ Corporation, a Maryland corporation ("Sublessee").
W I T N E S S E T H:
WHEREAS, Sublessor is the lessee under a prime lease (the "Prime
Lease") for an office building located within the ▇▇▇▇ Technical Park in
Hillsborough County, New Hampshire, commonly known as Building #2, ▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Building");
WHEREAS, Sublessee currently occupies approximately 52,000 square feet
on the second floor of the Building and makes use of the Common Areas (as
hereinafter defined) of the Building, together the 52,000 square feet and the
Common Areas shall be referred to as the "Premises"); and
WHEREAS, Sublessee desires to lease from Sublessor the Premises on the
terms and conditions set forth in this Sublease;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
ARTICLE I
TERM
Section 1.01 TERM. The term (the "Prime Term") of this Sublease (the
"Term") shall commence on the date hereof (the "Commencement Date") and shall
continue for a period of two years thereafter.
Section 1.02 ADDITIONAL TERMS.
(a) In the event that Sublessee shall desire to extend this Sublease at
the end of the Prime Term, Sublessee shall provide Sublessor with written notice
of such desire and of the desired term of any such extension, which term shall
be a period of up to four years following expiration of the Prime Term (the
"Additional Term"), at least 90 days before the expiration of the Prime Term.
The Rent (as defined herein) for the Additional Term shall be the same, on a per
square foot basis, as the Rent paid by Sublessor during the Additional Term of
the Prime Lease. All other terms and
VI-1
conditions of this Sublease shall remain in full force and effect during the
Additional Term of this Sublease.
(b) Notwithstanding anything contained herein to the contrary,
Sublessee acknowledges and agrees that Sublessor's right to Sublease the
Premises for the Prime Term and Additional Term is subject to its right to
sublease under the Prime Lease, and the continuation of the Prime Lease beyond
the Prime Term of the Prime Lease. If the Prime Lease expires or terminates
prior to the expiration or termination of this Sublease, Sublessee acknowledges
that all of its rights hereunder shall terminate simultaneously therewith and,
upon such event Sublessor shall have no further obligation to sublease the
Premises to Sublessor hereunder.
Section 1.03. SUBLESSOR'S OPTION TO TERMINATE. At any time during the
Prime Term or the Additional Term of this Sublease, Sublessor may, upon at least
12 months prior written notice to Sublessee, terminate Sublessee's interest in
this Sublease and Sublessee shall vacate the Premises pursuant to such written
notice.
ARTICLE II
THE PREMISES
Section 2.01 USE OF PREMISES. Sublessee may use and occupy the Premises
during the term of this Sublease for offices, a research and development lab,
engineering or manufacturing and for no other purposes except with the prior
written consent of Sublessor, provided that any such use of the Premises shall
at all time comply with all applicable laws and regulations, including zoning
and land use laws and regulations.
Section 2.02 USE OF COMMON AREAS. Sublessee shall also have the use of
the following common areas of the Building (the "Common Areas"):
(i) the cafeteria;
(ii) the hallways, lobby areas, elevators, and other areas of
ingress and egress from the Building;
(iii) the bathrooms;
(iv) the conference center;
(v) the shipping and receiving dock;
(vi) the nurse facilities;
(vii) the shower facilities;
(viii) photocopying and reproduction services; and
(ix) the parking facilities, including five specially designated
executive parking spaces, for executive personnel of Sublessee
(two of which being in the parking lot in front of the
Building and three of which being in the parking lot located
at the southerly side of the Building)
VI-2
Section 2.03 SERVICES PROCURED BY SUBLESSEE. Sublessee shall procure
electric power, water, sewer, fire protection (consisting only of sprinklers,
fire extinguishers and smoke detectors), outside maintenance services (including
plowing for the roads and parking lots of the Building) for the Premises
directly from the Landlord (as defined in the Prime Lease).
Section 2.04 SERVICES PROVIDED BY SUBLESSOR. Sublessor shall provide
plant engineering services (including, but not limited to, heating and air
conditioning maintenance and repair, ordinary interior repair, maintenance and
security for the Premises), janitorial services, trash removal and interior
window washing for the Premises. Sublessee shall reimburse Sublessor for
expenses incurred in providing these services pursuant to the terms of Section
3.02.
Section 2.05 COMPLIANCE WITH LAWS. Sublessee shall comply with all
applicable federal, state and local laws, ordinances and regulations with
respect to its use and occupancy of the Premises. Sublessee shall not permit the
conduct of any business trade or occupation on the Premises, or anything to be
done thereon which may void or make voidable any policy of insurance held by
Sublessor thereon, or which will be unlawful, improper, noisy or offensive or
contrary to any federal, state or local laws or regulations.
ARTICLE III
RENT
Section 3.01 MONTHLY RENT. Sublessee shall pay Sublessor $8,320 per
month as rent for the Premises during the Prime Term of this Sublease (the
"Rent"). The first payment of the Rent shall be due and payable on the
Commencement Date. Each subsequent payment of the Rent shall be due and payable
on the same calendar day of each month for the term of the Sublease. In the
event any such Rent shall not have been paid by the close of business on the
fifth calendar day following the due date for such Rent, Sublessee shall pay to
Sublessor a late fee equal to 5% of the overdue amount.
Section 3.02 ADDITIONAL RENT. Sublessee shall pay as additional rent
the costs associated with the services provided by Sublessor pursuant to Section
2.04 for the Premises (the "Additional Rent"). The Additional Rent shall be pro
rated based on Sublessee's percentage occupancy of the Premises. Sublessee
acknowledges that for the purposes of this Sublease, Sublessee shall be deemed
to occupy 26% of the Premises.
ARTICLE IV
SIGNS
Section 4.01 SIGNS. Sublessee shall have the right, at its expense, to
maintain within or on the exterior of the Building such signs, directories or
marquees as shall serve to identify Sublessee and to direct guests to
Sublessee's place of business. Such signs, directories, or marquees shall be
subject to Sublessor's approval, which shall not be unreasonably withheld.
Sublessor agrees to
VI-3
prominently identify Sublessee by a sign located at the entrance to the Building
as soon as reasonably practical after the Commencement Date, such sign to be of
a design mutually approved by Sublessor and Sublessee and subject to compliance
with local zoning ordinances.
ARTICLE V
TRANSFER AND SUBLETTING
Section 5.01 TRANSFER AND SUBLETTING. Sublessee shall not sublet,
assign, transfer, vacate or in any manner dispose of the Premises or any part
thereof for all or any part of the term of this Sublease without the prior
written consent of Sublessor.
ARTICLE VI
SURRENDER OF PREMISES
Section 6.01 SURRENDER OF PREMISES. On the Termination Date, Sublessee
shall peaceably surrender the Premises in its current condition, reasonable wear
and tear excepted. Neither Sublessor nor Sublessee shall be required to remove
asbestos containing building materials present upon the Premises as of the
Commencement Date. Any personal property left upon the Premises on the
Termination Date shall be deemed abandoned by Sublessee.
ARTICLE VII
IMPROVEMENTS TO PREMISES
Section 7.01 ALTERATIONS AND ADDITIONS. Sublessee shall not make any
alterations, additions, or improvements over $25,000 to the Premises without the
prior written consent of Sublessor. In no event shall any structural change or
any change or modification to the structure of the Premises' heating,
electrical, or plumbing services be undertaken by Sublessee or an employee or
agent of Sublessee without Sublessor's prior written consent. Any approved
alterations, additions, or improvements, shall be done in accordance with the
applicable county, city and State laws and ordinances and building and zoning
rules and regulations. Sublessee hereby expressly assumes full responsibility
for all damages and for injuries which may result to any person or property by
reason of or resulting from said alterations, additions, or improvements, and
shall hold Sublessor harmless with respect thereto, except with respect to those
injuries and damages arising out of Sublessor's fault or negligence. On the
Termination Date, all alterations, additions, and improvements to the Premises
shall become the property of Sublessor.
Section 7.02 APPROVAL OF SUBLESSOR REQUIRED. No such alterations,
additions or improvements may be commenced in the Premises, until Sublessee has
prepared or had prepared plans and specifications for the work and obtained
Sublessor's written approval therefor.
VI-4
Section 7.03 PAYMENT BY SUBLESSEE. Sublessee shall pay, when due, any
and all sums of money that may be due for any labor services, materials,
supplies or equipment alleged to have been furnished or to be furnished to or
for Sublessee in, on, or about the Premises and which may be secured by any
mechanics, material or other liens against the Premises or of Sublessor's
interest therein, and Sublessee shall cause each such lien to be fully
discharged and released at the time the performance of any obligation secured by
any such lien matures or becomes due. Sublessor does not own the building.
ARTICLE VIII
LIABILITY
Section 8.01 LIABILITY. Sublessor in no event shall be liable for, and
Sublessee shall indemnify and hold harmless Sublessor from, any damage or injury
to Sublessee or any agent or employee of Sublessee, or to any person or persons
coming upon the Premises in connection with the occupancy by Sublessee of the
Premises, or to any goods, chattels or other property of Sublessee, or any other
person or persons which may during the term of this Sublease be located in the
Premises unless Sublessor was responsible for such injury through Sublessor's
own negligence or intentional act. Sublessor shall not be liable for, and
Sublessee shall indemnify and hold harmless Sublessor from, any damage to
Sublessee's personal property located within the Premises whether such damage is
caused or contributed to by water, rain, snow, breakage of pipes, or leakage, in
the event that such damage is due to the fault or negligence of Sublessee, its
agents or employees. Sublessee shall carry insurance to cover damage by fire or
other casualty to Sublessee's personal property.
ARTICLE IX
INSPECTION
Section 9.01 SUBLESSOR'S INSPECTION. Subject to governmental security
regulations and Sublessee's reasonable proprietary requirements, and upon prior
notice, Sublessor and persons designated by Sublessor have the right to enter
the Premises at reasonable hours to examine the same and to do such work as
Sublessor is obligated to do under the terms of this Sublease, or to do such
work as Sublessor shall deem necessary for the safety or preservation of the
Premises; provided however, that the same shall not interfere unreasonably with
the conduct of Sublessee's business.
Section 9.02 QUIET ENJOYMENT. Subject to the terms of this Sublease,
Sublessor covenants that, if Sublessee pays the Rent, performs all of its
obligations provided for hereunder and observes all of the other provisions
hereof, Sublessee shall at all times during the Term peaceably and quietly have,
hold and enjoy the Premises, without any interruption or disturbance from
Sublessor.
VI-5
ARTICLE X
INDEMNIFICATION
Section 10.01 INDEMNIFICATION. Sublessee shall defend and indemnify
Sublessor and agrees to hold Sublessor harmless from any injury, cost or damage
to Sublessor or Sublessor's agents or employees and from any and all liability
for injury to third persons or damage to the property of third persons,
including expenses, and reasonable counsel fees to the extent occurring by
reason of any negligent or unlawful acts or omissions of Sublessee, Sublessee's
agents or employees occurring in, on, or about the Premises.
Section 10.02. ENVIRONMENTAL INDEMNIFICATION. Sublessee shall defend
and indemnify Sublessor and agrees to hold Sublessor harmless from any and all
Damages (as defined below) arising during or after the term of this Sublease
from or in connection with the use, storage, generation, disposal, discharge,
release or emission of Hazardous Substances (as defined in Section 12.01) in, on
or about the Premises by Sublessee, Sublessee's agents, employees, contractors
or invitees. This indemnification shall expressly include, without limitation,
any and all such Damages due to any Remedial Action (as defined below), and
shall survive indefinitely after the expiration or termination of this Sublease.
For the purposes of this Section 10.02, "Damages" means all demands,
claims, actions or causes of action, assessments, losses, damages, costs,
expenses, liabilities, judgments, awards, fines, sanctions, penalties, charges
and amounts paid in settlement, including, without limitation, reasonable costs,
fees and expenses of attorneys, experts, accountants, appraisers, consultants,
witnesses, investigators and any other agents or representatives of such person
(with such amounts to be determined net of any resulting tax benefit and net of
any refund or reimbursement of any portion of such amounts, including, without
limitation, reimbursement by way of insurance, third party indemnification or
the inclusion of any portion of such amounts as a cost under Government
Contracts), but specifically excluding (i) any costs incurred by or allocated to
Sublessor with respect to time spent by employees of Sublessor or any of its
affiliates, (ii) any consequential, exemplary or punitive damages and (iii) the
decrease in the value of any asset to the extent that such valuation is based on
a use of such asset other than its use as of the Commencement Date.
For the purposes of this Section 10.02, "Remedial Action(s)" means the
investigation, clean-up or remediation of contamination or environmental
degradation or damage caused by, related to or arising from the generation, use,
handling, treatment, storage, transportation, disposal, discharge, release, or
emission of Hazardous Substances, including, without limitation, investigations,
response and remedial actions under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, corrective action under the
Resource Conservation and Recovery Act of 1976, as amended, and clean-up
requirements under similar state Environmental Laws (as defined in Section
12.01).
ARTICLE XI
MAINTENANCE
VI-6
Section 11.01 MAINTENANCE OF PREMISES. Sublessee agrees to maintain the
Premises, including the heating and electrical systems in the Premises, in
substantially the same condition as they are on the Commencement Date,
reasonable wear and tear, and damage by fire and other casualty excepted,
acknowledging that the Premises are now in good condition. Sublessee shall not
permit the Premises to be overloaded, damaged, stripped or defaced, nor suffer
any waste.
ARTICLE XII
ENVIRONMENTAL SAFETY
Section 12.01 HAZARDOUS SUBSTANCES. Sublessee shall not cause or permit
any Hazardous Substances (as defined below) to be used, stored, generated or
disposed of in, on or about the Premises by Sublessee, its agents, employees,
contractors or invitees, except for such Hazardous Substances as are normally
utilized in an office or light manufacturing environment. Any such Hazardous
Substances permitted on the Premises as hereinabove provided, and all containers
therefor, shall be used, kept, stored and disposed of in a manner that complies
with all Environmental Laws. Sublessee shall not discharge, release or emit
Hazardous Substances on or about the Premises so as to pollute or contaminate
air, soil (including sediment and subsurface soil), or water (including
groundwater). Any testing, control, or treatment of discharges, releases or
emissions of Hazardous Substances required as a result of Sublessee's use and
occupancy of the Premises shall be solely the responsibility of Sublessee, and
costs incurred by Sublessor in effecting any such tests, controls, or treatment
shall be reimbursed by Sublessee to Sublessor upon demand as additional rent.
Sublessor reserves the right to enter upon the Premises at any time throughout
the term of this Lease to assure compliance with this Section 12.01.
For the purposes of this Section 12.01 and Section 10.02, "Hazardous
Substances" means substances defined as "hazardous substances," "hazardous
materials," "hazardous wastes," pollutants," or "contaminants," and any toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous substance,
waste, or material, including, without limitation, asbestos and petroleum, its
derivatives, by-products and other hydrocarbons, in each case as regulated under
any Environmental Law.
For the purposes of this Section 12.01 and Section 10.02,
"Environmental Laws" means any and all past, present or future federal, state,
local and foreign statutes, laws, regulations, ordinances, judgments, orders,
codes, injunctions, judicial decisions, permits or governmental restrictions or
agreements with any governmental authority, which relate to the environment,
human health and safety, or to pollutants, contaminants, wastes or chemicals or
any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous
substances, wastes or materials or which impose liability for or standards of
conduct concerning the manufacture, processing, generation, distribution, use,
treatment, storage, disposal, cleanup, transport or handling of Hazardous
Substances including, the Resource Conservation and Recovery Act of 1976, as
amended, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, the Superfund Amendment and Reauthorization Act of
1984, as amended, the Toxic Substances Control Act, as amended, any other
VI-7
so-called "Superfund" or "Superlien" law, and the Occupational Safety and Health
Act of 1970, as amended.
ARTICLE XIII
BREACH
Section 13.01 BREACH OR DEFAULT BY SUBLESSEE. Any breach by Sublessee
of any conditions of this Sublease, other than payment of the Rent pursuant to
Section 3.01 may be cured by Sublessor for the account of and at the expense of
Sublessee, and any sums so advanced shall be paid to Sublessor on the first day
of the following month. Further, if Sublessee shall fail to pay the Rent within
10 days after being due and having been provided with a written demand therefor,
Sublessor shall have the right to recover the Rent owed (together with any
applicable late fee) and to reenter and take possession of the Premises and
cancel and annul the remainder of this Sublease. If Sublessee defaults in any
condition or covenant of the Sublease or in performing the same, and fails to
correct such default within 10 days of receiving the written notice of Sublessor
thereof, Sublessor may, at its option, terminate this Sublease.
ARTICLE XIV
TAXES
Section 14.01 REALTY TAXES. As between Sublessee and Sublessor, all
real property taxes which have been or may be assessed by any lawful authority
against the Building and the Premises shall be paid in accordance with the terms
of the Prime Lease.
Section 14.02 PERSONAL PROPERTY TAXES. Sublessee shall be liable for
the payment of all taxes levied against any of Sublessee's personal property or
trade fixtures placed in, on, or about the Premises, including, without
limitation, the shelves, counters, vaults, vault doors, wall safes, partitions,
machinery, and electrical or electronic equipment. If Sublessor is required to
pay any of such taxes, Sublessee upon demand shall promptly reimburse Sublessor
therefor.
ARTICLE XV
INSURANCE
Section 15.01 LIABILITY INSURANCE. During the Term, Sublessee shall
carry and keep in full force and effect at all times for the protection of
Sublessor and Sublessee, comprehensive general liability insurance for bodily
injury, death and damage to property of others, including Sublessee's legal
liability for damage to the Premises and blanket contractual liability, with
respect to all business conducted from the Premises and the use and occupancy
thereof including the activities, operations and work conducted or performed by
Sublessee, by any other person on behalf of Sublessee, by those for whom
Sublessee is in law responsible, and by any other person on the Premises, with
minimum limits of coverage of at least $1,000,000 for each occurrence of
property
VI-8
damage and bodily injury with an aggregate of $3,000,000. Notwithstanding the
foregoing, Sublessor shall have the right to require Sublessee to increase the
minimum limits of coverage set forth above, from time to time, to the standard
limits of coverage required for comparable property in the Hudson, New Hampshire
area.
Section 15.02 FIRE AND CASUALTY INSURANCE. Sublessee shall obtain and
maintain in full force and effect throughout the Term insurance policies against
fire, theft, vandalism, malicious mischief, leakage and such additional perils
as now are or hereafter may be included in a standard extended coverage
endorsement from time to time in general use in the Hudson, New Hampshire area,
insuring all of the improvements comprising part of the Premises, as well as
Sublessee's improvements in the Premises, in an amount equal to not less than
the full replacement value thereof.
Section 15.03 POLICY REQUIREMENTS. All insurance policies carried by
Sublessee pursuant to this Article XV, and any other insurance policies carried
by Sublessee with respect to the Premises, shall: (i) be issued in form
acceptable to Sublessor by good and solvent insurance companies licensed to do
business in the State of New Hampshire and reasonably satisfactory to Sublessor;
(ii) name Sublessor and any other parties in interest, from time to time
designated by notice from Sublessor to Sublessee, as an additional insured;
(iii) provide for at least 30 days prior written notice to Sublessor of any
cancellation or material alteration of such policy or of any defaults
thereunder; (iv) contain an express waiver of any right of subrogation by the
insurance company against Sublessor and Sublessor's agents; (v) contain an
automatic increase in insurance endorsement providing appropriate inflation
protection; and (vi) have such other form and content as Sublessor may
reasonably require.
ARTICLE XVI
BANKRUPTCY, WAIVER OR DEFAULT
Section 16.01 BANKRUPTCY, WAIVER OR DEFAULT. In the event Sublessee
files a voluntary petition in bankruptcy, makes assignment for the benefit of
creditors, or is adjudged a bankrupt, or if a receiver, trustee or custodian is
appointed for Sublessee by any court, or if Sublessee files any petition for
relief under any section of the bankruptcy laws of the United States now in
force or hereafter enacted, or if Sublessee takes advantage of any insolvency
act, or if the interest of Sublessee shall be sold under any execution or other
legal process issued out of any court, or if Sublessee shall abandon or vacate
the Premises during the term of this Sublease, or if Sublessee shall breach any
promise or covenant herein, then in any such event it shall be lawful for
Sublessor at any time thereafter, at its option upon ten 10 days written notice
to Sublessee, to re-enter said premises and again have possession thereof and
occupy the same as if this Sublease had not been made, and thereupon this
Sublease shall cease and become null and void.
VI-9
ARTICLE XVII
SUBORDINATION
Section 17.01 SUBORDINATION. This Sublease shall be subject and
subordinate to any and all mortgages, deeds of trust and other instruments in
the nature of a mortgage, now or at any time hereafter, a lien or liens on the
property of which the Premises are a part and Sublessee shall, when requested,
promptly execute and deliver such written instruments as shall be necessary to
show the subordination of this Sublease to said mortgages, deeds of trust or
other such instruments in the nature of a mortgage.
ARTICLE XVIII
MISCELLANEOUS
Section 18.01 NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Sublessee:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and
Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and
General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Miles & Stockbridge P.C.
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
VI-10
if to Sublessor:
Benchmark Electronics, Inc.
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▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief
Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P.
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▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such addresses or telecopy numbers and with such other copies, as such
party may hereafter specify for the purpose of notice to the other parties. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section 18.01 and evidence of receipt is received or (ii) if given by any
other means, upon delivery or refusal of delivery at the address specified in
this Section 18.01.
Section 18.02 EMINENT DOMAIN. If the whole or any part of the Premises
shall be taken by public authority under the power of eminent domain, then the
term of this Sublease shall cease on the part so taken from the day that
possession of that part shall be required for any purpose by said public
authority, and the Rent shall be paid up to that day, and if such portion of the
Premises are so taken as to, in Sublessee's opinion, destroy the usefulness of
the Premises for the purpose for which the Premises were leased, then, from that
day, Sublessee shall have the right either to terminate this Sublease and
declare the same null and void, or to continue in the possession of the
remainder of the same under the terms herein provided, except that the Rent
shall be reduced in proportion to the amount of the Premises taken based on the
value of the portion taken to the value of the remaining part. All damages
awarded for such taking shall belong to and be the property of Sublessor,
including such damages as shall be awarded as compensation for diminution in
value to the leasehold, provided, however, that Sublessor shall not be entitled
to any portion of the award made to Sublessee for Sublessee's furnishings or
Sublessee's business relocation expenses.
Section 18.03 DESTRUCTION OF PREMISES. If, during the term of this
Sublease, the Premises are totally or partially destroyed from any cause,
rendering the Premises totally or partially inaccessible or unusable, Sublessor
shall restore the destruction if the restoration can be made under the existing
laws and can be completed within 120 working days after the destruction. Such
destruction shall not terminate the Sublease. During the period that the
premises are being restored
VI-11
Sublessee shall neither pay nor owe the Rent to Sublessor. If the restoration
cannot be made within 120 days, then within 10 days after such destruction
Sublessee or Sublessor can terminate this Sublease immediately by giving written
notice and, thereafter, neither party shall bear any further liability under
this Sublease.
Section 18.04 ENTIRE AGREEMENT. This Sublease contains all
representations, understandings, agreements and commitments of Sublessor and
Sublessee, and any other written or oral statements of promises of any type
whatsoever shall be null and void and of no effect whatsoever in the
interpretation of this Sublease.
Section 18.05 APPLICABLE LAW; JURISDICTION. This Sublease shall be
construed in accordance with the laws of the State of New Hampshire without
reference to the conflicts of laws principles thereof. The forum for any
disputes arising hereunder shall be a court of competent jurisdiction sitting in
the State of New Hampshire, and by executing this Lease, Landlord and Tenant
consent to such jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Sublease to be
executed the date first above written.
SUBLESSOR:
BENCHMARK ELECTRONICS, INC.
By:__________________________(SEAL)
Name:
Title:
SUBLESSEE:
LOCKHEED ▇▇▇▇▇▇
CORPORATION, by LMC
Properties, Inc.,
attorney-in-fact under
irrevocable power of
attorney dated June 5, 1996
By:__________________________(SEAL)
Name:
Title:
VI-12
ATTACHMENT VII
CONSENTS AND APPROVALS REQUIRED PRIOR TO CLOSING
None
VII-1