PERSONAL
AND
CONFIDENTIAL
EXHIBIT 10.5
TRANSACTION AGREEMENT
Dated as of March 28, 1997
By and Among
LOCKHEED ▇▇▇▇▇▇ CORPORATION
▇▇▇▇▇▇ BROTHERS CAPITAL PARTNERS III, L.P.
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
L-3 COMMUNICATIONS HOLDINGS, INC.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Closing Transactions . . . . . . . . . . . . . . . . 1
Section 2.02 Exchange Consideration . . . . . . . . . . . . . . . 4
Section 2.03 Adjustment of Exchange Consideration . . . . . . . . 4
Section 2.04 Closing . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.05 Cash True-Up . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LOCKHEED ▇▇▇▇▇▇
Section 3.01 Representations and Warranties of Lockheed ▇▇▇▇▇▇ . 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇
Section 4.01 Representations and Warranties of ▇▇▇▇▇▇ . . . . . . 8
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INDIVIDUAL PURCHASERS
Section 5.01 Representations and Warranties of the Individual
Purchasers . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NEWCO
Section 6.01 Representations and Warranties of Newco . . . . . . 8
ARTICLE VII
COVENANTS OF LOCKHEED ▇▇▇▇▇▇
Section 7.01 Conduct of Business . . . . . . . . . . . . . . . . 8
Section 7.02 Access to Information; Confidentiality . . . . . . . 10
Section 7.03 Non-Solicitation of Offers . . . . . . . . . . . . . 12
Section 7.04 Non-Solicitation of Employees . . . . . . . . . . . 12
Section 7.05 Change of Lockbox Accounts . . . . . . . . . . . . . 13
Section 7.06 Access to Information; Cooperation After Closing . . 13
Section 7.07 Maintenance of Insurance Policies . . . . . . . . . 13
Section 7.08 Novation of Government Contracts . . . . . . . . . . 14
Section 7.09 Financial Statements . . . . . . . . . . . . . . . . 14
ARTICLE VIII
COVENANTS OF NEWCO AND THE PURCHASERS
Section 8.01 Confidentiality . . . . . . . . . . . . . . . . . . 15
Section 8.02 Provision and Preservation of and Access to Certain
Information; Cooperation . . . . . . . . . . . . . . 16
Section 8.03 Insurance; Financial Support Arrangements . . . . . 17
Section 8.04 Non-Solicitation of Employees . . . . . . . . . . . 20
Section 8.05 Financing . . . . . . . . . . . . . . . . . . . . . 21
Section 8.06 Use of Certain Trademarks, etc . . . . . . . . . . . 21
Section 8.07 Government Contract Novation; Cooperation . . . . . 21
Section 8.08 Reimbursement of Damages . . . . . . . . . . . . . . 22
ARTICLE IX
COVENANTS OF THE PARTIES
Section 9.01 Further Assurances . . . . . . . . . . . . . . . . . 22
Section 9.02 Certain Filings; Consents . . . . . . . . . . . . . 22
Section 9.03 Public Announcements . . . . . . . . . . . . . . . . 22
Section 9.04 Intellectual Property; License Agreements . . . . . 23
Section 9.05 HSR Act . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.06 Operation of Newco . . . . . . . . . . . . . . . . . 24
Section 9.07 Maintenance of Insurance Policies . . . . . . . . . 24
Section 9.08 Legal Privileges . . . . . . . . . . . . . . . . . . 25
Section 9.09 Non-Compete . . . . . . . . . . . . . . . . . . . . 25
ARTICLE X
TAX MATTERS
Section 10.01 Tax Matters . . . . . . . . . . . . . . . . . . . . 26
ARTICLE XI
EMPLOYEE BENEFIT MATTERS
Section 11.01 Employee Benefit Matters . . . . . . . . . . . . . . 26
ARTICLE XII
CONDITIONS TO CLOSING
Section 12.01 Conditions to the Obligations of Each Party . . . . 26
Section 12.02 Conditions to Obligation of Newco and the Purchasers 27
Section 12.03 Conditions to Obligation of Lockheed ▇▇▇▇▇▇ . . . . 28
Section 12.04 Effect of Waiver . . . . . . . . . . . . . . . . . . 28
ARTICLE XIII
SURVIVAL; INDEMNIFICATION
Section 13.01 Survival . . . . . . . . . . . . . . . . . . . . . . 29
Section 13.02 Indemnification. . . . . . . . . . . . . . . . . . . 30
Section 13.03 Procedures . . . . . . . . . . . . . . . . . . . . . 31
Section 13.04 Limitations . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XIV
TERMINATION
Section 14.01 Termination . . . . . . . . . . . . . . . . . . . . 35
Section 14.02 Effect of Termination . . . . . . . . . . . . . . . 36
ARTICLE XV
MISCELLANEOUS
Section 15.01 Notices . . . . . . . . . . . . . . . . . . . . . . 37
Section 15.02 Amendments; Waivers . . . . . . . . . . . . . . . . 39
Section 15.03 Expenses . . . . . . . . . . . . . . . . . . . . . . 39
Section 15.04 Successors and Assigns . . . . . . . . . . . . . . . 40
Section 15.05 Disclosure . . . . . . . . . . . . . . . . . . . . . 40
Section 15.06 Construction . . . . . . . . . . . . . . . . . . . . 40
Section 15.07 Entire Agreement . . . . . . . . . . . . . . . . . . 41
Section 15.08 Governing Law . . . . . . . . . . . . . . . . . . . 41
Section 15.09 Counterparts; Effectiveness . . . . . . . . . . . . 41
Section 15.10 Jurisdiction . . . . . . . . . . . . . . . . . . . . 41
Section 15.11 Captions . . . . . . . . . . . . . . . . . . . . . . 42
Section 15.12 Bulk Sales . . . . . . . . . . . . . . . . . . . . . 42
Section 15.13 Delivery of Disclosure Schedules; Certain
Attachments . . . . . . . . . . . . . . . . . . . . 42
EXHIBITS
EXHIBIT A Definitions
EXHIBIT B Representations and Warranties of Lockheed ▇▇▇▇▇▇
EXHIBIT C Representations and Warranties of ▇▇▇▇▇▇
EXHIBIT D Representations and Warranties of the Individual Purchasers
EXHIBIT E Representations and Warranties of Newco
EXHIBIT F Tax Matters
EXHIBIT G Employee Benefit Matters
ATTACHMENTS
Attachment I Audited Business Financial Statements
Attachment II December Statement
Attachment III Transfer Agreement
Attachment IV Forms of Common Stock Subscription Agreements
Attachment V Form of Stockholders Agreement
Attachment VI Additional Matters Relating to the Calculation of
Net Tangible Assets
Attachment VII Form of Exchange Consideration Schedule
Attachment VIII Certificate of Incorporation of Newco
Attachment IX Bylaws of Newco
Attachment X Consents and Approvals Required Prior to Closing
Attachment XI Exceptions to Non-Solicitation of Employees
Attachment XII Lockheed ▇▇▇▇▇▇ Legal Opinions
Attachment XIII Newco Legal Opinions
Attachment XIV Certain Employee Benefit Matters
Attachment XV Patents and Patent Applications Constituting
Transferred Assets
TRANSACTION AGREEMENT
This Transaction Agreement (together with the Exhibits, Schedules and
Attachments hereto, this "Agreement") is made as of the 28th day of March,
1997, by and among Lockheed ▇▇▇▇▇▇ Corporation, a Maryland corporation
("Lockheed ▇▇▇▇▇▇"), ▇▇▇▇▇▇ Brothers Capital Partners III, L.P., a Delaware
limited partnership ("▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇"; and together with ▇▇▇▇▇, the "Individual Purchasers") and L-3
Communications Holdings, Inc., a Delaware corporation ("Newco"). For
purposes of this Agreement, ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇▇▇ each are individually
referred to as a "Purchaser" and collectively referred to as the
"Purchasers."
W I T N E S S E T H:
WHEREAS, Lockheed ▇▇▇▇▇▇, in its own right and through certain of its
direct and indirect Subsidiaries is engaged in the Business;
WHEREAS, Lockheed ▇▇▇▇▇▇ and the Purchasers, upon the terms and subject
to the conditions of this Agreement have agreed to the formation and
organization of Newco; and
WHEREAS, upon the terms and subject to the conditions of this Agreement,
Lockheed ▇▇▇▇▇▇ desires to transfer, or to cause the Affiliated Transferors
to transfer, substantially all of the assets held or owned by, or used to
conduct, the Business and to assign certain liabilities associated with the
Business to Newco, and Newco desires to receive such assets and assume such
liabilities;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Defined terms used in this Agreement shall
have the meanings specified in this Agreement or in Exhibit A.
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Closing Transactions. Upon the terms and subject to the
conditions set forth in the Transaction Documents, the parties agree that at
the Closing, among other things:
(i) Lockheed ▇▇▇▇▇▇ will transfer or cause to be transferred to
Newco all Transferred Assets and Newco will assume all Assumed
Liabilities in accordance with this Agreement and the terms of the
Transfer Agreement attached as Attachment III;
(ii) Newco will issue to ▇▇▇▇▇▇ 10,020,000 shares of Newco Class A
Stock in exchange for $64,835,000 in cash;
(iii) Newco will issue to ▇▇▇▇▇ 1,500,000 shares of Newco Class B
Stock in exchange for $7,500,000 in cash;
(iv) Newco will issue to ▇▇▇▇▇▇▇ 1,500,000 shares of Newco Class B
Stock in exchange for $7,500,000 in cash; and
(v) Newco, Lockheed ▇▇▇▇▇▇ and the Purchasers, as the case may be,
will enter into Common Stock Subscription Agreements and a Stockholders
Agreement in substantially the forms attached as Attachments IV and V,
will enter into License Agreements in the forms contemplated by
Section 9.04, and will enter into an Exchange Agreement in substantially
the form attached to the Transfer Agreement attached as Attachment III;
(vi) Lockheed ▇▇▇▇▇▇ and Newco will enter into a services agreement
for a term expiring on December 31, 1997 (other than with respect to
certain services to the Communications Systems Business Unit the term
for which shall be mutually agreed upon up to one year with a six-month
option exercisable by Newco) (which may be terminated (in whole or in
part, provided that related services may not be terminated in part) by
the party receiving such services upon 60 days advance written notice to
the other party at any time, it being understood that each party will
use reasonable commercial efforts to transition away from the other
party as the source for such services as soon as practicable) relating
to the provision by the Lockheed ▇▇▇▇▇▇ Companies to Newco (or by Newco
to the Lockheed ▇▇▇▇▇▇ Companies, as the case may be) following the
Closing of certain services (which may include making limited space and
equipment available) of a type provided by the Lockheed ▇▇▇▇▇▇ Companies
(other than services provided by the Business Units or personnel at the
location covered by the NY Leases) to the Business (or services provided
by the Business Units or the personnel at the location covered by the NY
Leases to the Lockheed ▇▇▇▇▇▇ Companies) as of the date of this
Agreement, at costs consistent with past practices (the "Interim
Services Agreement"), which agreement is to be negotiated by the parties
in good faith prior to the Closing;
(vii) Lockheed ▇▇▇▇▇▇ and Newco will enter into one or more supply
agreements to document intercompany work transfer agreements existing as
of the Closing or intercompany work transfer agreements or similar
support arrangements contemplated as of the Closing in connection with
Bids in existence as of the Closing between any of the Business Units
and any of the Lockheed ▇▇▇▇▇▇ Companies, at prices and generally upon
other terms consistent with existing intercompany work transfer
agreements, but including such additional terms and conditions as are
appropriate (including indemnification and damage provisions consistent
with the underlying contract) to reflect the third-party nature of the
agreements (and in any event (1) including profit chargebacks (other
than with respect to the Eagle and Raptor programs) to Lockheed ▇▇▇▇▇▇
of up to $1.9 million in 1997, $1.1 million in 1998, $700,000 in 1999
and $500,000 in 2000 consistent with the Long Range Plan for the
Business prepared by Lockheed ▇▇▇▇▇▇ and previously provided to the
Purchasers (the "Long Range Plan"), but only to the extent in backlog at
the Closing Date or contemplated as of the Closing in connection with
Bids in existence as of the Closing, and in the case of the "Eagle" and
"Raptor" (both long lead material award and production award) programs,
profit chargebacks to Lockheed ▇▇▇▇▇▇ of up to an aggregate of
$1,000,000 and (2) providing that, notwithstanding the terms of the Long
Range Plan, after December 31, 2000 Newco shall not be entitled to any
profit chargeback to Lockheed ▇▇▇▇▇▇) (the "Supply Agreement"), which
agreement is to be negotiated by the parties in good faith prior to the
Closing; and
(viii) Other than with respect to the matters referenced in clause
(ix) below, Lockheed ▇▇▇▇▇▇ (and/or other Lockheed ▇▇▇▇▇▇ Companies, as
appropriate) and Newco will enter into lease, sublease or assignment
agreements, as the case may be, in respect of those facilities used by
the Business Units on such terms and subject to such conditions as may
be negotiated by the parties in good faith prior to the Closing, it
being understood that such terms and conditions shall be consistent with
existing agreements; and
(ix) Lockheed ▇▇▇▇▇▇ and Newco will enter into an agreement
pursuant to which (A)(1) Lockheed ▇▇▇▇▇▇ will agree for a period
beginning on the Closing Date and ending on December 31, 1999, to lease
67,400 square feet of space in Building 1 at the Communications Systems
Business Unit at an "all in" annual cost of $36.25 per square foot,
(2) Newco will grant Lockheed ▇▇▇▇▇▇ an option (exercisable on or prior
to December 31, 1998) to continue to lease all of the space contemplated
by the preceding clause (A)(1) for the period from January 1, 2000 until
March 14, 2003 at an "all in" annual cost of $18.12 per square foot, and
(3) Newco will agree to pay Lockheed ▇▇▇▇▇▇ $2,000,000 on the first
Business Day of January 2000 in the event that Lockheed ▇▇▇▇▇▇ exercises
the option contemplated by the preceding clause (A)(2), and (B) Lockheed
▇▇▇▇▇▇ will agree to lease on behalf of its existing MAC-MAR business
its current space in Building 1 at the Communications Systems Business
Unit at the current lease rates through December 31, 1998, and will
grant Newco the right, on a year-to-year basis, to match any competing
offer to provide space and related services to MAC-MAR thereafter until
the end of the current lease term, it being understood that Newco must
continue to use the services of the MAC-MAR business as long as the MAC-
MAR business is using Newco's receiving services at the Communications
Systems Business Unit.
Section 2.02 Exchange Consideration. The consideration to be paid to
Lockheed ▇▇▇▇▇▇ and the Affiliated Transferors for the Transferred Assets
(the "Exchange Consideration") shall consist of the following:
(i) Subject to adjustment in accordance with Section 2.03 and
Section 2.04, $479,835,000 in cash;
(ii) 6,980,000 shares of Newco Class A Stock; and
(iii) Newco's assumption of the Assumed Liabilities in accordance
with this Agreement.
Section 2.03 Adjustment of Exchange Consideration.
(a) At least two Business Days prior to the Closing Date, Lockheed
▇▇▇▇▇▇ shall, in good faith and after consultation with the Individual
Purchasers, prepare an estimate of the Net Tangible Assets of the Business as
of March 30 (if the Closing shall occur in April 1997) or April 27 (if the
Closing shall occur in May 1997) (such date being the date on which Lockheed
▇▇▇▇▇▇ closes its accounting books and records for the respective month and
referred to as the "Effective Date"; and such estimate being the "Estimated
Final Net Tangible Asset Amount") and shall provide a copy of its calculation
of the Estimated Final Net Tangible Asset Amount to Newco and the Purchasers.
(b) Promptly following the Closing Date, but in no event later than 60
days after the Closing Date, Lockheed ▇▇▇▇▇▇ shall, at its expense, with the
assistance of Newco prepare and submit to Newco an audited combined statement
of net tangible assets setting forth, in reasonable detail, Lockheed ▇▇▇▇▇▇'▇
calculation of the Net Tangible Assets of the Business as of the close of
business on the Effective Date (the "Proposed Final Net Tangible Asset
Amount") together with an opinion of Ernst & Young LLP stating that such
audited combined statement of Net Tangible Assets presents fairly, in all
material respects, the Net Tangible Assets of the Business as of the close of
business on the Effective Date in accordance with the provisions of this
Agreement. In the event Newco disputes the correctness of the Proposed Final
Net Tangible Asset Amount, Newco shall notify Lockheed ▇▇▇▇▇▇ of its
objections within 45 days after receipt of Lockheed ▇▇▇▇▇▇'▇ calculation of
the Proposed Final Net Tangible Asset Amount and shall set forth, in writing
and reasonable detail, the reasons for Newco's objections. If Newco fails to
deliver such notice of objections within such time, Newco shall be deemed to
have accepted Lockheed ▇▇▇▇▇▇'▇ calculation. Lockheed ▇▇▇▇▇▇ and Newco shall
endeavor in good faith to resolve any disputed items within 20 days after
Lockheed ▇▇▇▇▇▇'▇ receipt of Newco's notice of objections. If they are
unable to do so, Lockheed ▇▇▇▇▇▇ and Newco shall select a nationally known
independent accounting firm (other than Ernst & Young LLP or Coopers &
▇▇▇▇▇▇▇ L.L.P.) to resolve the dispute (in a manner consistent with Section
2.03(c) and with any items not in dispute), and the determination of such
firm in respect of the correctness of each item remaining in dispute shall be
conclusive and binding on Lockheed ▇▇▇▇▇▇ and Newco. The Net Tangible Assets
of the Business as of the close of business on the Effective Date as finally
determined pursuant to this Section 2.03(b) (whether by failure of Newco to
deliver notice of objection, by agreement of Lockheed ▇▇▇▇▇▇ and Newco or by
determination of the accountants selected as set forth above) is referred to
herein as the "Final Net Tangible Asset Amount."
(c) The Estimated Final Net Tangible Asset Amount, the Proposed Final
Net Tangible Asset Amount and the Final Net Tangible Asset Amount shall be
determined in accordance with the accounting principles, policies, practices
and methods utilized in the preparation of the December Statement, as
disclosed in the notes to the December Statement, except as otherwise set
forth in Attachment VI.
(d) If the Final Net Tangible Asset Amount is greater than the
Estimated Final Net Tangible Asset Amount, the difference shall be paid to
Lockheed ▇▇▇▇▇▇ by Newco with interest thereon from the Closing Date to the
date of payment at a rate per annum equal to the per annum interest rate
announced from time to time by Bank of America National Trust and Savings
Association as its reference rate in effect. If the Final Net Tangible Asset
Amount is less than the Estimated Final Net Tangible Asset Amount, the
difference shall be paid to Newco by Lockheed ▇▇▇▇▇▇ with interest thereon
from the Closing Date to the date of payment at a rate per annum equal to the
per annum interest rate announced from time to time by Bank of America
National Trust and Savings Association as its reference rate in effect. Such
payment shall be made in immediately available funds not later than five
Business Days after the determination of the Final Net Tangible Asset Amount
by wire transfer to a bank account designated in writing by the party
entitled to receive the payment; provided, however, if Newco is prohibited
from making such payment by the financing arrangements of Newco in effect as
of the Closing Date, then, in lieu of making any payment in excess of the sum
of (i) the difference between $479,835,000 and the amount of the payment
actually made pursuant to Section 2.04(i) and (ii) $5,000,000 by wire
transfer in immediately available funds, Newco may deliver to Lockheed ▇▇▇▇▇▇
in satisfaction of its obligation in excess of such sum a subordinated note
the principal amount of which shall equal such excess and providing for
repayment thereof in eight consecutive equal quarterly payments of principal
together with interest thereon, with an interest rate and such other terms
and conditions that reflect the financial condition of Newco and would be
available to Newco for similar subordinated debt on the date the subordinated
note is delivered to Lockheed ▇▇▇▇▇▇ by Newco, which subordinated note is to
be negotiated by the parties in good faith in the event such subordinated
note is required to be issued pursuant to the terms hereof.
(e) Lockheed ▇▇▇▇▇▇ shall make available and shall cause Ernst & Young
LLP to make available, in accordance with reasonable and customary practices
and professional standards and subject to such reasonable conditions as Ernst
& Young LLP shall impose, the books, records, documents and work papers
underlying the preparation and audit of the December Statement and the
calculation of the Proposed Final Net Tangible Asset Amount. Newco and the
Purchasers shall make available and shall cause Coopers & ▇▇▇▇▇▇▇ L.L.P. to
make available, in accordance with reasonable and customary practices and
professional standards and subject to such reasonable conditions as Coopers &
▇▇▇▇▇▇▇ L.L.P. shall impose, the books, records, documents and work papers
created or prepared by or for Newco in connection with the review of the
Proposed Final Net Tangible Asset Amount and the other matters contemplated
by Section 2.03(b).
(f) The fees and expenses, if any, of the accounting firm selected to
resolve any disputes between Lockheed ▇▇▇▇▇▇ and Newco in accordance with
Section 2.03(b) shall be paid one-half by Lockheed ▇▇▇▇▇▇ and one-half by
Newco.
Section 2.04 Closing. The closing (the "Closing") of the Contemplated
Transactions shall take place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ on April 25, 1997, provided,
however, that if all of the conditions to Closing set forth in Article XII
have not been satisfied (or waived) as of that date and if closing on that
date therefore would be impractical, the Closing shall take place on the
fifth Business Day following the satisfaction or waiver (by the party
entitled to waive the condition) of all conditions to the Closing set forth
in Article XII, or at such other time and place as the parties to this
Agreement may agree. The Closing will occur at 9:00 a.m. on the Closing
Date. At the Closing, among other things:
(i) Newco shall pay and deliver to Lockheed ▇▇▇▇▇▇, for its own
account and as agent for the Affiliated Transferors, $479,835,000 (minus
the difference between the Estimated Final Net Tangible Asset Amount and
$269,118,000 in the event the Estimated Final Net Tangible Asset Amount
is less than $269,118,000) in immediately available funds by wire
transfer to an account designated by Lockheed ▇▇▇▇▇▇ (which account
shall be designated by Lockheed ▇▇▇▇▇▇ by written notice to Newco at
least two Business Days prior to the Closing Date, or such shorter
notice as Newco shall agree to accept);
(ii) Newco shall issue to Lockheed ▇▇▇▇▇▇, for its own account and
as agent for the Affiliated Transferors, 6,980,000 shares of Newco Class
A Stock;
(iii) Newco shall issue to ▇▇▇▇▇▇ 10,020,000 shares of Newco Class A
Stock in exchange for ▇▇▇▇▇▇ paying and delivering to Newco $64,835,000
in immediately available funds by wire transfer to an account designated
by Newco (which account shall be designated by Newco by written notice
to ▇▇▇▇▇▇ at least two Business Days prior to the Closing Date, or such
shorter notice as ▇▇▇▇▇▇ shall agree to accept);
(iv) Newco shall issue to ▇▇▇▇▇ 1,500,000 shares of Newco Class B
Stock in exchange for ▇▇▇▇▇ paying and delivering to Newco $7,500,000 in
immediately available funds by wire transfer to an account designated by
Newco (which account shall be designated by Newco by written notice to
▇▇▇▇▇ at least two Business Days prior to the Closing Date, or such
shorter notice as ▇▇▇▇▇ shall agree to accept); and
(v) Newco shall issue to ▇▇▇▇▇▇▇ 1,500,000 shares of Newco Class B
Stock in exchange for ▇▇▇▇▇▇▇ paying and delivering to Newco $7,500,000
in immediately available funds by wire transfer to an account designated
by Newco (which account shall be designated by Newco by written notice
to ▇▇▇▇▇▇▇ at least two Business Days prior to the Closing Date, or such
shorter notice as ▇▇▇▇▇▇▇ shall agree to accept).
Section 2.05 Cash True-Up. Within fifteen Business Days after the
Closing Date, Lockheed ▇▇▇▇▇▇ shall prepare and deliver to Newco a schedule
setting forth, on a daily basis, the cash generated by the Business from
12:01 a.m. on the first day following the Effective Date (after subtracting
any cash investments made by any of the Lockheed ▇▇▇▇▇▇ Companies in or for
the benefit of the Business after the Effective Date and the amount of any
checks drawn on the accounts of any of the Lockheed ▇▇▇▇▇▇ Companies prior to
Closing Date but not yet debited from such accounts as of the close of
business on the day prior to the Closing Date). Within five Business Days of
receipt of the foregoing schedule, Newco shall make payment to Lockheed
▇▇▇▇▇▇ if the schedule shows a net cash usage by the Business during the
period referenced in the preceding sentence and Lockheed ▇▇▇▇▇▇ shall make
payment to Newco if the schedule shows net cash generation during such period
in an amount equal to such net cash usage or net cash generation, as the case
may be. Lockheed ▇▇▇▇▇▇ shall give Newco reasonable access to its books and
records for the purpose of confirming the calculations of Lockheed ▇▇▇▇▇▇
pursuant to this Section 2.05. Any payment made hereunder shall be made in
immediately available funds by wire transfer to a bank account designated in
writing by the party entitled to receive the payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LOCKHEED ▇▇▇▇▇▇
Section 3.01 Representations and Warranties of Lockheed ▇▇▇▇▇▇.
Lockheed ▇▇▇▇▇▇ represents and warrants prior to but not after the Closing to
the Purchasers, and as of and after the Closing to Newco, as set forth in
Exhibit B.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇
Section 4.01 Representations and Warranties of ▇▇▇▇▇▇. ▇▇▇▇▇▇
represents and warrants to Lockheed ▇▇▇▇▇▇, Newco and the Individual
Purchasers as set forth in Exhibit C.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INDIVIDUAL PURCHASERS
Section 5.01 Representations and Warranties of the Individual
Purchasers. Each of the Individual Purchasers represents and warrants to
Lockheed ▇▇▇▇▇▇, Newco and ▇▇▇▇▇▇ as set forth in Exhibit D.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NEWCO
Section 6.01 Representations and Warranties of Newco. Newco
represents and warrants to Lockheed ▇▇▇▇▇▇ and the Purchasers as set forth in
Exhibit E.
ARTICLE VII
COVENANTS OF LOCKHEED ▇▇▇▇▇▇
Section 7.01 Conduct of Business. From the date of this Agreement
until the Closing Date, except with the written consent of either of the
Individual Purchasers (which consent may not be unreasonably withheld or
delayed) the Lockheed ▇▇▇▇▇▇ Companies shall conduct the Business in all
material respects in accordance with the historical and customary operating
practices relating to the conduct of the Business (except that Lockheed
▇▇▇▇▇▇ and the Affiliated Transferors may sell or otherwise dispose
of obsolete Inventory whether or not in accordance with such practices and
shall cause its Subsidiaries to use reasonable commercial efforts to preserve
intact the Business and its relationships with third parties. Without
limiting the generality of the foregoing, from the date of this Agreement
through the Closing Date, subject to any exceptions required to comply with
Applicable Laws, the Lockheed ▇▇▇▇▇▇ Companies shall not, without the written
consent of either of the Individual Purchasers (which consent may not be
unreasonably withheld or delayed):
(i) make any capital expenditure, or group of related capital
expenditures (other than as contemplated by the Long Range Plan)
relating to the Business in excess of $250,000;
(ii) sell or dispose of more than an aggregate of $250,000 of
assets (other than the sale of Inventory, any sale made in the ordinary
course of business, and other than pursuant to Bids or Contracts in
existence on the date of this Agreement) that would constitute
Transferred Assets if owned, held or used by any of the Lockheed ▇▇▇▇▇▇
Companies on the Closing Date;
(iii) amend, modify, or terminate any Contract where the effect of
such amendment, modification or termination would be a decrease in the
backlog value of the relevant Contract or a decrease in the payments to
be received or made by Newco, in any such case by $250,000 or more;
(iv) submit any Bid which, if accepted, would result in a fixed
price Contract that would constitute a Transferred Asset with a backlog
value in excess of (1) $5,000,000 in the case of a fixed price
production Contract, or (2) $1,000,000 in the case of a fixed price
development Contract;
(v) except as required by Contracts in existence as of the date of
this Agreement or in the ordinary course of business, sell, transfer,
license or otherwise dispose of, any Intellectual Property relating to
the Business;
(vi) enter into any (1) fixed price production Contracts (other
than pursuant to a Bid in existence as of the date of this Agreement)
that would constitute a Transferred Asset if held by any of the Lockheed
▇▇▇▇▇▇ Companies on the Closing Date with a backlog value in excess of
$5,000,000, or (2) fixed price development Contracts (other than
pursuant to a Bid in existence as of the date of this Agreement) that
would constitute a Transferred Asset if held by any of the Lockheed
▇▇▇▇▇▇ Companies on the Closing Date with a backlog value in excess of
$1,000,000;
(vii) terminate the coverage of any policies of title, liability,
fire, workers' compensation, property and any other form of insurance
covering the Transferred Assets or operations of the Business, except
where the termination could not reasonably be expected to have a
Material Adverse Effect on the Business;
(viii) settle any lawsuit or claim if such settlement imposes a
material continuing non-monetary obligation on the Business or any of
the Transferred Assets;
(ix) except in respect of the Individual Purchasers, grant any new
or modified severance or termination arrangement or increase or
accelerate in any material respect any benefits payable under its
severance or termination pay policies in effect on the date of this
Agreement with respect to any Transferred Employee;
(x) other than with respect to the Individual Purchasers, except
as may be otherwise permitted or required by this Agreement, and except
as contemplated by Attachment XIV, adopt or amend in any material
respect any bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other employee benefit
plan, agreement, trust, fund or other arrangement for the benefit or
welfare of any Transferred Employee or, other than compensation
increases for individuals below the level of vice president in the
ordinary course of business or compensation increases for individuals at
the level of vice president and above in accordance with
nondiscretionary provisions of the Employee Plans or Benefit
Arrangements disclosed in Section B.21 of the Disclosure Schedules or
referenced in Exhibit G, increase the compensation or fringe benefits of
any Transferred Employee or pay any benefit not required by any Employee
Plan, Benefit Arrangement or any agreement with respect to any
Transferred Employee; and
(xi) effectuate a "plant closing" or "mass layoff," as those terms
are defined in WARN, affecting in whole or in part any site of
employment, facility, operating unit or employee of the Business,
without complying with the notice requirements and other provisions of
WARN.
Section 7.02 Access to Information; Confidentiality.
(a) Except as may be necessary to comply with any Applicable Laws
(including, without limitation, any requirements with respect to security
clearances) and subject to any applicable privileges (including, without
limitation, the attorney-client privilege), from the date of this Agreement
until the Closing Date, Lockheed ▇▇▇▇▇▇ will (a) give the Purchasers and
their Representatives reasonable access to the records of the Lockheed ▇▇▇▇▇▇
Companies relating to the Business during normal business hours and upon
reasonable prior notice, (b) give the Purchasers and their Representatives
reasonable access to any facilities the possession of which will be
transferred to Newco at Closing during normal business hours and upon
reasonable prior notice for the purpose of Purchasers' conduct of a Phase I
Environmental Audit of such facilities or documentary diligence, (c) furnish
to the Purchasers and their Representatives such financial and operating data
and other information relating to the Business as the Purchasers may
reasonably request and (d) instruct the employees and Representatives of the
Lockheed ▇▇▇▇▇▇ Companies to cooperate with the Purchasers in their
investigation of the Business. Without limiting the generality of the
foregoing, subject to the limitations set forth in the first sentence of this
Section 7.02(a), (i) Lockheed ▇▇▇▇▇▇ shall use reasonable commercial efforts
to enable the Purchasers and the Purchasers' Representatives to conduct, at
the Purchasers' own expense, business and financial reviews, investigations
and studies as to the operation of the various Business Units, including any
tax, operating or other efficiencies that may be achieved and (ii) from the
date of this Agreement to the Closing Date, Lockheed ▇▇▇▇▇▇ shall give the
Purchasers and their Representatives access to information relating to the
Business of the type, and with the same level of detail, as in the ordinary
course of business is made available to the presidents or chief financial
officers of the Business Units. Notwithstanding the foregoing, the
Purchasers shall not have access to personnel records of any of the Lockheed
▇▇▇▇▇▇ Companies relating to individual performance or evaluation records,
medical histories or other information which in Lockheed ▇▇▇▇▇▇'▇ good faith
opinion is sensitive or the disclosure of which could subject any of the
Lockheed ▇▇▇▇▇▇ Companies to risk of liability.
(b) For a period of three years after the Closing Date, the Lockheed
▇▇▇▇▇▇ Companies will treat and hold as such, any confidential information
concerning the operations or affairs of the Business. In the event any of
the Lockheed ▇▇▇▇▇▇ Companies is requested or required (by oral or written
request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand or similar process or by Applicable Law)
to disclose any such confidential information, then Lockheed ▇▇▇▇▇▇ will
notify Newco promptly of the request or requirement so that Newco, at its
expense, may seek an appropriate protective order or waive compliance with
this Section 7.02(b). If, in the absence of a protective order or receipt of
a waiver hereunder, any of the Lockheed ▇▇▇▇▇▇ Companies is, on the advice of
counsel, compelled to disclose such confidential information the Lockheed
▇▇▇▇▇▇ Company may so disclose the confidential information, provided that
the Lockheed ▇▇▇▇▇▇ Company will use its reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded to such
confidential information. The provisions of this Section 7.02(b) will not be
deemed to prohibit the disclosure of confidential information concerning the
operations or affairs of the Business by any of the Lockheed ▇▇▇▇▇▇ Companies
to the extent reasonably required (i) to prepare or complete any required tax
returns or financial statements, (ii) in connection with audits or other
proceedings by or on behalf of a Governmental Authority, (iii) in connection
with any insurance or benefits claims, (iv) to the extent necessary to comply
with any Applicable Laws, (v) to provide services to Newco in accordance with
the Interim Services Agreement, or (vi) in connection with any other similar
administrative functions in the ordinary course of business. Notwithstanding
the foregoing, the provisions of this Section 7.02(b) shall not apply to
information that (i) is or becomes publicly available other than as a result
of a disclosure by any of the Lockheed ▇▇▇▇▇▇ Companies, (ii) is or becomes
available to a Lockheed ▇▇▇▇▇▇ Company on a non-confidential basis from a
source that, to Lockheed ▇▇▇▇▇▇'▇ knowledge, is not prohibited from
disclosing such information by a legal, contractual or fiduciary obligation,
or (iii) is or has been independently developed by a Lockheed ▇▇▇▇▇▇ Company
(other than solely for the Business or by one of the Business Units). This
Section 7.02(b) shall not apply to the disclosure of confidential information
concerning the Instrumentation Recorder Product Line of Advanced Recorders in
connection with or after the sale thereof to a purchaser or potential
purchaser (other than Newco); provided, however, that such disclosure may
only be made pursuant to a confidentiality agreement containing reasonable
terms and conditions.
Section 7.03 Non-Solicitation of Offers. From the date of this
Agreement to the earlier of the Closing Date or the termination of this
Agreement, Lockheed ▇▇▇▇▇▇ shall not, and Lockheed ▇▇▇▇▇▇ shall not authorize
or permit any of its Representatives to, directly or indirectly (through
Affiliates or otherwise), (i) solicit, initiate or take any action knowingly
to facilitate the submission of inquiries, proposals or offers from any
Person (other than Newco) relating to any acquisition or purchase of all or a
substantial part of the Business, in one transaction or a series of related
transactions (whether by asset or stock sale, business combination
transaction or otherwise), (collectively, the "Alternative Transaction
Proposals"), or (ii) enter into or participate in any discussions or
negotiations regarding any of the foregoing, or furnish to any other Person
any information with respect to the Business (other than in the ordinary
course of operating the Business and in connection with the possible sale of
the Instrumentation Recorder Product Line of Advanced Recorders) or otherwise
cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to do or seek any of the
foregoing. Except to the extent that it is prohibited from doing so by
contractual agreements that were in existence as of January 31, 1997 (of
which there are two), if Lockheed ▇▇▇▇▇▇, directly or indirectly, receives an
Alternative Transaction Proposal, Lockheed ▇▇▇▇▇▇ shall promptly inform the
Purchasers of the terms and conditions of the Alternative Transaction
Proposal and the identity of the Person making it.
Section 7.04 Non-Solicitation of Employees. From and after the date
of this Agreement until the second anniversary of the Closing Date, Lockheed
▇▇▇▇▇▇ shall not, without prior written approval of Newco, directly or
indirectly (through Affiliates or otherwise), knowingly solicit any
individual (other than individuals identified in Attachment XI) who at that
time is an employee of the Business to terminate his or her relationship with
the Business and will not knowingly hire any individual inadvertently
solicited; provided, however, that the foregoing shall not apply to (i)
individuals solicited or hired as a result of the use of an independent
employment agency (so long as the agency was not directed to solicit such
individual and Lockheed ▇▇▇▇▇▇, promptly following execution of this
Agreement, advises the Vice President for Human Resources of each Operating
Sector of Lockheed ▇▇▇▇▇▇ of the provisions of this Section 7.04), and (ii)
individuals solicited or hired as a result of the use of a general
solicitation (such as an advertisement) not specifically directed to
employees of the Business.
Section 7.05 Change of Lockbox Accounts. Immediately after the
Closing, Lockheed ▇▇▇▇▇▇ shall take such steps as Newco may reasonably
request to cause Newco to be substituted as the sole party having control
over any lockbox or similar bank account maintained exclusively by the
Business Units to which customers of the Business directly make payments in
respect of the Business or to direct the bank at which any such lockbox or
similar account is maintained to transfer any payments made thereto to an
account established by Newco.
Section 7.06 Access to Information; Cooperation After Closing. On and
after the Closing Date and subject to any applicable privileges (including,
without limitation, the attorney-client privilege), Lockheed ▇▇▇▇▇▇ shall,
and shall cause each of the other Lockheed ▇▇▇▇▇▇ Companies to, at their
expense (i) afford Newco and its Representatives reasonable access upon
reasonable prior notice during normal business hours, to all employees,
offices, properties, agreements, records, books and affairs of the Lockheed
▇▇▇▇▇▇ Companies to the extent relating to the Business, (ii) provide copies
of such information concerning the Business as Newco may reasonably request
for any proper purpose, including, without limitation, in connection with any
public or private offering of securities by Newco or the preparation of any
financial statements or in connection with any judicial, quasi judicial,
administrative, or arbitration proceeding or audit (provided, however, that
except as otherwise provided in writing signed by an officer of Lockheed
▇▇▇▇▇▇ specifically approving the use of such information, the specific
purpose for which such information is to be used therein and the specific
representations and warranties at issue, Lockheed ▇▇▇▇▇▇ makes no
representations or warranties to the Purchasers, Newco or any other Person in
respect of any such information) and (iii) cooperate fully with Newco for
any proper purpose, including, without limitation, in the defense or pursuit
of any Transferred Asset, Assumed Liability or any claim or action that
relates to occurrences involving the Business prior to the Closing Date.
Section 7.07 Maintenance of Insurance Policies. Except as otherwise
provided in Exhibit G, on and after the date of this Agreement and until the
Closing Date, Lockheed ▇▇▇▇▇▇ shall not take or fail to take any action if
such action or inaction, as the case may be, would adversely affect the
applicability of any insurance (including reinsurance) in effect on the date
of this Agreement that covers all or any part of the assets that would
constitute Transferred Assets if owned, held or used by any of the Lockheed
▇▇▇▇▇▇ Companies on the Closing Date, the Business or the Transferred
Employees. Except as otherwise provided in Exhibit G or as may otherwise be
agreed in writing by the parties, Lockheed ▇▇▇▇▇▇ shall not have any
obligation to maintain the effectiveness of any such insurance policy after
the Closing Date or to make any monetary payment in connection with any such
policy.
Section 7.08 Novation of Government Contracts. As soon as is
reasonably practicable following the Closing, Lockheed ▇▇▇▇▇▇ shall, in
accordance with Federal Acquisition Regulations Part 42, Section 42.12,
submit in writing to each Responsible Contracting Officer (as such term is
defined in Federal Acquisition Regulations Part 42, Section 42.102(a)), a
request for the U.S. Government to (i) recognize Newco as the successor in
interest to all of the Government Contracts being sold, assigned, transferred
and conveyed to Newco in accordance with this Agreement and (ii) enter into a
novation agreement (the "Novation Agreement") substantially in the form
contemplated by such regulations. Lockheed ▇▇▇▇▇▇ shall use commercially
reasonable efforts to obtain all consents, approvals and waivers required for
the purpose of processing, entering into and completing the Novation
Agreement with regard to any of the Government Contracts, including
responding to any reasonable requests for information by the U.S. Government
with regard to such Novation Agreement.
Section 7.09 Financial Statements. Lockheed ▇▇▇▇▇▇ shall, at Lockheed
▇▇▇▇▇▇'▇ expense, furnish and shall cause its independent accountants for the
Communications Systems Business Unit to audit and furnish their opinion
thereon not later than March 28, 1997, financial statements for such Business
Unit for the years ended December 31, 1996, December 31, 1995 and December
31, 1994 prepared in accordance with GAAP applied consistently throughout the
periods covered thereby in a form meeting the requirements of Regulation S-X
of the Securities Act, and, consistent with appropriate terms and conditions
and upon receipt of appropriate management representation letters, to furnish
the consent of such independent accountants to the inclusion of their report
on such financial statements to the extent the financial statements are
required to be included in any registration statement of Newco under the
Securities Act and any amendments thereto or in any offering memoranda in
connection with an offering of securities exempt from registration under the
Securities Act, and to provide comfort letters in customary form in
connection therewith; and for the purposes of assisting Newco with any such
registration statement and subsequent reporting requirements under the
Securities Act of 1934, as amended, Lockheed ▇▇▇▇▇▇ will deliver to Newco
unaudited income statements and balance sheets of the Communications Systems
Business Unit for each 1996 calendar quarter and each 1997 calendar quarter
completed prior to or on the Closing Date. The financial statements and
schedules described in the preceding sentence for the first quarter of 1997
and 1996, respectively, will be provided by May 10, 1997. To the extent
required, each subsequent 1997 quarter's financial statements and schedules
(together with the corresponding 1996 quarter's financial statements) shall
be delivered to Newco by Lockheed ▇▇▇▇▇▇ within 40 days after the last day of
such quarter. The parties acknowledge and agree that time is of the essence
in the performance of this Section 7.09 and Lockheed ▇▇▇▇▇▇ shall provide
Newco unaudited financial information with respect to the Communications
Systems Business Unit for the years 1993 and 1992 meeting the requirements of
Item 301 of Regulation S-K (Selected Financial Data) of the Securities Act by
April 4, 1997. Lockheed ▇▇▇▇▇▇ acknowledges that Newco's independent
accountants will be performing the audit of the combined financial statements
of the Business for the year ended December 31, 1996 (and, if required by
applicable SEC regulations, for the period from January 1, 1997 to the
Closing Date), and the combined financial statements of the Wideband Systems
Business Unit and the Products Group of the Business for the three months
ended March 31, 1996 and the years ended December 31, 1995 and December 31,
1994. Lockheed ▇▇▇▇▇▇ agrees to cooperate and cause its independent
accountants to cooperate with Newco's independent accountants, and provide
such reasonable representation letters of Lockheed ▇▇▇▇▇▇'▇ management to
Newco's independent accountants in a form appropriate to enable such
accountants to issue an opinion on the financial statements they are auditing
in accordance with professional standards.
ARTICLE VIII
COVENANTS OF NEWCO AND THE PURCHASERS
Section 8.01 Confidentiality.
(a) Newco and the Purchasers agree that all information provided or
otherwise made available in connection with the Contemplated Transactions, to
any of the Purchasers, Newco or their Representatives will be treated as if
provided, in the case of Newco and ▇▇▇▇▇▇, under the ▇▇▇▇▇▇ Confidentiality
Agreement (whether or not the ▇▇▇▇▇▇ Confidentiality Agreement is in effect
or has been terminated) or, in the case of the Individual Purchasers, under
paragraph 7 of the Memorandum (whether or not the Memorandum is in effect or
has been terminated). In addition, until consummation of the Closing, Newco
agrees to be bound by the terms of the ▇▇▇▇▇▇ Confidentiality Agreement as if
Newco were ▇▇▇▇▇▇ thereunder (whether or not the ▇▇▇▇▇▇ Confidentiality
Agreement is in effect or has been terminated). Upon consummation of the
Closing, the ▇▇▇▇▇▇ Confidentiality Agreement and paragraph 7 of the
Memorandum shall cease to apply.
(b) For a period of three years after the Closing Date, the Purchasers,
Newco and each of their Affiliates will treat and hold as such, any
confidential information concerning the operations or affairs of businesses
of the Lockheed ▇▇▇▇▇▇ Companies (other than the Business). In the event
that any of the Purchasers, Newco or any of their Affiliates is requested or
required (by oral or written request for information or documents in any
legal proceeding, interrogatory, subpoena, civil investigative demand or
similar process or by Applicable Law) to disclose any such confidential
information, then they will notify Lockheed ▇▇▇▇▇▇ promptly of the request or
requirement so that Lockheed ▇▇▇▇▇▇, at its expense, may seek an appropriate
protective order or waive compliance with this Section 8.01(b). If, in the
absence of a protective order or receipt of a waiver hereunder, any of the
Purchasers, Newco or any of their Affiliates is, on the advice of counsel,
compelled to disclose such confidential information, they may so disclose the
confidential information, provided that they use reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded to such
confidential information. Notwithstanding the foregoing, the provisions of
this Section 8.01(b) shall not apply to information that (i) is or becomes
publicly available other than as a result of a disclosure by any of the
Purchasers, Newco or any of their Affiliates, (ii) is or becomes available to
any of the Purchasers, Newco or any of their Affiliates on a non-confidential
basis from a source that, to the Purchasers', Newco's or any of their
Affiliates' knowledge, is not prohibited from disclosing such information by
a legal, contractual or fiduciary obligation, or (iii) is or has been
independently developed by any of the Purchasers, Newco or any of their
Affiliates.
(c) Nothing in this Section 8.01 shall abrogate or otherwise limit the
fiduciary duties of, and any other duties or restrictions imposed by
Applicable Law on, the Individual Purchasers by virtue of their service as a
director, officer or employee of any of the Lockheed ▇▇▇▇▇▇ Companies or
their predecessors.
Section 8.02 Provision and Preservation of and Access to Certain
Information; Cooperation.
(a) Prior to the Closing Date, each Purchaser shall provide to Lockheed
▇▇▇▇▇▇ promptly upon its receipt thereof copies of all environmental audit
and similar reports with respect to facilities the possession of which will
be transferred to Newco at the Closing.
(b) The Individual Purchasers acknowledge that effective as of February
3, 1997, Lockheed ▇▇▇▇▇▇ turned over day-to-day management of the Business
Units to the Individual Purchasers. From the date of this Agreement until
the Closing Date, the Individual Purchasers agree to take reasonable steps to
ensure that the Business Units conduct their business and operations in
accordance with the provisions of Section 7.01. Notwithstanding the
foregoing, the Individual Purchasers shall not have liability to any Person
for the breach of this Section 8.02(b), it being understood that the effects
of a breach of this Section 8.02(b) shall be limited to the effects set forth
in Section 13.04(d) and Section 14.02.
(c) On and after the Closing Date, Newco shall preserve all books and
records of the Business for a period of five years commencing on the Closing
Date (or in the case of books and records relating to tax, employment and
employee benefits matters, until such time as Lockheed ▇▇▇▇▇▇ notifies Newco
in writing that all statutes of limitations to which such records relate have
expired), and thereafter, not to destroy or dispose of such records without
giving notice to Lockheed ▇▇▇▇▇▇ of such pending disposal and offering
Lockheed ▇▇▇▇▇▇ the right to copy such records at its expense. In the event
Lockheed ▇▇▇▇▇▇ has not copied such materials within 90 days following the
receipt of notice from Newco, Newco may proceed to destroy or dispose of such
materials without any liability. From and after the Closing Date and subject
to any applicable privileges (including, without limitation, the attorney-
client privilege), Newco shall at its expense (i) afford Lockheed ▇▇▇▇▇▇ and
its Representatives reasonable access upon reasonable prior notice during
normal business hours, to all employees, offices, properties, agreements,
records, books and affairs of Newco, and provide copies of such information
concerning the Business as Lockheed ▇▇▇▇▇▇ may reasonably request for any
proper purpose, including, without limitation, in connection with the
preparation of any tax returns or financial statements or in connection with
any judicial, quasi judicial, administrative, tax, audit or arbitration
proceeding and in connection with the preparation of any financial statements
or reports in accordance with past practices and procedures and (ii)
cooperate fully with Lockheed ▇▇▇▇▇▇ for any proper purpose, including,
without limitation, the defense of or pursuit of any Excluded Liability,
Excluded Asset or any claim or action that relates to an Excluded Liability
or Excluded Asset.
Section 8.03 Insurance; Financial Support Arrangements.
(a) Newco and the Purchasers acknowledge and agree that as of the
Closing Date, neither Newco, the Business or any of the Business Units, any
property owned or leased by any of the foregoing nor any of the directors,
officers, employees (including, without limitation, the Transferred
Employees) or agents of any of the foregoing will be insured under any
insurance policies maintained by Lockheed ▇▇▇▇▇▇ or any of its Affiliates,
except (i) in the case of certain policies, to the extent that a claim has
been reported as of the Closing Date, (ii) in the case of a policy that is an
occurrence policy, to the extent the accident, event or occurrence that
results in an insurable loss occurs prior to the Closing Date and has been,
is or will be reported or noticed to the respective carrier by Newco or any
of the Lockheed ▇▇▇▇▇▇ Companies in accordance with the requirements of such
policies (which claims Lockheed ▇▇▇▇▇▇ shall, at Newco's cost and expense,
pursue diligently on Newco's behalf and the net proceeds of which claims
shall be remitted promptly to Newco upon receipt thereof), and (iii) as
otherwise provided in Exhibit G or agreed to in writing by the parties.
Except as otherwise provided in Exhibit G or as otherwise may be agreed to in
writing by the parties, from and after the Closing Date, Lockheed ▇▇▇▇▇▇
shall have no obligation of any kind to maintain any form of insurance
covering all or any part of the Transferred Assets, the Business or the
Transferred Employees.
(b) Newco agrees to reimburse Lockheed ▇▇▇▇▇▇ within 30 days of receipt
of an invoice for the items set forth below.
(i) The allocated cost to the Business of premiums, costs and
expenses (excluding Lockheed ▇▇▇▇▇▇ risk management department costs and
expenses), including general and administrative charges, for all periods
prior to the Closing Date in respect of any and all insurance policies
that cover or covered the Business, whether or not a claim has been made
or ever will be made by the Business or Newco under such policies. The
"allocated cost" to the Business shall be determined by Lockheed ▇▇▇▇▇▇
in a manner consistent with prior practices and in conjunction with the
Cost Disclosure Statement filed by Lockheed ▇▇▇▇▇▇ or any of its
Affiliates and their predecessors with the U.S. Government on the
portion of the period covered by the respective policies that ends prior
to the Closing Date, except that with respect to policies for which no
premium rebate or refund is available as a result of the consummation of
the Contemplated Transactions, the "allocated cost" to the Business
shall be based on the entire policy period. Newco and the Purchasers
understand that Lockheed ▇▇▇▇▇▇ is in the process of reviewing with the
U.S. Government the methodology used by Lockheed ▇▇▇▇▇▇ and its
Affiliates to allocate premiums, costs, expenses and reserves to various
businesses and divisions, including the Business Units, and acknowledge
that any changes to such allocation methodology may result in
retroactive adjustments to the allocated cost to the Business of
premiums, costs and expenses. In the event of any such change to the
allocation methodology, Lockheed ▇▇▇▇▇▇ and Newco agree to adjust the
allocated costs to the Business (either through a special charge or
credit to Newco under this Section 8.03(b)(i)) as appropriate.
(ii) Any self insurance, retention, deductible, retrospective
premium, cash payment for reserves calculated or charged on an incurred
loss basis and similar items, including but not limited to associated
administrative expenses and allocated loss adjustment or similar
expenses (collectively, "Insurance Liabilities") allocated to the
Business by Lockheed ▇▇▇▇▇▇ on a basis consistent with past practices
resulting from or arising under any and all current or former insurance
policies maintained by Lockheed ▇▇▇▇▇▇ or any of its Affiliates to the
extent that such Insurance Liabilities relate to or arise out of the
Business or any activities of Newco.
Newco agrees that, to the extent any of the insurers under the insurance
policies, in accordance with the terms of the insurance policies, requests or
requires collateral, deposits or other security to be provided with respect
to claims made against such insurance policies relating to or arising from
the Business, Newco will provide the collateral, deposits or other security
or, upon request of Lockheed ▇▇▇▇▇▇, ▇▇▇▇ replace any collateral, deposits or
other security provided by Lockheed ▇▇▇▇▇▇ or any of its Affiliates.
(c) Newco agrees that, for a period of at least six years commencing on
the Closing Date, to the extent it maintains insurance coverage, Newco will
(at Lockheed ▇▇▇▇▇▇'▇ cost to the extent of any additional cost therefor,
provided that, in the event there will be such a cost, Newco will give
Lockheed ▇▇▇▇▇▇ a reasonable period of time to determine whether it desires
to incur such cost before Newco commits to such coverage with respect to
Lockheed ▇▇▇▇▇▇) include Lockheed ▇▇▇▇▇▇ and its Affiliates as an additional
insured/loss payee on any policies in respect of which Lockheed ▇▇▇▇▇▇ or its
Affiliates has or may have an insurable interest with respect to the
Business, the Transferred Assets, any of the Assumed Liabilities or any
facilities the possession of which will be transferred to Newco at the
Closing.
(d) Newco and the Purchasers agree that, not later than September 30,
1997, and in a manner reasonably satisfactory to Lockheed ▇▇▇▇▇▇, Newco will
in good faith seek to release Lockheed ▇▇▇▇▇▇ and its Affiliates from all
obligations under all Financial Support Arrangements maintained by Lockheed
▇▇▇▇▇▇ or any of its Affiliates in connection with the Business.
(e) Lockheed ▇▇▇▇▇▇ will use reasonable commercial efforts to cause
each Financial Support Arrangement to remain in full force and effect in
accordance with its terms until the earliest of (i) the date (the "Release
Date") on which Newco ensures that Lockheed and its Affiliates are released
from all obligations of Lockheed ▇▇▇▇▇▇ and its Affiliates under such
Financial Support Arrangement in accordance with Section 8.03(d), (ii)
September 30, 1997 and (iii) the date such Financial Support Arrangement
terminates in accordance with its terms. After the Closing Date and prior to
the Release Date for any such Financial Support Arrangement, Lockheed ▇▇▇▇▇▇
will not waive any requirements of or agree to amend such Financial Support
Arrangement without the prior written consent of Newco.
(f) If, after the Closing Date, (i) any amounts are drawn on or paid
under any Financial Support Arrangement where Lockheed ▇▇▇▇▇▇ or any of its
Affiliates is obligated to reimburse the Person making such payment or (ii)
Lockheed ▇▇▇▇▇▇ or any of its Affiliates pays any amounts under, or any fees,
costs or expenses relating to, any Financial Support Arrangement, Newco shall
pay Lockheed ▇▇▇▇▇▇ such amounts promptly after receipt from Lockheed ▇▇▇▇▇▇
of notice thereof accompanied by written evidence of the underlying payment
obligation.
(g) In the event that Newco fails to ensure that Lockheed ▇▇▇▇▇▇ and
its Affiliates are released from all obligations under the Financial Support
Arrangements not later than September 30, 1997, Newco shall either (i)
promptly deposit with Lockheed ▇▇▇▇▇▇ ▇▇▇▇ in an amount equal to the
aggregate principal or stated amount, as may be applicable, of the Financial
Support Arrangements not so released or (ii) provide back-up letters of
credit in form and substance reasonably satisfactory to Lockheed ▇▇▇▇▇▇ with
respect to such Financial Support Arrangements; provided that if Newco has
used reasonable commercial efforts to structure its financing arrangements to
permit it to comply with the foregoing obligations, Newco shall not be
required to take any action under this Section 8.03(g) that it is prohibited
from taking under the terms of any financing agreements of Newco in effect on
the Closing Date. Any cash deposited with Lockheed ▇▇▇▇▇▇ in accordance with
clause (i) shall be held by Lockheed ▇▇▇▇▇▇ in a segregated interest-bearing
account and shall be used by Lockheed ▇▇▇▇▇▇ solely to satisfy its payment
obligations in respect of such Financial Support Arrangements, and the unused
portion of any cash (including interest) relating to a Financial Support
Arrangement shall be returned to Newco promptly after the occurrence of the
Release Date with respect to, or any other termination of, the Financial
Support Arrangement.
(h) In the event that Newco fails to ensure that Lockheed ▇▇▇▇▇▇ and
its Affiliates are released from all obligations of Lockheed ▇▇▇▇▇▇ and its
Affiliates under the Disclosed Financial Support Arrangements not later than
September 30, 1997, whether as a result of the proviso to the first sentence
of Section 8.03(g) or otherwise, and to the extent that Newco has not
provided the deposits or letters of credit contemplated by the first sentence
of Section 8.03(g), on October 1, 1997 and on the first day of each calendar
quarter thereafter Newco agrees to pay to Lockheed ▇▇▇▇▇▇ an amount equal to
(i) .3125% of the maximum aggregate potential liability of Lockheed ▇▇▇▇▇▇
and its Affiliates under such Disclosed Financial Support Arrangements in
the case of performance-related Disclosed Financial Support Arrangements or
(ii) .625% of the maximum aggregate potential liability of Lockheed ▇▇▇▇▇▇
and its Affiliates under such Disclosed Financial Support Arrangements in the
case of all other Disclosed Financial Support Arrangements (other than
Disclosed Financial Support Arrangements that constitute non-monetary
performance guarantees or similar non-monetary obligations) that have not
been released or otherwise secured by the deposits or letters of credit
contemplated by the first sentence of Section 8.03(g) (determined as of the
last day of the preceding calendar quarter). Any such payment by Newco shall
be due and payable on October 1, 1997 or on the first day of the applicable
calendar month thereafter, and shall be nonrefundable regardless of any
subsequent reduction of the liability of Lockheed ▇▇▇▇▇▇ or any of its
Affiliates thereunder.
Section 8.04 Non-Solicitation of Employees. From and after the date
of this Agreement until the second anniversary of the Closing Date, Newco
shall not, without prior written approval of Lockheed ▇▇▇▇▇▇, directly or
indirectly (through Affiliates or otherwise), knowingly solicit any
individual (other than individuals identified in Attachment XI) who at that
time is an employee of any of the Lockheed ▇▇▇▇▇▇ Companies (other than a
Transferred Employee) to terminate his or her relationship with the Lockheed
▇▇▇▇▇▇ Companies and will not knowingly hire any individual inadvertently
solicited; provided, however, that the foregoing shall not apply to
individuals solicited or hired as a result of the use of an independent
employment agency (so long as the agency was not directed to solicit such
individual and Newco advises its Manager of Human Resources of the provisions
of this Section 8.04) or solicited or hired as a result of the use of a
general solicitation (such as an advertisement) not specifically directed to
employees of the Lockheed ▇▇▇▇▇▇ Companies.
Section 8.05 Financing. Newco shall use reasonable commercial efforts
to obtain (on or prior to the Closing Date) sufficient funds on commercially
available terms acceptable to Newco in its sole discretion (i) to pay the
cash portion of the Exchange Consideration and (ii) to obtain adequate
working capital for the Business, provided that Newco shall not be considered
to be in breach of this Agreement if, notwithstanding its use of reasonable
commercial efforts as aforesaid, Newco does not have sufficient funds
available for such purposes on the Closing Date.
Section 8.06 Use of Certain Trademarks, etc. Newco acknowledges and
agrees that it is not obtaining any rights or licenses with respect to the
names "Lockheed ▇▇▇▇▇▇," "Lockheed," "Loral," "▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇" or any
derivative thereof, or to their logos or trade dress, or to any other
Intellectual Property not constituting a Transferred Asset or not licensed to
it under the License Agreements. As soon as practicable following the
Closing, but no later than 180 days after the Closing Date, Newco shall
remove and change signage, change and substitute promotional and advertising
material in whatever medium, change stationery and packaging and take all
such other steps as may be required or appropriate to cease use of all such
Intellectual Property not constituting a Transferred Asset or not licensed to
it under the License Agreements; provided, however, that nothing in this
Agreement shall obligate Newco to change or copy over any engineering
drawings, prints or copies of correspondence, invoices and other documents
prepared prior to the Closing Date or to replace or alter any tools or dies
included in the Transferred Assets.
Section 8.07 Government Contract Novation; Cooperation. Newco shall
provide to Lockheed ▇▇▇▇▇▇ and each Responsible Contracting Officer all
information necessary to obtain the consent of the U.S. Government to
recognize Newco as the successor in interest to all of the Government
Contracts being sold, assigned, transferred and conveyed to Newco in
accordance with this Agreement. Newco shall use commercially reasonable
efforts to obtain all consents, approvals and waivers required for the
purpose of processing, entering into and completing the Novation Agreement
with regard to any of the Government Contracts, including responding to any
requests for information by the U.S. Government with regard to such Novation
Agreement.
Section 8.08 Reimbursement of Damages. Newco shall use reasonable
commercial efforts to obtain reimbursement of any Damages suffered by it that
are subject to indemnification by Lockheed ▇▇▇▇▇▇ hereunder as a reimbursable
cost under Government Contracts, provided the reimbursement of such Damages
is permitted by Applicable Law.
ARTICLE IX
COVENANTS OF THE PARTIES
Section 9.01 Further Assurances. Subject to the terms and conditions
of this Agreement, each party shall use all reasonable commercial efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable under Applicable Laws to consummate the
Contemplated Transactions. Lockheed ▇▇▇▇▇▇, Newco and the Purchasers shall
execute and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the Contemplated Transactions.
Except as otherwise expressly set forth in the Transaction Documents, nothing
in this Section 9.01 shall require Lockheed ▇▇▇▇▇▇, Newco or any of the
Purchasers to make any payments in order to obtain any consents or approvals
necessary or desirable in connection with the consummation of the
Contemplated Transactions.
Section 9.02 Certain Filings; Consents. Lockheed ▇▇▇▇▇▇, Newco and
the Purchasers shall cooperate with one another (i) in determining whether
any action by or in respect of, or filing with, any Governmental Authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material Contracts, in connection with the
consummation of the Contemplated Transactions and (ii) subject to the terms
and conditions of this Agreement, in taking such actions or making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such actions, consents, approvals or waivers.
Section 9.03 Public Announcements. Prior to the Closing, Lockheed
▇▇▇▇▇▇, Newco and the Purchasers shall consult with each other before issuing
any press release or making any public statement or communicating with the
U.S. Government as a customer with respect to this Agreement or the
Contemplated Transactions and, except as may be required by Applicable Law or
any listing agreement with any national or international securities exchange,
will not issue any such press release or make any such public statement prior
to such consultation. Notwithstanding the foregoing, no provision of this
Agreement (except as set forth in Section 8.01) shall relieve ▇▇▇▇▇▇ from any
of its obligations under the ▇▇▇▇▇▇ Confidentiality Agreement, or relieve the
Individual Purchasers from any of their respective obligations under
paragraph 7 of the Memorandum, or terminate any of the restrictions imposed
upon any party by Section 8.01.
Section 9.04 Intellectual Property; License Agreements.
(a) In consideration of the grant described in Section 9.04(b),
Lockheed ▇▇▇▇▇▇ shall grant to Newco, effective as of the Closing Date and
pursuant to a License Agreement, a fully paid-up, worldwide, perpetual, non-
exclusive license in respect of all Intellectual Property owned by Lockheed
▇▇▇▇▇▇ that is used or currently planned for use by the Business (but not
constituting Transferred Assets) on the Closing Date, for such uses and
currently planned uses by Newco and its Affiliates. Such license shall not
be transferable by Newco other than in connection with the sale or transfer
of all or a substantial portion (it being understood that the sale of a
Business Unit shall be deemed a substantial portion) of the Business by
Newco.
(b) In consideration of the grant described in Section 9.04(a), Newco
shall grant to the Lockheed ▇▇▇▇▇▇ Companies, effective as of the Closing
Date and pursuant to a License Agreement, a fully paid-up, world-wide,
perpetual, non-exclusive license in respect of all Intellectual Property
constituting Transferred Assets (i) that is used or currently planned for use
by the Lockheed ▇▇▇▇▇▇ Companies (other than the Business Units) on the
Closing Date, for such uses and currently planned uses by Lockheed ▇▇▇▇▇▇ and
its Affiliates or (ii) used by Newco after the Closing Date in connection
with the manufacture of any products for sale to, or the provision of any
services to, any of the Lockheed ▇▇▇▇▇▇ Companies pursuant to any agreement
between Newco and any of the Lockheed ▇▇▇▇▇▇ Companies that is breached by
Newco, for use by Lockheed ▇▇▇▇▇▇ and its Affiliates in making or using such
products or providing such services (other than in the case of clause (ii),
the duration for which shall be an appropriate length of time to permit
completion of manufacture or services). The license granted pursuant to
clause (i) of the preceding sentence shall be effective as of the Closing
Date and the license granted pursuant to clause (ii) of the preceding
sentence shall be effective as of the date that the agreement described
therein is breached by Newco. Such license shall not be transferable by
Lockheed ▇▇▇▇▇▇ other than in connection with the sale or transfer of all or
a substantial portion of a business by Lockheed ▇▇▇▇▇▇.
(c) Newco acknowledges and agrees that it shall hold all Intellectual
Property constituting part of the Transferred Assets subject to any licenses
thereof granted by Lockheed ▇▇▇▇▇▇ and its Affiliates prior to the Closing
Date.
(d) The transfer of Intellectual Property constituting Transferred
Assets to Newco shall not affect Lockheed ▇▇▇▇▇▇'▇ right to use, disclose or
otherwise freely deal with any know-how, trade secrets and other technical
information not constituting Transferred Assets that is resident on the
Closing Date at businesses of the Lockheed ▇▇▇▇▇▇ Companies other than the
Business.
Section 9.05 HSR Act. The parties shall take all actions necessary or
appropriate to cause the prompt expiration or termination of any applicable
waiting period under the HSR Act in respect of the Contemplated Transactions,
including, without limitation, complying as promptly as practicable with any
requests for additional information; provided that Newco shall not be
required to provide any undertakings or comply with any condition that, in
its good faith judgment, would materially and adversely diminish Newco's
rights under this Agreement or materially and adversely affect its business,
results or operations.
Section 9.06 Operation of Newco. From and after the date of this
Agreement through the Closing, Newco will not engage in or conduct any
activities other than activities that are necessary or appropriate in
connection with the consummation of the Contemplated Transactions.
Section 9.07 Maintenance of Insurance Policies. Notwith-standing any
provision to the contrary in this Agreement, this Section 9.07 shall
constitute the parties' agreement regarding the allocation of insurance
proceeds with respect to claims for liabilities that arise under or relate to
Environmental Laws that are comprised, in whole or in part, of Environmental
Liabilities that constitute Assumed Liabilities (the "Environmental Insurance
Claims"). Newco and the Purchasers acknowledge that Lockheed ▇▇▇▇▇▇ shall
control the Environmental Insurance Claims and shall have the right to
compromise or settle any Environmental Insurance Claims. Lockheed ▇▇▇▇▇▇
will act in good faith and with reasonable prudence to maximize recovery with
respect to the Environmental Insurance Claims and will allocate any recovery
received with respect to such Environmental Insurance Claims, first, to the
costs it incurred to collect such recovery and all net tax costs related to
such recovery, and second, to reimburse any Governmental Authority, prime
contractor or subcontractor pursuant to a Government Contract.
With respect to any recovery remaining (the "Remaining Recovery"):
(i) if the recovery applies to liabilities that are Assumed
Liabilities and to liabilities that are not Assumed Liabilities, and the
recovery was not designated as arising from specific liabilities (e.g.,
a global settlement with an insurance carrier), Lockheed ▇▇▇▇▇▇ will pay
Newco an amount equal to the Remaining Recovery multiplied by X
multiplied by (one minus Y); where X equals the total of the
Environmental Insurance Claims (estimated as of the date of recovery)
under said insurance policies divided by the total environmental and
other claims by Lockheed ▇▇▇▇▇▇ under said insurance policies; and Y
equals Lockheed ▇▇▇▇▇▇'▇ past expenditures on said liabilities divided
by the total estimated expenditures made or to be made by Lockheed
▇▇▇▇▇▇ or Newco in respect of said liabilities (estimated as of the date
of recovery), or
(ii) if the recovery was designated as arising from a specific
liability that is an Assumed Liability, Lockheed ▇▇▇▇▇▇ will pay Newco
the Remaining Recovery multiplied by (one minus Y).
Any obligations assumed in any such compromise or settlement of the
Environmental Insurance Claims will be apportioned between Lockheed ▇▇▇▇▇▇
and Newco in the same proportion as a recovery would be allocated pursuant to
this Section 9.07.
Section 9.08 Legal Privileges. Lockheed ▇▇▇▇▇▇ and Newco acknowledge
and agree that all attorney-client, work product and other legal privileges
that may exist with respect to the Transferred Assets or the Assumed
Liabilities, shall, from and after the Closing Date, be deemed joint
privileges of Lockheed ▇▇▇▇▇▇ and Newco. Both Lockheed ▇▇▇▇▇▇ and Newco
shall use all commercially reasonable efforts after the Closing Date to
preserve all such privileges and neither Lockheed ▇▇▇▇▇▇ nor Newco shall
knowingly waive any such privilege without the prior written consent of the
other party (which consent will not be unreasonably withheld or delayed).
Section 9.09 Non-Compete. Lockheed ▇▇▇▇▇▇, Newco and the Purchasers
covenant and agree that prior to the Closing Date they will discuss in good
faith the scope and nature of an appropriate non-competition agreement to
provide reasonable commercial protection to Newco for periods to be mutually
agreed upon of up to three years with respect to the material core businesses
of the Business while providing the Lockheed ▇▇▇▇▇▇ Companies the ability to
continue, without impediment, all of its existing businesses and currently
planned businesses (other than those conducted only through the Business
Units), to enter into businesses reasonably related to its exiting businesses
and currently planned businesses, to make acquisitions and to otherwise
provide third-party sourced products similar to those manufactured or sold by
the Business as part of larger systems manufactured or sold by the Lockheed
▇▇▇▇▇▇ Companies. The non-competition agreement also will provide reasonable
commercial protection to the Lockheed ▇▇▇▇▇▇ Companies on programs where
Newco performs substantial subcontract work for the Lockheed ▇▇▇▇▇▇
Companies, it being understood that this provision shall not prohibit Newco
from entering into subcontract agreements with other Persons on programs that
compete against the Lockheed ▇▇▇▇▇▇ Companies, provided that appropriate
safeguards (including, for example, "firewalls" and confidentiality
agreements) are implemented and in place to protect the proprietary and
confidential information of the Lockheed ▇▇▇▇▇▇ Companies. For the purposes
of any such non-competition agreement, (i) the businesses operated and
managed by Lockheed ▇▇▇▇▇▇ on behalf of the U.S. Government, including the
Department of Energy, shall not be included within the prohibitions, and (ii)
"currently planned" businesses of the Lockheed ▇▇▇▇▇▇ Companies shall mean
those businesses that Lockheed ▇▇▇▇▇▇ can demonstrate are affirmatively under
consideration as of the Closing Date.
ARTICLE X
TAX MATTERS
Section 10.01 Tax Matters. The parties agree as to tax matters as set
forth in Exhibit F.
ARTICLE XI
EMPLOYEE BENEFIT MATTERS
Section 11.01 Employee Benefit Matters. The parties agree as to
employee benefit matters as set forth in Exhibit G.
ARTICLE XII
CONDITIONS TO CLOSING
Section 12.01 Conditions to the Obligations of Each Party. The
obligations of Lockheed ▇▇▇▇▇▇, Newco and the Purchasers to consummate the
Closing are subject to the satisfaction (or waiver) of the following
conditions:
(a) Any applicable waiting period under the HSR Act relating to the
Contemplated Transactions shall have expired or been terminated;
(b) No provision of any Applicable Law or regulation and no judgment,
injunction, order or decree shall prohibit the Closing, and no action or
proceeding shall be pending before any court, arbitrator or governmental
body, agency or official with respect to which counsel reasonably
satisfactory to Lockheed ▇▇▇▇▇▇, Newco and the Purchasers shall have rendered
a written opinion that there is a substantial likelihood of a determination
that would prohibit the Closing;
(c) All actions by or in respect of or filings with any Governmental
Authority required to permit the consummation of the Closing shall have been
obtained;
(d) Lockheed ▇▇▇▇▇▇, Newco and the Purchasers shall have executed and
delivered the Common Stock Subscription Agreements and the Stockholders
Agreement in substantially the forms attached as Attachments IV and V, and
shall have executed and delivered the Exchange Agreement in substantially the
form attached to the Transfer Agreement attached as Attachment III, the
Interim Services Agreement, the License Agreements, the Supply Agreement and
the leases, subleases and assignment agreements referred to in Section
2.01(viii) and the agreement referred to in Section 2.01(ix);
(e) Lockheed ▇▇▇▇▇▇ and Newco shall have executed and delivered the
noncompetition agreement contemplated by Section 9.09;
(f) Lockheed ▇▇▇▇▇▇ or the applicable Affiliated Transferor, as the
case may be, shall have obtained the consents, approvals or permits
contemplated by Attachment X; and
(g) There shall be (i) no conditions requested of Lockheed ▇▇▇▇▇▇ by
the PBGC or of Newco by Lockheed ▇▇▇▇▇▇, in connection with the transfer of
all of the assets and liabilities of the Spinoff Plans or the Assumed Plans,
that are in either party's reasonable good faith judgment unacceptable to
either Lockheed ▇▇▇▇▇▇ (as to conditions requested of Lockheed ▇▇▇▇▇▇ by the
PBGC) or Newco (as to conditions requested of Newco by Lockheed ▇▇▇▇▇▇); or
(ii) no commencement of proceedings by the PBGC to terminate any Lockheed
▇▇▇▇▇▇ Pension Plan (or a reasonable good faith determination of Newco or
Lockheed ▇▇▇▇▇▇ that the commencement of such proceedings is reasonably
likely).
Section 12.02 Conditions to Obligation of Newco and the Purchasers.
The obligations of Newco and the Purchasers to consummate the Closing are
subject to the satisfaction (or waiver by Newco and the Purchasers) of the
following further conditions:
(a) (i) Lockheed ▇▇▇▇▇▇ shall have performed in all material respects
all of its obligations under the Transaction Documents required to be
performed by it on or prior to the Closing Date, (ii) the representations and
warranties of Lockheed ▇▇▇▇▇▇ contained in the Transaction Documents shall be
complete and correct (in all material respects, in the case of those
representations and warranties which are not by their express terms qualified
by reference to materiality) at and as of the date of this Agreement and as
of the Closing Date, as if made at and as of each such date, except that
those representations and warranties which are by their express terms made as
of a specific date shall be complete and correct (in all material respects,
in the case of those representations and warranties which are not by their
express terms qualified by reference to materiality) only as of such date,
and (iii) Newco shall have received a certificate signed by an executive
officer of Lockheed ▇▇▇▇▇▇ to the foregoing effect;
(b) Newco has sufficient funds available to pay the cash portion of the
Exchange Consideration for the Transferred Assets, provided that this Section
12.02(b) shall not be a condition to Newco and the Purchasers' obligation to
consummate the Closing unless the representations and warranties set forth in
Section C.08 of Exhibit C and Section D.06 of Exhibit D shall be, and
continue to be, accurate and Newco shall have complied in all material
respects with its obligations under Section 8.05;
(c) The Purchasers shall have completed their review of the litigation
titled Universal Navigation v. Loral Corporation and the results of such
review shall be satisfactory to the Purchasers;
(d) Since December 31, 1996, there shall not have been any material
adverse change in the assets, properties, business, financial condition or
results of operations of the Business taken as a whole or any developments
that reasonably could be expected to result in such a change;
(e) Lockheed ▇▇▇▇▇▇, the applicable Affiliated Transferor or Newco, as
the case may be, shall have obtained the consents, approvals or permits
contemplated by Attachment X;
(f) Newco shall have obtained such surveys and title insurance in
respect of the Owned Real Property as are sufficient to satisfy Newco's
lenders and to enable Newco to obtain financing; and
(g) Lockheed ▇▇▇▇▇▇ shall have furnished Newco with an opinion dated
the Closing Date concerning the matters set forth in Attachment XII.
Section 12.03 Conditions to Obligation of Lockheed ▇▇▇▇▇▇. The
obligation of Lockheed ▇▇▇▇▇▇ to consummate the Closing is subject to the
satisfaction (or waiver by Lockheed ▇▇▇▇▇▇) of the following further
conditions:
(a) (i) Newco and the Purchasers shall have performed in all material
respects all of their respective obligations under the Transaction Documents
required to be performed by them at or prior to the Closing Date, (ii) the
representations and warranties of Newco and the Purchasers contained in the
Transaction Documents shall be complete and correct (in all material
respects, in the case of those representations and warranties which are not
by their express terms qualified by reference to materiality) at and as of
the date of this Agreement and as of the Closing Date, as if made at and as
of each such date, except that those representations and warranties which are
by their express terms made as of a specific date shall be complete and
correct (in all material respects, in the case of those representations and
warranties which are not by their express terms qualified by reference to
materiality) only as of such date, and (iii) Lockheed ▇▇▇▇▇▇ shall have
received certificates signed by executive officers of Newco (as to Newco) and
▇▇▇▇▇▇ (as to ▇▇▇▇▇▇), and certificates signed by each of the Individual
Purchasers, to the foregoing effect; and
(b) Newco shall have furnished Lockheed ▇▇▇▇▇▇ with an opinion dated
the Closing Date covering the matters set forth in Attachment XIII.
Section 12.04 Effect of Waiver. Any waiver by Newco and the Purchasers
of the conditions specified in clause (ii) of Section 12.02(a) and any waiver
by Lockheed ▇▇▇▇▇▇ of the conditions specified in clause (ii) of Section
12.03, if made knowingly, shall also be deemed a waiver by such Person of any
claim for Damages as the result of the matters waived.
ARTICLE XIII
SURVIVAL; INDEMNIFICATION
Section 13.01 Survival. None of the representations and warranties of
the parties contained in any Transaction Document or in any certificate or
other writing delivered pursuant to any Transaction Document or in connection
with any Transaction Document shall survive the Closing, except for:
(i) the representations and warranties in Sections ▇.▇▇, ▇.▇▇,
▇.▇▇(▇) and B.12 shall survive indefinitely;
(ii) the representations and warranties in Section B.13 shall not
survive the Closing Date;
(iii) the representations and warranties in Section B.15 shall
survive for a period of three years from the Closing Date;
(iv) the representations and warranties in Section B.21 shall
survive until 30 days after the expiration of the applicable statute of
limitations (or extensions or waivers thereof);
(v) the representations and warranties in Exhibit B (other than
those Sections of Exhibit B referenced in the preceding clauses (i),
(ii), (iii) and (iv)), shall survive for a period of two years from the
Closing Date;
(vi) the representations and warranties included in Exhibit F shall
survive until 30 days after the expiration of the applicable statute of
limitations (or extensions or waivers thereof);
(vii) the representations and warranties in Sections C.01, C.02 and
C.05 shall survive indefinitely;
(viii) the representations and warranties in Exhibit C (other than
those Sections of Exhibit C referenced in the preceding clause (vii))
shall survive for a period of two years from the Closing Date;
(ix) the representations and warranties in Sections D.03 shall
survive indefinitely;
(x) the representations and warranties in Exhibit D (other than
the representations and warranties in Section D.03), shall survive for a
period of two years from the Closing Date;
(xi) the representations and warranties in Sections E.01, E.02 and
E.05 shall survive indefinitely; and
(xii) the representations and warranties in Exhibit E (other than
those Sections of Exhibit E referenced in the preceding clause (xi))
shall survive for a period of two years from the Closing Date.
The covenants and agreements of the parties in the Transaction Documents and
the representations and warranties referenced in the preceding clauses (i)
and (iii) through (xii) are referred to herein as the "Surviving
Representations or Covenants." It is understood and agreed that, (1) before
the Closing the remedies expressly set forth in Article XIV are the sole and
exclusive remedies for any breach of any representation, warranty or covenant
and (2) following the Closing the sole and exclusive remedy with respect to
any breach of any representation, warranty or covenant (other than (i) with
respect to a breach of the terms of a covenant, as to which Newco or Lockheed
▇▇▇▇▇▇, as the case may be, shall be entitled to seek specific performance or
other equitable relief and (ii) with respect to claims for fraud or for
willful breach of a covenant) shall be a claim for Damages made pursuant to
this Article XIII.
Section 13.02 Indemnification.
(a) Effective as of the Closing and subject to the limitations set
forth in Section 13.04(a), Newco hereby indemnifies Lockheed ▇▇▇▇▇▇ and its
Affiliates and their respective directors, officers, employees and agents,
against and agrees to hold them harmless from any and all Damages incurred or
suffered by any of them arising out of or related in any way to (i) any
misrepresentation or breach of any Surviving Representation or Covenant made
or to be performed by Newco pursuant to any of the Transaction Documents,
(ii) the Assumed Liabilities (including, without limitation, Newco's failure
to perform or in due course pay and discharge any Assumed Liability) or (iii)
any Financial Support Arrangement referred to in Section 8.03(b).
(b) Effective as of the Closing and subject to the limitations set
forth in Section 13.04(b), Lockheed ▇▇▇▇▇▇ hereby indemnifies Newco and its
Affiliates and their respective directors, officers, employees and agents
against and agrees to hold them harmless from any and all Damages incurred or
suffered by any of them arising out of or related in any way to (i) any
misrepresentation or breach of any Surviving Representation or Covenant made
or to be performed by the Lockheed ▇▇▇▇▇▇ Companies pursuant to any
Transaction Document, (ii) the Excluded Liabilities (including, without
limitation, Lockheed ▇▇▇▇▇▇'▇ (or any other Lockheed ▇▇▇▇▇▇ Company's)
failure to perform or in due course pay and discharge any Excluded
Liability), (iii) the assumption by Newco of Environmental Liabilities
arising out of, relating to, based on or resulting from actions taken (or
failures to take action), conditions existing or events occurring prior to
the Closing, (iv) the Camden CAS 410 Issue, or (v) the Sarasota Asset Step-Up
Issue; provided, however, that Newco shall not have suffered or be deemed to
have suffered any Damages in the case of the foregoing clauses (iii), (iv),
and (v) to the extent that such Damages are recoverable as an allowable cost
under Applicable Law or under the terms of any applicable Government
Contracts.
(c) Effective as of the Closing and subject to the limitations set
forth in Section 13.04(c), each of the Purchasers hereby, severally and not
jointly with the other Purchasers, indemnifies each of the other parties to
this Agreement and their respective Affiliates and their respective
directors, officers, employees and agents, against and agrees to hold them
harmless from any and all Damages incurred or suffered by any of them arising
out of or related in any way to any breach of any Surviving Representation or
Covenant made or to be performed by the Purchasers pursuant to any of the
Transaction Documents.
Section 13.03 Procedures.
(a) If Lockheed ▇▇▇▇▇▇ or any of its Affiliates or any of their
directors, officers, employees and agents, shall seek indemnification
pursuant to Section 13.02(a) or Section 13.02(c), or if Newco or any of its
Affiliates or any of their directors, officers, employees and agents, shall
seek indemnification pursuant to Section 13.02(b), such Person seeking
indemnification (the "Indemnified Party") shall give written notice to the
party from whom such indemnification is sought (the "Indemnifying Party")
promptly (and in any event within 30 days) after the Indemnified Party (or,
if the Indemnified Party is a corporation, any officer of the Indemnified
Party) becomes aware of the facts giving rise to such claim for
indemnification (an "Indemnified Claim") specifying in reasonable detail the
factual basis of the Indemnified Claim, stating the amount of the Damages, if
known, the method of computation thereof, and containing a reference to the
provision of the Transaction Documents in respect of which such Indemnified
Claim arises. The failure of an Indemnified Party to provide notice pursuant
to this Section 13.03 shall not constitute a waiver of that party's claims to
indemnification pursuant to Section 13.02 in the absence of, and then only to
the extent of, material prejudice to the Indemnifying Party. If the
Indemnified Claim arises from the assertion of any claim, or the commencement
of any suit, action, proceeding or Remedial Action brought by a Person that
is not a party hereto (a "Third Party Claim")any such notice to the
Indemnifying Party shall be accompanied by a copy of any papers theretofore
served on the Indemnified Party in connection with such Third Party Claim.
With respect to any Third Party Claim asserted or brought prior to the
Closing Date, notice of such Third Party Claim shall be deemed to have been
delivered on the Closing Date.
(b) (i) Upon receipt of notice of a Third Party Claim from an
Indemnified Party pursuant to Section 13.03(a), the Indemnifying Party
will, subject to the other provisions of this Section 13.03(b), assume
the defense and control of such Third Party Claim but shall allow the
Indemnified Party a reasonable opportunity to participate in the defense
thereof with its own counsel and at its own expense. The Indemnifying
Party shall select counsel, contractors and consultants of recognized
standing and competence after consultation with the Indemnified Party;
shall take all steps necessary in the defense or settlement thereof; and
shall at all times diligently and promptly pursue the resolution
thereof. In conducting the defense thereof, the Indemnifying Party
shall at all times act as if all Damages relating to such Third Party
Claim were for its own account and shall act in good faith and with
reasonable prudence to minimize Damages therefrom. The Indemnified
Party shall, and shall cause each of its Affiliates, directors,
officers, employees, and agents to, cooperate fully with the
Indemnifying Party in the defense of any Third Party Claim defended by
the Indemnifying Party.
(ii) The Indemnifying Party shall give prompt and continuing notice
to the other Indemnified Party of any Third Party Claims that the
Indemnifying Party reasonably believes may: (1) result in the assertion
of criminal liability on the part of the Indemnified Party or any of its
Affiliates, directors, officers, employees or agents; (2) adversely
affect the ability of the Indemnified Party to do business in any
jurisdiction or in any manner or with any customer; or (3) materially
affect the reputation of the Indemnified Party or any of its Affiliates,
directors, officers, employees or agents.
(iii) Subject to the provisions of Section 13.03(b)(iv) and Section
13.03(b)(v), the Indemnifying Party shall be authorized to consent to a
settlement of, or the entry of any judgment arising from, any Third
Party Claims, without the consent of any Indemnified Party; provided,
that the Indemnifying Party shall (1) pay or cause to be paid all
amounts arising out of such settlement or judgment concurrently with the
effectiveness thereof; (2) shall not encumber any of the assets of any
Indemnified Party or agree to any restriction or condition that would
apply to such Indemnified Party or to the conduct of that party's
business; and (3) shall obtain, as a condition of any settlement or
other resolution, a complete release of each Indemnified Party. Except
for the foregoing, no settlement or entry of judgment in respect of any
Third Party Claim shall be consented to by any Indemnifying Party
without the consent of the Indemnified Party, which consent shall not be
unreasonably withheld.
(iv) An Indemnified Party may elect to share the defense of a Third
Party Claim the defense of which has been assumed by the Indemnifying
Party pursuant to Section 13.03(b)(ii). In that event, the Indemnified
Party will so notify the Indemnifying Party in writing. Thereafter, the
Indemnifying Party and the Indemnified Party shall participate on an
equal basis in the defense, management and control of any such claim.
The Indemnifying Party and the Indemnified Party shall select mutually
satisfactory counsel, contractors and consultants to conduct the defense
or settlement thereof (the costs and expenses of which shall be shared
equally by the Indemnifying Party and the Indemnified Party), and shall
at all times diligently and promptly pursue the resolution thereof.
Notwithstanding the foregoing, Newco shall manage all Remedial Actions
conducted with respect to facilities which constitute Transferred Assets
or at which Newco will undertake operations pursuant to this Agreement,
provided that Lockheed ▇▇▇▇▇▇ and its Representatives shall have the
right, consistent with Newco's right to manage such Remedial Actions as
aforesaid, to participate fully in all decisions regarding any Remedial
Action, including reasonable access to sites where any Remedial Action
is being conducted, reasonable access to all documents, correspondence,
data, reports or information regarding the Remedial Action, reasonable
access to employees and consultants of Newco with knowledge of relevant
facts about the Remedial Action and the right to attend all meetings and
participate in any telephone or other conferences with any government
agency or third party regarding the Remedial Action.
(v) In the case of the indemnification contemplated by clauses
(iii), (iv) and (v) of Section 13.02(b), in the event that either the
Indemnified Party or the Indemnifying Party desires to settle the
matters referenced therein or consent to the entry of any judgment
arising thereunder and the other party does not wish to consent to such
settlement, the other party shall have no obligation to consent to the
settlement provided that it agrees in writing to pay and be responsible
for 100% of any Damages thereafter incurred; provided that no
Indemnified Party shall be required to consent to any settlement or
agree to be responsible for the payment of Damages thereafter incurred
with respect to any matter the settlement of which would require the
consent of such Indemnified Party pursuant to Section 13.03(b)(iii).
The obligation of the party that rejects any proposed settlement offer
or entry of any such judgment to pay and be responsible for 100% of any
Damages thereafter incurred in accordance with this Section 13.03(b)(v)
shall be conditioned upon and subject to the payment, within five
Business Days of the date such party provides the written agreement
contemplated by the preceding sentence, of an amount, in immediately
available funds, equal to the portion of the total settlement that would
have been payable by the party desiring to settle the matter or consent
to the entry of any such judgment according to the percentage sharing
arrangement contemplated by Section 13.04(b)(ii) or Section
13.04(b)(iii), as the case may be. Thereafter, the party that rejects
the proposed settlement shall be solely responsible for the defense of
the matter that is the subject of the proposed settlement.
(c) If the Indemnifying Party and the Indemnified Party are unable to
agree with respect to a procedural matter arising under Section 13.03(b)(iv),
the Indemnifying Party and the Indemnified Party shall, within 10 days after
notice of disagreement given by either party, agree upon a third-party
referee ("Referee"), who shall be an attorney and who shall have the
authority to review and resolve the disputed matter. The parties shall
present their differences in writing (each party simultaneously providing to
the other a copy of all documents submitted) to the Referee and shall cause
the Referee promptly to review any facts, law or arguments either the
Indemnifying Party or the Indemnified Party may present. The Referee shall
be retained to resolve specific differences between the parties within the
range of such differences. Either party may request that all oral arguments
presented to the Referee by either party be in each other's presence. The
decision of the Referee shall be final and binding unless both the
Indemnifying Party and the Indemnified Party agree. The parties shall share
equally all costs and fees of the Referee.
Section 13.04 Limitations. Notwithstanding anything to the contrary in
this Agreement or in any of the Transaction Documents:
(a) Newco shall only have liability to Lockheed ▇▇▇▇▇▇ and its
Affiliates with respect to the representations and warranties described in
clause (i) of Section 13.02(a) if such matters were the subject of a written
notice given by the Indemnified Party pursuant to Section 13.03(a) within the
period following the Closing Date specified for each respective matter in
Section 13.01.
(b) Lockheed ▇▇▇▇▇▇ shall only have liability to Newco or any other
Person hereunder:
(i) with respect to the representations and warranties described
in clause (i) of Section 13.02(b), (y) to the extent that the aggregate
Damages of all Indemnified Parties as the result thereof exceed
$5,000,000 but are not greater than $55,000,000 (it being understood
that Lockheed ▇▇▇▇▇▇'▇ maximum liability under Section 13.02(b)(i) with
respect to representations and warranties and this Section 13.04(b)(i)
shall be $50,000,000), and (z) if such matters were the subject of a
written notice given by the Indemnified Party pursuant to Section
13.03(a) within the period following the Closing Date specified for each
respective matter in Section 13.01;
(ii) with respect to the matters described in clause (iii) of
Section 13.02(b) (after giving effect to the proviso thereto), (y) to
the extent of 50% of the aggregate Damages incurred within eight years
following the Closing Date by all Indemnified Parties as the result
thereof, and (z) to the extent of 40% of the aggregate Operation and
Maintenance Costs incurred by all Indemnified Parties after the eighth
anniversary of the Closing Date and within 15 years following the
Closing Date; provided, however, that Lockheed ▇▇▇▇▇▇ shall only have
liability under Section 13.02(b)(iii) or this Section 13.04(b)(ii) for
Damages and Operation and Maintenance Costs incurred after the Closing
Date in excess of $6,000,000;
(iii) with respect to the matters described in clause (iv) of
Section 13.02(b) (after giving effect to the proviso thereto), (y) to
the extent of 75% of the aggregate Damages incurred by an Indemnified
Party as the result thereof, and (z) to the extent such Damages were
incurred within three years following the Closing Date; and
(iv) with respect to the matters described in clause (v) of Section
13.02(b) (after giving effect to the proviso thereto), (y) to the extent
of 75% of the aggregate Damages incurred by an Indemnified Party as the
result thereof, and (z) to the extent such Damages were incurred within
three years following the Closing Date.
(c) The Purchasers shall only have liability to Lockheed ▇▇▇▇▇▇ and its
Affiliates with respect to the representations and warranties described in
Section 13.02(c) if such matters were the subject of a written notice given
by the Indemnified Party pursuant to Section 13.03(a) within the period
following the Closing Date specified for each respective matter in Section
13.01.
(d) Lockheed ▇▇▇▇▇▇ shall not be liable to Newco or any other Person
hereunder for any Damages that result from a breach of the provisions of
Section 7.01 if such breach results from a breach by either of the Individual
Purchasers of Section 8.02(b).
(e) Lockheed ▇▇▇▇▇▇ shall not be liable to Newco or any other Person
under this Article XIII for any Damages that result from any breach of any
representation or warranty made by Lockheed ▇▇▇▇▇▇ hereunder to the extent
such representation or warranty is expressly qualified by reference to the
knowledge of the Individual Purchasers or a substantially similar clause
relating to their knowledge if either of the Individual Purchasers had such
knowledge as of the Closing.
ARTICLE XIV
TERMINATION
Section 14.01 Termination. The Transaction Documents may be terminated
at any time prior to the Closing:
(i) by mutual written agreement of Lockheed ▇▇▇▇▇▇ and the
Purchasers;
(ii) by Lockheed ▇▇▇▇▇▇ or the Purchasers (as a group) if the
Closing shall not have been consummated by May 30, 1997; provided,
however, that neither Lockheed ▇▇▇▇▇▇ nor a Purchaser may terminate the
Transaction Documents pursuant to this clause (ii) if the Closing shall
not have been consummated by May 30, 1997, by reason of the failure of
such party or any of its Affiliates to perform in all material respects
any of its or their respective covenants or agreements contained in the
Transaction Documents; provided further, that either Lockheed ▇▇▇▇▇▇ or
Newco and the Purchasers (as a group) shall be entitled to terminate the
Transaction Documents prior to May 30, 1997, if such party or parties,
as the case may be, shall reasonably conclude that any condition to such
party's or parties' obligations hereunder (as set forth in Section 12.01
with respect to Lockheed ▇▇▇▇▇▇, Newco and the Purchasers, Section 12.02
with respect to Newco and the Purchasers, and Section 12.03 with respect
to Lockheed ▇▇▇▇▇▇) cannot reasonably be expected to be satisfied prior
to May 30, 1997; and provided, further, that as a condition to the right
of a party to elect to terminate the Transaction Documents pursuant to
the immediately preceding proviso, the party shall first provide ten
Business Days prior notice to the other party specifying in reasonable
detail the nature of the condition that such party has concluded will
not be satisfied, and the other party shall be entitled during such ten
Business Day period to take any actions it may elect consistent with the
terms of this Agreement such that the condition reasonably could be
expected to be satisfied prior to the expiration of such time period;
(iii) by either Lockheed ▇▇▇▇▇▇ or Newco and the Purchasers (as a
group) if there shall be any law or regulation that makes consummation
of the Contemplated Transactions illegal or otherwise prohibited or if
consummation of the Contemplated Transactions would violate any
nonappealable final order, decree or judgment of any court or
Governmental Authority having competent jurisdiction; and
(iv) in accordance with the provisions of Section 15.13.
Any party desiring to terminate this Agreement pursuant to this Section 14.01
shall give written notice of such termination to the other parties to this
Agreement.
Section 14.02 Effect of Termination. If this Agreement is terminated
as permitted by Section 14.01, such termination shall be without liability of
any party (or any Affiliate, shareholder, director, officer, employee, agent,
consultant or representative of such party) to any other party to this
Agreement; provided, however, that if the Contemplated Transactions fail to
close as a result of a breach of any Transaction Document by Lockheed ▇▇▇▇▇▇,
Newco or any of the Purchasers, such party shall be fully liable for any and
all Damages incurred or suffered by any other party as a result of all such
breaches in an amount not to exceed $2,500,000, except that Lockheed ▇▇▇▇▇▇
(i) shall be fully liable for any and all Damages incurred or suffered by the
Purchasers as a result of any breach by Lockheed ▇▇▇▇▇▇ of its obligations
under Section 7.03, (ii) shall be fully liable for any and all Damages
incurred or suffered by the Purchasers as a result of Lockheed ▇▇▇▇▇▇'▇
willful failure to consummate the Closing (other than resulting from an
unintentional failure of any of the conditions set forth in Section 12.01 or
Section 12.03) if Newco and the Purchasers have sufficient funds available,
and are ready and willing, to pay the cash portion of the Exchange
Consideration for the Transferred Assets, and (iii) shall not be liable to
the Purchasers or any other Person hereunder for any Damages that result from
a breach of the provisions of Section 7.01 if such breach results from a
breach by either of the Individual Purchasers of Section 8.02(b). The
provisions of Sections 8.01 and 15.03 and this Section 14.02 shall survive
any termination hereof pursuant to Section 14.01.
ARTICLE XV
MISCELLANEOUS
Section 15.01 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Lockheed ▇▇▇▇▇▇:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Miles & Stockbridge, a
Professional Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇▇:
▇▇▇▇▇▇ Brothers Capital Partners III, L.P.
3 World Financial Center
New York, New York 10285
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇:
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇▇▇:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇:
▇-▇ Communications Holdings, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ Brothers Capital Partners III, L.P.
3 World Financial Center
New York, New York 10285
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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 15.01 and evidence of receipt is received or
(ii) if given by any other means, upon delivery or refusal of delivery at the
address specified in this Section 15.01.
Section 15.02 Amendments; Waivers.
(a) Any provision of the Transaction Documents may be amended or waived
prior to the Closing Date if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by Lockheed ▇▇▇▇▇▇, Newco
and the Purchasers, or in the case of a waiver, by the party against whom the
waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege under any Transaction Document shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
Section 15.03 Expenses. Except as otherwise provided in the
Transaction Documents and except that if the Closing shall occur the costs
and expenses of the Purchasers will be paid by Newco, all costs and expenses
incurred in connection with the Transaction Documents shall be paid by the
party incurring such cost or expense. Notwithstanding the foregoing, all
transfer, sales, use and similar fees and taxes resulting from or relating to
the formation and organization of Newco, including but not limited to the
transfer of the Transferred Assets to Newco by Lockheed ▇▇▇▇▇▇ or any of the
Affiliated Transferors, shall be borne one-half by Lockheed ▇▇▇▇▇▇ and one-
half by Newco. Each of Newco and Lockheed ▇▇▇▇▇▇ shall reimburse the other
for one-half of such fees and taxes paid by the other promptly upon
presentation of a demand therefor.
Section 15.04 Successors and Assigns. The provisions of the
Transaction Documents shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns; provided that no party
may assign, delegate or otherwise transfer any of its right or obligations
under this Agreement without the consent of Lockheed ▇▇▇▇▇▇, in the case of
Newco or any of the Purchasers, and Newco and the Purchasers in the case of
Lockheed ▇▇▇▇▇▇. Notwithstanding the foregoing proviso (i) ▇▇▇▇▇▇ may assign
all or part of its rights to ▇▇▇▇▇▇ Brothers Holdings Inc. and (ii) Newco may
assign all or part of its rights and obligations (other than the obligation
to issue shares of its capital stock) to a wholly owned Subsidiary of Newco,
provided that Newco also shall remain liable hereunder as if it had not
assigned its rights and obligations.
Section 15.05 Disclosure. Certain information set forth in the
Disclosure Schedules has been included and disclosed solely for informational
purposes and may not be required to be disclosed pursuant to the terms and
conditions of the Transaction Documents. The disclosure of any such
information shall not be deemed to constitute an acknowledgement or agreement
that the information is required to be disclosed in connection with the
representations and warranties made in the Transaction Documents or that the
information is material, nor shall any information so included and disclosed
be deemed to establish a standard of materiality or otherwise used to
determine whether any other information is material.
Section 15.06 Construction. As used in the Transaction Documents, any
reference to the masculine, feminine or neuter gender shall include all
genders, the plural shall include the singular, and the singular shall
include the plural. With regard to each and every term and condition of the
Transaction Documents, the parties understand and agree that the same have or
has been mutually negotiated, prepared and drafted, and that if at any time
the parties desire or are required to interpret or construe any such term or
condition or any agreement or instrument subject hereto, no consideration
shall be given to the issue of which party actually prepared, drafted or
requested any term or condition of the Transaction Documents.
Section 15.07 Entire Agreement.
(a) The Transaction Documents and any other agreements
contemplated thereby (including, to the extent contemplated herein, the
▇▇▇▇▇▇ Confidentiality Agreement and paragraph 7 of the Memorandum) and
certain other letter agreements entered into contemporaneously herewith
constitute the entire agreement among the parties with respect to the subject
matter of such documents and supersede all prior agreements, understandings
and negotiations, both written and oral, between the parties with respect to
the subject matter thereof.
(b) The parties hereto acknowledge and agree that no
representation, warranty, promise, inducement, understanding, covenant or
agreement has been made or relied upon by any party hereto other than those
expressly set forth in the Transaction Documents. Without limiting the
generality of the disclaimer set forth in the preceding sentence, neither
Lockheed ▇▇▇▇▇▇ nor any of its Affiliates has made or shall be deemed to have
made any representations or warranties, in any presentation or written
information relating to the Business given or to be given in connection with
the Contemplated Transactions, in any filing made or to be made by or on
behalf of Lockheed ▇▇▇▇▇▇ or any of its Affiliates with any governmental
agency, and no statement, made in any such presentation or written materials,
made in any such filing or contained in any such other information shall be
deemed a representation or warranty hereunder or otherwise. The Purchasers
acknowledge that Lockheed ▇▇▇▇▇▇ has informed them that no Person has been
authorized by Lockheed ▇▇▇▇▇▇ or any of its Affiliates to make any
representation or warranty in respect of the Business or in connection with
the Contemplated Transactions, unless in writing and contained in this
Agreement or in any of the Transaction Documents to which they are a party.
(c) Except as expressly provided herein or in any other
Transaction Document, no Transaction Document or any provision thereof is
intended to confer upon any Person other than the parties hereto any rights
or remedies hereunder.
Section 15.08 Governing Law. Except as otherwise provided in any of
the Transaction Documents, this Agreement shall be construed in accordance
with and governed by the law of the State of New York.
Section 15.09 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by the other parties
hereto.
Section 15.10 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, any of the Transaction Documents or the Contemplated
Transactions may be brought against any of the parties in the United States
District Court for the Southern District of New York, and each of the parties
hereby consents to the exclusive jurisdiction of such court (and of the
appropriate appellate court) in any such suit, action or proceeding and
waives any objection to venue laid therein. Process in any such suit, action
or proceeding may be served on any party anywhere in the world, whether
within or without the State of New York. Without limiting the foregoing,
Lockheed ▇▇▇▇▇▇, Newco and the Purchasers agree that service of process upon
such party at the address referred to in Section 15.01, together with written
notice of such service to such party, shall be deemed effective service of
process upon such party.
Section 15.11 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
Section 15.12 Bulk Sales. Newco hereby waives compliance by Lockheed
▇▇▇▇▇▇ and each Affiliated Transferor, in connection with the Contemplated
Transactions, with the provisions of Article 6 of the Uniform Commercial Code
as adopted in the States of Georgia, Florida, California, Pennsylvania, New
York, Massachusetts, Utah and New Jersey, and as adopted in any other states
where any of the Transferred Assets are located, and any other applicable
bulk sales laws with respect to or requiring notice to Lockheed ▇▇▇▇▇▇'▇ (or
any Affiliated Transferor's) creditors, as the same may be in effect on the
Closing Date. Lockheed ▇▇▇▇▇▇ shall indemnify and hold harmless Newco
against any and all liabilities (other than liabilities in respect of Assumed
Liabilities) which may be asserted by third parties against Newco as a result
of noncompliance with any such bulk sales law.
Section 15.13 Delivery of Disclosure Schedules; Certain Attachments.
(a) The parties acknowledge and agree that the Disclosure
Schedules contemplated by this Agreement are not being delivered at the time
of signing of this Agreement. Not later than the close of business on April
14, 1997, Lockheed ▇▇▇▇▇▇ shall deliver to Newco the Disclosure Schedules
contemplated by this Agreement, which Disclosure Schedules, once delivered,
shall be effective and speak as of the date of this Agreement as if delivered
on the date of this Agreement. In the event Newco or the Purchasers object
to the Disclosure Schedules, Newco or the Purchasers may, by written notice
delivered to Lockheed ▇▇▇▇▇▇ prior to the close of business on the fifth
Business Day following the day on which the Disclosure Schedules are
delivered to Newco, terminate this Agreement. In the event Lockheed ▇▇▇▇▇▇
does not receive such written notice within the time period specified in the
preceding sentence, Newco and the Purchasers shall be deemed to have accepted
the Disclosure Schedules. In the event that Newco or any of the Purchasers
elects to terminate this Agreement in accordance with the provisions of this
Section 15.13(a), no party to this Agreement shall have any liability to any
of the other parties to this Agreement.
(b) The parties acknowledge and agree that Attachment X
contemplated by this Agreement is not being delivered at the time of signing
of this Agreement. Not later than the close of business on the third
Business Day after delivery of the Disclosure Schedules, Newco shall deliver
to Lockheed ▇▇▇▇▇▇ a draft of the portions of Attachment X contemplated by
Section 12.01 and Section 12.02. Not later than the close of business on the
third Business Day after delivery of the Disclosure Schedules, Lockheed
▇▇▇▇▇▇ shall deliver to Newco a draft of the portion of Attachment X
contemplated by Section 12.01. In the event either Newco or Lockheed ▇▇▇▇▇▇
objects to any of the matters proposed to be included by the other party in
Attachment X, Newco and Lockheed ▇▇▇▇▇▇ shall in good faith discuss the
matters to be included in Attachment X. In the event Newco and Lockheed
▇▇▇▇▇▇ are unable to reach agreement on the matters to be included in
Attachment X prior to the close of business on the sixth Business Day after
the delivery of the Disclosure Schedules, Attachment X shall include all
matters proposed to be included by each of Newco and Lockheed ▇▇▇▇▇▇.
(c) The parties acknowledge and agree that Attachments IV, V,
VIII, IX, XI and XV as attached to this Agreement at the time of signing of
this Agreement are subject to modification by any of the Purchasers or
Lockheed ▇▇▇▇▇▇ at any time not later than the close of business on April 4,
1997. In the event that any of the Purchasers or Lockheed ▇▇▇▇▇▇ desires to
amend either Attachment IV, Attachment V, Attachment VIII, Attachment IX,
Attachment XI or Attachment XV, it shall notify the other parties in writing
of the proposed amendment and the Purchasers and Lockheed ▇▇▇▇▇▇ shall, in
good faith, discuss the proposed amendment. In the event that,
notwithstanding those discussions, the Purchasers and Lockheed ▇▇▇▇▇▇ are
unable to resolve the differences as to the provisions of either Attachment
IV, Attachment V, Attachment VIII, Attachment IX, Attachment XI or Attachment
XV, any of the parties may terminate this Agreement prior to the close of
business on April 11, 1997 by written notice to the other parties to this
Agreement and upon any such termination no party to this Agreement shall have
any liability to any other parties to this Agreement. If this Agreement
shall not have been terminated in accordance with the provisions of this
Section 15.13(c) by the close of business on April 11, 1997, the amended
versions of Attachments IV, V, VIII, IX, XI and XV shall replace Attachments
IV, V, VIII, IX, XI and XV as attached to this Agreement at the time of
signing of this Agreement.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed by their respective authorized officers on the day and year first
above written.
WITNESS: LOCKHEED ▇▇▇▇▇▇ CORPORATION
____________________________ By:________________________________
Name:
Title:
▇▇▇▇▇▇ BROTHERS CAPITAL
PARTNERS III, L.P.
By: ▇▇▇▇▇▇ BROTHERS HOLDINGS INC.,
its General Partner
____________________________ By:___________________________
Name:
Title:
▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________ ___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________ ___________________________________
L-3 COMMUNICATIONS HOLDINGS, INC.
____________________________ By:________________________________
Name:
Title:
EXHIBIT A
DEFINITIONS
(a) The following terms have the following meanings:
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such
other Person. For purposes of determining whether a Person is an Affiliate,
the term "control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of securities, contract or otherwise.
Notwith-standing the foregoing, for purposes of the Agreement neither
Lockheed ▇▇▇▇▇▇ nor any of the Lockheed ▇▇▇▇▇▇ Companies shall be considered
an Affiliate of Newco or any of the Purchasers.
"Affiliated Transferors" means Lockheed ▇▇▇▇▇▇ Tactical Systems, Inc.,
Randtron Systems, Inc., Lockheed ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Corporation, Conic
Corporation, Lockheed ▇▇▇▇▇▇ Microcom Corporation, Lockheed ▇▇▇▇▇▇ Hycor,
Inc., The ▇▇▇▇▇ Microwave Corporation and any other Affiliate of Lockheed
▇▇▇▇▇▇ that owns any of the assets that would constitute Transferred Assets
if owned, held or used by Lockheed ▇▇▇▇▇▇ or any of the Affiliated
Transferors specified above on the Closing Date or is liable for any of the
Assumed Liabilities.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction,
directive, judgment, decree or other requirement of any Governmental
Authority (including any Environmental Law) applicable to such Person or any
of their respective properties, assets, officers, directors, employees,
consultants or agents (in connection with such officer's, director's,
employee's, consultant's or agent's activities on behalf of such Person).
"Assumed Liabilities" means all of the following liabilities and
obligations of any of the Lockheed ▇▇▇▇▇▇ Companies relating to or arising
out of the operation and affairs of the Business, the Transferred Assets or
the NY Leases:
(i) Balance Sheet and Scheduled Liabilities. All liabilities and
obligations relating to the Business, the Transferred Assets or the NY Leases
whether accrued, liquidated, contingent, matured or unmatured, at or prior to
the Closing, which (a) are disclosed in any of the Disclosure Schedules
delivered hereunder, (b) would be subject to disclosure in any of the
Disclosure Schedules delivered in connection with any of Lockheed ▇▇▇▇▇▇'▇
representations and warranties but for the materiality standards contained in
such representation and warranty, (c) are reflected in the Final Net Tangible
Asset Amount as determined in accordance with Section 2.03 herein (including
without limitation accounts payable and reserves reflected as contra-asset
accounts, and those reflected in the estimates at completion), (d) are
incurred in the ordinary course of business subsequent to the Effective Date,
other than with respect to the matters covered by Exhibits F and G, or (e)
are otherwise a liability or obligation that Newco is expressly assuming
pursuant to this Agreement;
(ii) Contracts. All liabilities and obligations arising under the
Contracts, whether or not such Contracts have been completed or terminated
prior to the Closing Date, including, without limitation, any such
liabilities and obligations arising from or relating to the performance or
non-performance of the Contracts by the Business Units, Newco or any other
party, whether arising prior to, on or after the Closing Date, except to the
extent they constitute Excluded Liabilities;
(iii) Employment. All liabilities and obligations in respect of
employees and former employees of the Business provided in Exhibit G to be
assumed by Newco;
(iv) Benefit Plans; Workers' Compensation. The liabilities and
obligations under the Employee Plans and Benefit Arrangements provided in
Exhibit G to be assumed by Newco;
(v) Product Warranty and Liability Claims. All liabilities and
obligations relating to warranty obligations or services, or claims of
manufacturing or design defects, with respect to any product or service sold
or provided by the Business whether prior to, on or after the Closing Date;
(vi) Taxes. All liabilities and obligations in respect of Taxes
provided in Exhibit F to be assumed by Newco;
(vii) Environmental Liabilities. All Environmental Liabilities,
whether arising prior to, on or after the Closing Date and whether such
Environmental Liabilities are "onsite" or "offsite," but only to the extent
relating to or arising out of conditions at, or the current or former
operations of the Business Units at, the facilities owned or leased by the
Business as of the Closing Date and included in the Transferred Assets
(whether by fee ownership or leasehold interest), it being understood that
the term "Assumed Liabilities" shall not include any Environmental
Liabilities included in clause (viii) of the definition of Excluded
Liabilities;
(viii) NY Leases. All liabilities and obligations relating to the NY
Leases, whether arising prior to, on or after the Closing Date;
(ix) OSHA Liabilities. All liabilities and obligations relating to
the Occupational Safety and Health Act of 1970, as amended, and any
regulations, decisions or orders promulgated thereunder, together with any
state or local law, regulation or ordinance pertaining to worker, employee or
occupational safety or health in effect as of the Closing Date or as
thereinafter may be amended or superseded, whether arising prior to, on or
after the Closing Date;
(x) Litigation. All matters of governmental, judicial or
adversarial proceedings (public or private), litigation, arbitration,
disputes, claims, causes of action or investigations (collectively,
"Proceedings") of a civil nature arising from or directly or indirectly
relating to any of the enumerated "Assumed Liabilities" in clauses (i)
through (ix), whether or not such matters were accrued, liquidated,
contingent, matured, unmatured, or known or unknown to Lockheed ▇▇▇▇▇▇ at or
prior to the Closing; and
(xi) Post-Closing Liabilities. All liabilities and obligations
relating to Newco's ownership of the Transferred Assets, directly or
indirectly relating to or arising under the Employee Plans and Benefit
Arrangements or relating to the Transferred Employees, the lease of
properties under the NY Leases or otherwise or its conduct of the Business
and any related operations, in each case, from and after the Closing Date
including, without limitation, any and all Proceedings in respect thereof.
"Audited Business Financial Statements" means the audited combined
financial statements of the Lockheed ▇▇▇▇▇▇ Predecessor Businesses, together
with the notes thereto, as attached in Attachment I to the Agreement.
"Bid" means any quotation, bid or proposal made by Lockheed ▇▇▇▇▇▇ or
any of its Affiliates primarily in connection with the Business that if
accepted or awarded would lead to a Contract with the U.S. Government or any
other Person for the design, manufacture and sale of products or the
provision of services by the Business.
"Business" means the businesses conducted by the Business Units
(together with their predecessors), which in the aggregate comprise the
Products Group (excluding the business of Frequency Sources Inc. (other than
its semiconductor products business) and the assembly plant in Goodyear,
Arizona), the Wideband Systems business and the Communications Systems
business of the Lockheed ▇▇▇▇▇▇ Companies.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by
law to close.
"Business Units" means (i) Display Systems headquartered in Atlanta,
Georgia, (ii) Advanced Recorders headquartered in Sarasota, Florida,
(iii) Conic headquartered in San Diego, California, (iv) Microcom
headquartered in Warminster, Pennsylvania, (v) Telemetry & Instrumentation
headquartered in San Diego, California, (vi) Randtron headquartered in Menlo
Park, California, (vii) Microwave--▇▇▇▇▇ East headquartered in Hauppauge, New
York (including the ▇▇▇▇▇ Semiconductor Products business in Lowell,
Massachusetts), (viii) Microwave--▇▇▇▇▇ ▇▇▇▇ headquartered in Rancho Cordova,
California, (ix) Hycor headquartered in Woburn, Massachusetts, (x) Wideband
Systems headquartered in Salt Lake City, Utah, (xi) Communications Systems
headquartered in Camden, New Jersey, and (xii) the Airport Explosive
Detection Business represented by the Grant from the Federal Aviation
Administration held by Lockheed ▇▇▇▇▇▇ Specialty Components, Inc.
"Camden CAS 410 Issue" means the assertions raised by the United States
Defense Contract Audit Agency that the Communications Systems Business Unit
overallocated general and administrative expenses during its transition from
a "cost of sales" to a "total cost input" allocation methodology for such
expenses in a manner inconsistent with CAS 410.
"Closing Date" means the date of the Closing.
"Common Stock Subscription Agreements" means the Common Stock
Subscription Agreements dated the Closing Date and entered into by each of
Lockheed ▇▇▇▇▇▇ and the Purchasers with Newco (in substantially the forms of
Attachment IV to the Agreement), as the same may be amended from time to
time.
"Contemplated Transactions" means the transactions contemplated by the
Transaction Documents.
"Contracts" means all contracts, agreements, leases (including leases of
real property), licenses, commitments, sales and purchase orders,
intercompany work transfer agreements (with respect to work by or for other
Lockheed ▇▇▇▇▇▇ businesses) and other instruments of any kind, whether
written or oral, that relate primarily to the Business.
"Damages" means (subject in the case of Damages suffered by Newco to
Newco's fulfillment of its obligations under Section 8.08 of the Agreement)
all demands, claims, actions or causes of action, assessments, losses,
damages, costs, expenses, liabilities, judgments, awards, fines, sanctions,
penalties, charges and amounts paid in settlement, including, without
limitation, reasonable costs, fees and expenses of attorneys, experts,
accountants, appraisers, consultants, witnesses, investigators and any other
agents or representatives of such Person (with such amounts to be determined
net of any resulting tax benefit actually received or realized and net of any
refund or reimbursement of any portion of such amounts actually received or
realized, including, without limitation, reimbursement by way of insurance,
third party indemnification or the inclusion of any portion of such amounts
as a cost under Government Contracts), but specifically excluding (i) any
costs incurred by or allocated to an Indemnified Party with respect to time
spent by employees of the Indemnified Party or any of its Affiliates, (ii)
any lost profits or opportunity costs (except to the extent assessed in
connection with a third-party claim with respect to which the party against
which such damages are assessed is entitled to indemnification hereunder),
exemplary or punitive damages and (iii) the decrease in the value of any
Transferred Asset to the extent that such valuation is based on any use of
such Transferred Asset other than its use as of the Closing Date.
Notwithstanding the foregoing, in respect of any breach of the
representations and warranties set forth in Section B.05 with respect to the
Audited Business Financial Statements, "Damages" shall be limited to (i) the
reasonable costs of defense by Newco of any demands, claims, actions or
causes of action to the extent related to or arising out of allegations that
the Audited Business Financial Statements as included in the offering
document used by Newco in the sale of high yield debt securities to finance
the Contemplated Transactions (and the related exchange offer registration
statement) and (ii) liability of Newco to third parties for violations of the
Securities Act or related blue sky or state securities laws in connection
with the offerings of securities referenced in the foregoing clause (i) (with
such amounts in each case to be determined net of any resulting tax benefit
actually received or realized and net of any refund or reimbursement of any
portion of such amounts actually received or realized, including, without
limitation, reimbursement by way of insurance, third party indemnification or
the inclusion of any portion of such amounts as a cost under Government
Contracts).
"December Statement" means the audited combined statement of net
tangible assets of the Business at December 31, 1996, together with the notes
thereto, as attached in Attachment II to the Agreement.
"Disclosed Financial Support Arrangements" means the Financial Support
Arrangements listed or referred to in Section B.10 of the Disclosure
Schedules.
"Disclosure Schedule" means the Disclosure Schedule dated the date of
this Agreement and acknowledged by the parties hereto relating to the
Agreement.
"Environmental Claim" means any written or oral notice, claim, demand,
action, suit, complaint, proceeding or other communication by any third
Person alleging liability or potential liability (including without
limitation liability or potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resource damages, property
damage, personal injury, fines or penalties) arising out of, relating to,
based on or resulting from (i) the presence, discharge, emission, release or
threatened release of any Hazardous Substances at any location, (ii) circum-
stances forming the basis of any violation or alleged violation of any
Environmental Laws, or (iii) otherwise relating to obligations or liabilities
under any Environmental Laws.
"Environmental Laws" means any and all past, present or future federal,
state, local and foreign statutes, laws, regulations, ordinances, judgments,
orders, codes, or injunctions, which (i) imposes liability for or standards
of conduct concerning the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of
Hazardous Substances including, The Resource Conservation and Recovery Act of
1976, as amended, The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, The Superfund Amendment and
Reauthorization Act of 1984, as amended, The Toxic Substances Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, to the
extent it relates to the handling of and exposure to hazardous or toxic
materials or similar substances, and any other so-called "Superfund" or
"Superlien" law or (ii) otherwise relates to the protection of human health
or the environment.
"Environmental Liabilities" means all liabilities to the extent arising
in connection with or in any way relating to the Business or Lockheed
▇▇▇▇▇▇'▇ or its Affiliates' use or ownership thereof, whether vested or
unvested, contingent or fixed, actual or potential, which arise under or
relate to Environmental Laws including, without limitation, (i) Remedial
Actions, (ii) personal injury, wrongful death, economic loss or property
damage claims, (iii) claims for natural resource damages, (iv) violations of
law or (v) any other cost, loss or damage with respect thereto.
"Exchange Agreement" means the Exchange Agreement referred to in the
Transfer Agreement.
"Excluded Assets" means:
(i) cash and cash equivalents of Lockheed ▇▇▇▇▇▇ or any of its
Affiliates, including, without limitation, cash and cash equivalents used as
collateral for letters of credit, deposits with utilities, insurance
companies and other Persons;
(ii) all original books and records that Lockheed ▇▇▇▇▇▇ or any of
its Affiliates shall be required to retain pursuant to any Applicable Law (in
which case copies of such books and records shall be provided to Newco upon
request), or that contain information relating primarily to any business or
activity of Lockheed ▇▇▇▇▇▇ or any of its Affiliates not forming a part of
the Business, or any employee of Lockheed ▇▇▇▇▇▇ or any of its Affiliates
that is not a Transferred Employee;
(iii) tax assets specified as Excluded Assets in Exhibit F;
(iv) all assets of Lockheed ▇▇▇▇▇▇ or any of its Affiliates not
held or owned by or used primarily in connection with the Business (including
the Chelmsford, Massachusetts location of Frequency Sources, Inc.), other
than the NY Leases;
(v) all assets of Lockheed ▇▇▇▇▇▇ or any of its Affiliates (other
than the Business Units) held or used in connection with the provision of
services, or the sale of goods, to the Business;
(vi) all rights of Lockheed ▇▇▇▇▇▇ under any of the Transaction
Documents and the agreements and instruments delivered to Lockheed ▇▇▇▇▇▇ by
Newco pursuant to any of the Transaction Documents;
(vii) "Legacy Intellectual Property" identified as such in Section
B.16 of the Disclosure Schedules, including but not limited to income, losses
and rights relating thereto;
(viii) any accounts receivable, notes receivable or similar claims or
rights (whether billed or accrued) of the Business from Lockheed ▇▇▇▇▇▇ or
any Affiliate of Lockheed ▇▇▇▇▇▇ other than a Business Unit except for
accounts receivable, notes receivable or similar claims or rights (whether
billed or accrued) relating to materials sold or services rendered by the
Business Units to or for Lockheed ▇▇▇▇▇▇ or any such Affiliates;
(ix) capital stock or any other securities of any Subsidiaries of
Lockheed ▇▇▇▇▇▇;
(x) Intellectual Property not used primarily in the Business, it
being understood and agreed that the only Intellectual Property consisting of
patents and patent applications used primarily in the Business are those
listed on Attachment XV;
(xi) the leasehold interest of the Lockheed ▇▇▇▇▇▇ Companies in
respect of the Horsham, Pennsylvania property of the Microcom Business Unit;
and
(xii) any Intellectual Property developed by a Business Unit at the
expense of a Lockheed ▇▇▇▇▇▇ Company (other than a Business Unit) unless such
Intellectual Property may fairly be characterized as an immaterial
improvement, modification or derivative work to or of Intellectual Property
developed by a Business Unit at its own expense, including but not limited to
income, losses and rights relating thereto.
"Excluded Liabilities" means the following obligations and liabilities:
(i) any obligations or liabilities in respect of events occurring
prior to the Closing Date and arising out of (1) any criminal investigations,
grand jury proceedings, or counts in any causes of action specifically
alleging criminal conduct; provided, however, that if such investigations,
grand jury proceedings or counts become civil in nature, at such time they
will no longer constitute Excluded Liabilities pursuant to this provision
or (2) counts or actions alleging civil fraud or intentional misconduct by
the Communications Systems Business Unit (or its predecessors) headquartered
in Camden, New Jersey;
(ii) all obligations and liabilities of Lockheed ▇▇▇▇▇▇ or any of
its Affiliates not arising out of the conduct of the Business, except as
otherwise specifically provided in the Transaction Documents;
(iii) to the extent set forth in Exhibit F to the Agreement, any
obligation or liability for any Tax arising from or with respect to the
Transferred Assets or the operations of the Business for the Pre-Closing Tax
Period;
(iv) any liability whether presently in existence or arising after
the date of the Agreement in respect of accounts payable, notes payable
(including intercompany promissory notes and similar financing arrangements)
or similar obligations (whether billed or unbilled) to or allocated to
Lockheed ▇▇▇▇▇▇ or any Affiliate of Lockheed ▇▇▇▇▇▇, except for accounts
payable, notes payable or similar obligations (whether billed or unbilled)
relating to materials sold or services rendered to, or any insurance procured
for, the Business Units by Lockheed ▇▇▇▇▇▇ or any Affiliate of Lockheed
▇▇▇▇▇▇ other than a Business Unit;
(v) any liability whether presently in existence or arising after
the date of the Agreement relating to fees, commissions or expenses owed to
any broker, finder, investment banker, accountant, attorney or other
intermediary or advisor employed by Lockheed ▇▇▇▇▇▇ or any of its Affiliates
in connection with the Contemplated Transactions;
(vi) any obligation or liability retained by Lockheed ▇▇▇▇▇▇
pursuant to Exhibit G;
(vii) all obligations and liabilities related to Excluded Assets;
(viii) all Environmental Liabilities whether arising prior to, on or
after the Closing Date and whether such Environmental Liabilities are
"onsite" or "offsite," (1) relating to or arising out of conditions at or the
operations of the Camden Truck Depot located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇, or (2) relating to or arising out of conditions at, or the current or
former operations at, any facilities not included in the Transferred Assets
(whether by fee ownership or leasehold interest) (including any predecessors
to such facilities); and
(vi) all obligations and liabilities related to the closing of the
assembly plant formerly operated by the Conic Business Unit in Goodyear,
Arizona.
"Financial Support Arrangements" means any obligations, contingent or
otherwise, of a Person in respect of any indebtedness, obligation or
liability (including assumed indebtedness, obligations or liabilities) of
another Person, including but not limited to remaining obligations or
liabilities associated with indebtedness, obligations or liabilities that are
assigned, transferred or otherwise delegated to another Person, if any,
letters of credit and standby letters of credit (including any related
reimbursement or indemnity agreements), direct or indirect guarantees,
endorsements (except for collection or deposit in the ordinary course of
business), notes co-made or discounted, recourse agreements, take-or-pay
agreements, keep-well agreements, agreements to purchase or repurchase such
indebtedness, obligation or liability or any security therefor or to provide
funds for the payment or discharge thereof, agreements to maintain solvency,
assets, level of income or other financial condition, agreements to make
payment other than for value received and any other financial accommodations.
"GAAP" means Generally Accepted Accounting Principles as in effect on
the date of the Agreement.
"Government Contract" means any prime contract, subcontract, teaming
agreement or arrangement, joint venture, basic ordering agreement, pricing
agreement, letter contract, purchase order, delivery order, change order, Bid
or other arrangement of any kind relating exclusively to the Business between
Lockheed ▇▇▇▇▇▇ or any of the Affiliated Transferors and (i) the U.S.
Government (acting on its own behalf or on behalf of another country or
international organization), (ii) any prime contractor of the U.S. Government
or (iii) any subcontractor with respect to any contract of a type described
in clauses (i) or (ii) above.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory
organization, commission, tribunal or organization or any regulatory,
administrative or other agency, or any political or other subdivision,
department or branch of any of the foregoing.
"Hazardous Substances" means substances defined as "hazardous
substances," "hazardous materials" or "hazardous waste" in The Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
or The Resource Conservation and Recovery Act of 1976, as amended, those
substances defined as "hazardous wastes" in the regulations adopted and
publications promulgated pursuant to any of said laws, those substances
defined as "toxic substances" in The Toxic Substances Control Act, as
amended, petroleum, its derivatives and petroleum products, and asbestos and
asbestos containing materials.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Intellectual Property" means all patents, copyrights, technology, know-
how, processes, trade secrets, inventions, proprietary data, formulae,
research and development data and computer software programs; all trademarks,
trade names, service marks and service names; all registrations,
applications, recordings, licenses and common-law rights relating thereto,
all rights to ▇▇▇ at law or in equity for any infringement or other
impairment thereto, including the right to receive all proceeds and damages
therefrom, and all rights to obtain renewals, continuations, divisions or
other extensions of legal protections pertaining thereto; and all other
United States, state and foreign intellectual property owned by Lockheed
▇▇▇▇▇▇ or the Affiliated Transferors on the Closing Date.
"Interim Services Agreement" means the Interim Services Agreement dated
the Closing Date by and among Newco and Lockheed ▇▇▇▇▇▇ as contemplated by
Section 2.01, as the same may be amended from time to time.
"Inventory" means all items of inventory notwithstanding how classified
in Lockheed ▇▇▇▇▇▇'▇ financial records, including all raw materials, work-in-
process and finished goods, together with costs accumulated under all
Contracts in progress.
"▇▇▇▇▇▇ Confidentiality Agreement" means the letter agreement dated
November 13, 1996, by and between Lockheed ▇▇▇▇▇▇ and ▇▇▇▇▇▇, as the same has
been or may be amended from time to time.
"License Agreements" means the license agreements dated the Closing Date
by and among Newco and Lockheed ▇▇▇▇▇▇ as contemplated by Section 9.04, as
the same may be amended from time to time.
"Lien" means, with respect to any asset, any mortgage, lien, claim,
pledge, charge, security interest or other encumbrance of any kind in respect
of such asset.
"Lockheed ▇▇▇▇▇▇ Companies" means Lockheed ▇▇▇▇▇▇ and its Subsidiaries.
"Material Adverse Effect" means (i) with respect to the Business, a
material adverse effect on the assets, properties, business, financial
condition or results of operations of the Business taken as a whole, or (ii)
with respect to any other Person, a material adverse effect on the assets,
properties, business, financial condition or results of operations of such
Person and its Subsidiaries taken as a whole.
"Memorandum" means the Memorandum of Understanding dated January 31,
1997, by and among Lockheed ▇▇▇▇▇▇ and the Purchasers, as the same may be
amended from time to time.
"Net Tangible Assets" means (i) all Transferred Assets of the Business,
(ii) minus all (1) Assumed Liabilities of the Business, (2) goodwill, (3)
intangible assets related to contracts and programs acquired, and (4) any
reserve, liability or asset resulting from or relating to pension benefits,
retirement benefits or other post-employment benefits, (iii) in accordance
with the practices and policies of Lockheed ▇▇▇▇▇▇ on December 31, 1996 and
employed in the preparation of the December Statement, determined, in each
case, in accordance with the December Statement and Attachment VI.
"1933 Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"Newco Bylaws" means the Bylaws of Newco as attached in Attachment IX.
"Newco Certificate of Incorporation" means the Certificate of
Incorporation of Newco as attached in Attachment VIII.
"Newco Class A Stock" means the Class A Common Stock, par value $.01 per
share, of Newco.
"Newco Class B Stock" means the Class B Common Stock, par value $.01 per
share, of Newco.
"NY Leases" means the lease by and between Loral Corporation (now known
as Lockheed ▇▇▇▇▇▇ Tactical Systems, Inc.) and ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Associates in
respect of the property located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, as
the same may be amended and supplemented from time to time, including the
interests of the Lockheed ▇▇▇▇▇▇ Companies in any related fixtures,
improvements and personal property located therein.
"Operation and Maintenance Costs" means the reasonable costs (including
routine monitoring and sampling) required to operate and maintain the
effectiveness of an environmental response action that, on or prior to the
eighth anniversary of the Closing Date, has been constructed or effectuated
and, if required, have been approved (or subsequently are approved as
constructed or effectuated as of the eighth anniversary of the Closing Date)
by the applicable environmental regulatory authority, it being understood
that Operation and Maintenance Costs does not include (i) any capital costs
(other than replacement in kind) relating to any such action, (ii) any claim
for property damage, damages to natural resources or personal injury or
similar claims or damages, whether or not arising out of the operation or
maintenance of such action or otherwise or (iii) any fines or penalties,
whether or not arising out of the operation or maintenance of such action or
otherwise.
"Permitted Liens" means any of the following:
(i) Liens for taxes that (x) are not yet due or delinquent or (y)
are being contested in good faith by appropriate proceedings;
(ii) statutory Liens or landlords' carriers' warehousemen's
mechanic's, suppliers' materialmen's or other like Liens arising in the
ordinary course of business with respect to amounts not yet overdue for a
period of 45 days or amounts being contested in good faith by appropriate
proceedings;
(iii) easements, rights of way, restrictions and other similar
charges or encumbrances on real property interests, that, individually or in
the aggregate, do not materially interfere with the ordinary course of
operation of the Business or the use of any such real property for its
current uses;
(iv) leases or subleases granted to others that do not materially
interfere with the ordinary conduct of the Business;
(v) with respect to real property, title defects or irregularities
that do not in the aggregate materially impair the use of such real property
for its current use;
(vi) Liens in favor of the U.S. Government or any other customer of
the Business arising in the ordinary course of business;
(vii) rights and licenses granted to others in Intellectual
Property;
(viii) with respect to any Real Property Lease where any of the
Lockheed ▇▇▇▇▇▇ Companies is a lessee, any Lien affecting the interest of the
landlord thereunder;
(ix) Liens, title defects, encumbrances, easements and
restrictions, invalidities of leasehold interests (collectively,
"Encumbrances") that have not had, and could not reasonably be expected to
have, a Material Adverse Effect on the Business; and
(x) Encumbrances disclosed in the Disclosure Schedule or taken
into account in the December Statement.
"Person" means an individual, a corporation, a general partnership, a
limited partnership, a limited liability company, an association, a trust or
any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Prime Government Contract" means any Government Contract relating
primarily to the Business in connection with which Lockheed ▇▇▇▇▇▇ or an
Affiliated Transferor is the prime contractor.
"Remedial Action(s)" means the investigation, clean-up or remediation of
contamination or environmental degradation or damage caused by, related to or
arising from the generation, use, handling, treatment, storage,
transportation, disposal, discharge, release, or emission of Hazardous
Substances, including, without limitation, investigations, response, removal
and remedial actions under The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, corrective action under
The Resource Conservation and Recovery Act of 1976, as amended, and clean-up
requirements under similar state Environmental Laws.
"Representatives" means (i) with respect to ▇▇▇▇▇▇, any of the
"Representatives" as defined in the ▇▇▇▇▇▇ Confidentiality Agreement, (ii)
with respect to the Individual Purchasers, any of the "Representatives" as
defined in the Memorandum and (iii) with respect to Lockheed ▇▇▇▇▇▇ or Newco,
each of their respective directors, officers, advisors, attorneys,
accountants, employees or agents.
"Responsible Contracting Officer" means, with respect to any Prime
Government Contract, the Person identified as such with respect thereto in
Section 42.1202(a) of the Federal Acquisition Regulation, Part 42 of the Code
of Federal Regulations.
"Sarasota Asset Step-Up Issue" means the position of the U.S. Government
that the amendment of the provisions of the Federal Acquisition Regulations
relating to the ability of a contractor to include in its overhead the
"stepped up" value of acquired assets shall have retroactive effect and the
related impact on the Advanced Recorders Business Unit of its agreements in
June 1994, April 1995 and January 1997 with the cognizant Administrative
Contracting Officer to authorize the Advanced Recorders Business Unit to
include in its overhead the "stepped up" assets relating to the acquisition
of Advanced Recorders by Loral Corporation in 1989.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Stockholders Agreement" means the Stockholders Agreement dated the
Closing Date by and among Newco, Lockheed ▇▇▇▇▇▇ and the Purchasers (in
substantially the form of Attachment V to the Agreement), as the same may be
amended from time to time.
"Subsidiary" as it relates to any Person, shall mean with respect to any
Person, any corporation, partnership, joint venture or other legal entity of
which such Person, either directly or through or together with any other
Subsidiary of such Person, owns more than 50% of the voting power in the
election of directors or their equivalents, other than as affected by events
of default.
"Supply Agreement" means the Supply Agreement dated the Closing Date by
and among Newco and Lockheed ▇▇▇▇▇▇ as contemplated by Section 2.01, as the
same may be amended from time to time.
"Transaction Documents" means the Agreement, the Transfer Agreement, the
Exchange Agreement, the Common Stock Subscription Agreements, the
Stockholders Agreement, the Interim Services Agreement, the Supply Agreement,
the License Agreements, the Newco Certificate of Incorporation, the Newco
Bylaws and any exhibits or attachments to any of the foregoing, as the same
may be amended from time to time.
"Transfer Agreement" means the Transfer Agreement dated March 28, 1997,
by and between Lockheed ▇▇▇▇▇▇ and Newco (a copy of which is attached as
Attachment III to the Agreement), as the same may be amended from time to
time.
"Transferred Assets" means all of the assets, properties, rights,
licenses, permits, contracts, causes of action and business of every kind and
description as the same shall exist on the Closing Date, other than the
Excluded Assets, wherever located, real, personal or mixed, tangible or
intangible, owned by, leased by or in the possession of Lockheed ▇▇▇▇▇▇ or
any Affiliated Transferor, whether or not reflected in the books and records
thereof, and held or used primarily in the conduct of the Business as the
same shall exist on the Closing Date, including but not limited to all assets
reflected in the December Statement and not disposed of in the ordinary
course of business or as permitted or contemplated by the Agreement, and all
assets of the Business acquired by Lockheed ▇▇▇▇▇▇ or any Affiliated
Transferor, on or prior to the Closing Date and not disposed of in the
ordinary course of business or as permitted or contemplated by the Agreement
and including, without limitation, except as otherwise specified herein, all
direct or indirect right, title and interest of Lockheed ▇▇▇▇▇▇ or any
Affiliated Transferor in, to and under:
(i) all real property and leases (including, without limitation,
the NY Leases), whether capitalized or operating, of, and other interests in,
real property, owned by Lockheed ▇▇▇▇▇▇ or any of its Affiliates that are
used primarily in the Business, in each case together with all buildings,
fixtures, easements, rights of way, and improvements thereon and
appurtenances thereto;
(ii) all personal property and interests therein, including
machinery, equipment, furniture, office equipment, communications equipment,
vehicles, storage tanks, spare and replacement parts, fuel and other tangible
property (and interests in any of the foregoing) owned by Lockheed ▇▇▇▇▇▇ or
any of its Affiliates that are used primarily in connection with the
Business:
(iii) all costs accumulated for all Contracts in progress, raw
materials, work-in-process, finished goods, supplies and other inventories
that are owned by Lockheed ▇▇▇▇▇▇ or any of its Affiliates and held for sale,
use or consumption primarily in the Business;
(iv) all Contracts;
(v) all Bids (with any Contracts (including, without limitation,
Government Contracts) awarded to Lockheed ▇▇▇▇▇▇ or any of its Affiliates on
or before the Closing Date in respect of such Bids to be deemed Contracts);
(vi) all accounts, accounts receivable and notes receivable whether
or not billed, accrued or otherwise recognized in the December Statement or
taken into account in the determination of the Final Net Tangible Asset
Amount, together with any unpaid interest or fees accrued thereon or other
amounts due with respect thereto, of Lockheed ▇▇▇▇▇▇ or any of its Affiliates
that relate primarily to the Business, and any security or collateral for any
of the foregoing;
(vii) all expenses that have been prepaid by Lockheed ▇▇▇▇▇▇ or any
of its Affiliates to the extent relating to the operation of the Business,
including but not limited to ad valorem taxes, lease and rental payments;
(viii) all of Lockheed ▇▇▇▇▇▇'▇ or any of its Affiliates' rights,
claims, credits, causes of action or rights of set-off against third parties
relating primarily to the Business or the Transferred Assets, including,
without limitation, unliquidated rights under manufacturers' and vendors'
warranties;
(ix) all Intellectual Property (other than Intellectual Property
constituting an Excluded Asset) used primarily in the Business, including the
goodwill of the Business symbolized thereby (including, without limitation,
the rights to the name "▇▇▇▇▇▇▇▇▇" when used by or in connection with the
Advanced Recorders Business Unit and the names "▇▇▇▇▇," "Conic," and
"Randtron," but excluding "Lockheed ▇▇▇▇▇▇," "Loral," "Lockheed" and "▇▇▇▇▇▇
▇▇▇▇▇▇▇▇" and any derivatives thereof together with any logos, trade dress or
other intellectual property rights relating thereto);
(x) all transferable franchises, licenses, permits or other
governmental authorizations owned by, or granted to, or held or used by,
Lockheed ▇▇▇▇▇▇ or any of its Affiliates and primarily related to the
Business;
(xi) except to the extent Lockheed ▇▇▇▇▇▇ or any of its Affiliates
is required to retain the originals pursuant to any Applicable Law (in which
case copies will be provided to Newco upon request), all business books,
records, files and papers, whether in hard copy or computer format, of
Lockheed ▇▇▇▇▇▇ or any of its Affiliates used primarily in the Business,
including, without limitation, bank account records, books of account,
invoices, engineering information, sales and promotional literature, manuals
and data, sales and purchase correspondence, lists of present and former
suppliers, lists of present and former customers, personnel and employment
records of present or former employees, documentation developed or used for
accounting, marketing, engineering, manufacturing, or any other purpose
relating to the conduct of the Business at any time prior to the closing;
(xii) the right to represent to third parties that Newco is the
successor to the Business;
(xiii) all insurance proceeds, net of any retrospective premiums,
deductibles, retention or similar amounts, arising out of or related to
damage, destruction or loss of any property or asset of or used primarily in
connection with the Business to the extent of any damage or destruction that
remains unrepaired, or to the extent any property or asset remains unreplaced
at the Closing Date;
(xiv) any tax assets specified to be Transferred Assets in Exhibit
F; and
(xv) all of the Lockheed ▇▇▇▇▇▇ Companies' right, title and
interest in the real property located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
"U.S. Government" means the United States Government and any agencies,
instrumentalities and departments thereof.
(b) "To the knowledge," "known by" or "known" (and any similar phrase) means
(i) with respect to Lockheed ▇▇▇▇▇▇, to the actual knowledge of any of the
Senior Vice Presidents or higher ranking officers of Lockheed ▇▇▇▇▇▇, or the
Vice President, Financial Strategies of Lockheed ▇▇▇▇▇▇, or the President,
Chief Financial Officer and General Counsel of the Lockheed ▇▇▇▇▇▇ Operating
Sector to which each of the Business Units reports, and shall be deemed to
include a representation that a reasonable investigation or inquiry of the
subject matter thereof has been conducted by or on behalf of the foregoing
specified Persons, which investigation shall include inquiries of the
President and the Chief Financial Officer of each of the Business Units, and
(ii) with respect to the Individual Purchasers, to the actual knowledge of
either of the Individual Purchasers as of the date the applicable
representation or warranty is made (by Lockheed ▇▇▇▇▇▇, in the case of
representations in Exhibit B limited by reference to the knowledge of the
Individual Purchasers, or by the Individual Purchasers, in the case of
representations in Exhibit D), it being understood that if there is any
dispute as to whether an Individual Purchaser had actual knowledge of any
fact, event or circumstance and Lockheed ▇▇▇▇▇▇ seeks to assert such
knowledge as a defense to any claim under any of the Transaction Documents,
Lockheed ▇▇▇▇▇▇ shall have the burden of proof in connection with any such
determination. Notwithstanding the foregoing, the knowledge of Lockheed
▇▇▇▇▇▇ at any particular time shall not include knowledge of any matters
actually known by either of the Individual Purchasers at such time if such
matters are not also actually known by one or more of the other individuals
specified in clause (i) above (whether by disclosure to them by the
Individual Purchasers or otherwise).
(c) Each of the following terms is defined in the Section set forth opposite
such term:
Term Section
Accrued Liability . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Allocation Tax Loss . . . . . . . . . . . . . . . . . . . . . . . . F.01
Alternative Transaction Proposals . . . . . . . . . . . . . . . . . 7.04
Assumed Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Basis Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . F.01
Benefit Arrangement . . . . . . . . . . . . . . . . . . . . . . . . G.01
Camden SERPs . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Camden Transferee . . . . . . . . . . . . . . . . . . . . . . . . . G.01
Camden Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Cash Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.01
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.01
Controlled Group . . . . . . . . . . . . . . . . . . . . . . . . . B.21
Defending Party . . . . . . . . . . . . . . . . . . . . . . . . . 13.03
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
Employee Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . G.01
Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . A
Environmental Insurance Claims . . . . . . . . . . . . . . . . . . 9.07
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.01
Estimated Final Net Tangible Asset Amount . . . . . . . . . . . . . 2.03
Exchange Consideration . . . . . . . . . . . . . . . . . . . . . . 2.02
Exchange Consideration Schedule . . . . . . . . . . . . . . . . . . F.05
Federal Systems Plan . . . . . . . . . . . . . . . . . . . . . . . G.05
Final Determination . . . . . . . . . . . . . . . . . . . . . . . . F.01
Final Net Tangible Asset Amount . . . . . . . . . . . . . . . . . . 2.03
Former GE Employees . . . . . . . . . . . . . . . . . . . . . . . . G.07
GE Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . G.07
GE Reimbursement Obligations . . . . . . . . . . . . . . . . . . . G.07
Government Bid . . . . . . . . . . . . . . . . . . . . . . . . . . B.15
Government Conditions . . . . . . . . . . . . . . . . . . . . . . . G.05
Hycor Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . F.01
Indemnified Claim . . . . . . . . . . . . . . . . . . . . . . . . 13.03
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . 13.03
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . 13.03
Individual Purchaser . . . . . . . . . . . . . . . . . . . . . Preamble
Initial Transfer Amount . . . . . . . . . . . . . . . . . . . . . . G.05
Initial Transfer Date . . . . . . . . . . . . . . . . . . . . . . . G.05
Insurance Liabilities . . . . . . . . . . . . . . . . . . . . . . . 8.03
▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
▇▇▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Leased Real Property . . . . . . . . . . . . . . . . . . . . . . . B.07
▇▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
LMC SERPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
LMTS SERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
LMTS Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Lockheed ▇▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Lockheed ▇▇▇▇▇▇ Conditions . . . . . . . . . . . . . . . . . . . . G.05
Lockheed ▇▇▇▇▇▇ Defined Contribution Plans . . . . . . . . . . . . G.06
Lockheed ▇▇▇▇▇▇ Pension Plans . . . . . . . . . . . . . . . . . . . G.05
Lockheed ▇▇▇▇▇▇ Savings Plans . . . . . . . . . . . . . . . . . . . G.06
Lockheed Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Long Range Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
▇▇▇▇▇ Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Newco Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Newco's Savings Plans . . . . . . . . . . . . . . . . . . . . . . . G.06
Newco SERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Newco Spinoff Plans . . . . . . . . . . . . . . . . . . . . . . . . G.05
Novation Agreement . . . . . . . . . . . . . . . . . . . . . . . . 7.08
Owned Real Property . . . . . . . . . . . . . . . . . . . . . . . . B.07
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.21
Post-Closing Tax Period . . . . . . . . . . . . . . . . . . . . . . F.01
Pre-Closing Tax Period . . . . . . . . . . . . . . . . . . . . . . F.01
Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . A
Program Agreements . . . . . . . . . . . . . . . . . . . . . . . . G.08
Proposed Final Net Tangible Asset Amount . . . . . . . . . . . . . 2.03
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . B.07
Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . B.07
Referee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.03
Release Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.03
Remaining Recovery . . . . . . . . . . . . . . . . . . . . . . . . 9.07
Section 351 Transfer . . . . . . . . . . . . . . . . . . . . . . . F.01
Section 4044 Amount . . . . . . . . . . . . . . . . . . . . . . . . G.05
SERP Liability . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Spinoff Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . G.08
Supplementary Plan . . . . . . . . . . . . . . . . . . . . . . . . G.05
Surviving Representation and Covenant . . . . . . . . . . . . . . 13.01
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.01
Tax Basis Shortfall . . . . . . . . . . . . . . . . . . . . . . . . F.01
Third Party Claim . . . . . . . . . . . . . . . . . . . . . . . . 13.03
Transferred Beneficiary . . . . . . . . . . . . . . . . . . . . . . G.01
Transferred Benefit Plans . . . . . . . . . . . . . . . . . . . . . G.10
Transferred Employee . . . . . . . . . . . . . . . . . . . . . . . G.01
Transferred Savings Plans . . . . . . . . . . . . . . . . . . . . . G.06
True-Up Amount . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
True-Up Date . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
WARN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.02
EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF LOCKHEED ▇▇▇▇▇▇
Lockheed ▇▇▇▇▇▇ hereby represents and warrants prior to but not after
the Closing to the Purchasers, and as of and after the Closing to Newco,
that:
B.01. Corporate Existence and Power. Each of Lockheed ▇▇▇▇▇▇ and
each Affiliated Transferor is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its
incorporation and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on the Business as
now conducted, except where the failure to have such licenses,
authorizations, consents and approvals has not had, and could not reasonably
be expected to have, a Material Adverse Effect on the Business. Each of
Lockheed ▇▇▇▇▇▇ and each Affiliated Transferor, as the case may be, is duly
qualified to do business as a foreign corporation in each jurisdiction where
the character of the property owned or leased by it or the nature of its
activities make such qualification necessary to carry on the Business as now
conducted, except where the failure to be so qualified has not had, and could
not reasonably be expected to have, a Material Adverse Effect on the
Business.
B.02. Corporate Authorization. The execution, delivery and
performance by each of Lockheed ▇▇▇▇▇▇ and each Affiliated Transferor of each
of the Transaction Documents to which it is a party and the consummation by
Lockheed ▇▇▇▇▇▇ and each Affiliated Transferor of the Contemplated
Transactions are within its corporate powers and have been duly authorized by
all necessary corporate action on its part. Each of the Transaction
Documents to which it is a party constitutes a legal, valid and binding
agreement of Lockheed ▇▇▇▇▇▇ and each Affiliated Transferor enforceable
against it in accordance with its terms (i) except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, including the effect of statutory and other laws
regarding fraudulent conveyances and preferential transfers and (ii) subject
to the limitations imposed by general equitable principles (regardless of
whether such enforceability is considered in a proceeding at law or in
equity).
B.03. Governmental Authorization.
(a) The execution, delivery and performance by Lockheed ▇▇▇▇▇▇ and
each Affiliated Transferor of the Transaction Documents to which it is a
party require no action by or in respect of, or consent or approval of, or
filing with, any Governmental Authority other than:
(i) compliance with any applicable requirements of the HSR
Act;
(ii) compliance with any applicable requirements of the New
Jersey Industrial Site Recovery Act;
(iii) the facilities clearance requirements of the Defense
Investigative Service of the United States Department of Defense
("DIS"), as set forth in the DIS Industrial Security Regulation and the
DIS Industrial Security Manual, as each may be amended from time to
time;
(iv) the novation of the Government Contracts as contemplated
by Section 7.08 herein;
(v) any actions, consents, approvals or filings set forth in
Section B.03 of the Disclosure Schedules or otherwise expressly referred
to in this Agreement; and
(vi) such other consents, approvals, authorizations, permits
and filings the failure to obtain or make would not have, in the
aggregate, a Material Adverse Effect on the Business.
(b) To the knowledge of Lockheed ▇▇▇▇▇▇, there are no facts
relating to the identity or circumstances of Lockheed ▇▇▇▇▇▇ or any of its
Affiliates that would prevent or materially delay obtaining any of the
consents referred to in Section B.03(a).
B.04. Non-Contravention. Except as set forth in Section B.04 of the
Disclosure Schedules or known to the Individual Purchasers (in the case of
clauses (i)(B) and (i)(C) below), the execution, delivery and performance by
Lockheed ▇▇▇▇▇▇ of the Transaction Documents do not and will not (i)(A)
contravene or conflict with the charter or bylaws of Lockheed ▇▇▇▇▇▇ or any
Affiliated Transferor, (B) assuming compliance with the matters referred to
in Section B.03, contravene or conflict with or constitute a violation of any
provisions of any Applicable Law, regulation, judgment, injunction, order,
writ or decree binding upon Lockheed ▇▇▇▇▇▇ or any Affiliated Transferor that
is applicable to the Business; (C) assuming compliance with the matters
referred to in Section B.03, constitute a default under or give rise to any
right of termination, cancellation or acceleration of, or to a loss of any
benefit relating primarily to the Business to which Lockheed ▇▇▇▇▇▇ or any
Affiliated Transferor is entitled under, any agreement, Contract or other
instrument binding upon Lockheed ▇▇▇▇▇▇ or any Affiliated Transferor and
relating primarily to the Business or by which any of the Transferred Assets
is or may be bound or any license, franchise, permit or similar authorization
held by Lockheed ▇▇▇▇▇▇ or any Affiliated Transferor relating primarily to
the Business except, in the case of clauses (B) and (C), for any such
contravention, conflict, violation, default, termination, cancellation,
acceleration or loss that could not reasonably be expected to have a Material
Adverse Effect on the Business or (ii) result in the creation or imposition
of any Lien on any transferred Asset, other than Permitted Liens and other
than such Liens the creation or imposition of which could not reasonably be
expected to have a Material Adverse Effect on the Business.
B.05. Financial Statements.
(a) The December Statement presents fairly, in all material
respects, the Net Tangible Assets of the Business (other than the Airport
Explosive Detection Business) as of December 31, 1996, in conformity with
GAAP (except as set forth in the notes thereto or in Attachment VI applied on
a basis consistent in all material respects with the manner in which the
Business reported as of December 31, 1996 its financial position for
inclusion in the financial statements of Lockheed ▇▇▇▇▇▇.
(b) The Audited Business Financial Statements have been prepared
based upon the books and records of Lockheed ▇▇▇▇▇▇ and the Affiliated
Transferors relating to the Business and present fairly the financial
condition, results of operations and cash flows of the Business in conformity
with GAAP (except as set forth in the notes thereto) for the periods and as
of the dates included therein.
B.06. Absence of Certain Changes. Except for matters that would be
permitted (without consent of either of the Individual Purchasers) in
accordance with Section 7.01 if they occurred after the date of this
Agreement, as set forth in Section B.06 of the Disclosure Schedules and
except as known to the Individual Purchasers, from December 31, 1996 to the
date of this Agreement, there has not been any material adverse change in the
business, financial condition or results of operations of the Business and
there has not been:
(a) any event, occurrence, development or state of circumstances
or facts that has had a Material Adverse Effect on the Business, other than
those resulting from changes, whether actual or prospective, in general
conditions applicable to the industries in which the Business is involved or
general economic conditions;
(b) any damage, destruction or other casualty loss affecting the
Business or any assets that would constitute Transferred Assets if owned,
held or used by Lockheed ▇▇▇▇▇▇ or any of the Affiliated Transferors on the
Closing Date that has had a Material Adverse Effect on the Business;
(c) any transaction or commitment made, or any contract or
agreement entered into, by Lockheed ▇▇▇▇▇▇ or any Affiliated Transferor
relating primarily to the Business or any assets that would constitute
Transferred Assets if owned, held or used by Lockheed ▇▇▇▇▇▇ or any of the
Affiliated Transferors on the Closing Date (including the acquisition or
disposition of any assets) or any termination or amendment by Lockheed ▇▇▇▇▇▇
or any Affiliated Transferor of any contract or other right relating
primarily to the Business, in either case, material to the Business taken as
a whole, other than transactions and commitments in the ordinary course of
business and those contemplated by this Agreement;
(d) any sale or other disposition of more than an aggregate of
$250,000 of assets (other than Inventory or any sale made in the ordinary
course of business) that would constitute Transferred Assets if owned, held
or used by any of the Lockheed ▇▇▇▇▇▇ companies on the Closing Date;
(e) any increase in the compensation of any current employee of
any of the Business Units at a level of vice president or above, other than
nondiscretionary increases pursuant to Employee Plans or Benefit Arrangements
disclosed in Section B.21 of the Disclosure Schedules or referenced in
Exhibit G; and
(f) any cancellation, compromise, waiver or release by Lockheed
▇▇▇▇▇▇ of any claim or right (or a series of related rights and claims)
related to the Business, other than cancellations, compromises, waivers or
releases in the ordinary course of business.
B.07. Sufficiency of and Title to the Transferred Assets.
(a) The Transferred Assets, together with the services to be
provided to Newco pursuant to the Interim Services Agreement and the
Intellectual Property to be licensed to Newco pursuant to the License
Agreements, constitute, and on the Closing Date will constitute, all of the
assets and services that are necessary to permit the operation of the
Business in substantially the same manner as such operations have heretofore
been conducted.
(b) Upon consummation of the Contemplated Transactions, Newco will
have acquired good and marketable title in and to, or a valid leasehold
interest in, each of the Transferred Assets that are necessary to permit the
operation of the Business in substantially the same manner as operations have
heretofore been conducted, free and clear of all Liens, except for Permitted
Liens.
(c) Section B.07 of the Disclosure Schedules includes a true and
complete list of all real property owned by the Lockheed ▇▇▇▇▇▇ Companies (or
property which the Lockheed ▇▇▇▇▇▇ Companies have a right to acquire in
connection with the operation of the Business) which is included in the
Transferred Assets (collectively, the "Owned Real Property"; the Owned Real
Property and the Leased Real Property, collectively the "Real Property").
Section B.07(c) of the Disclosure Schedules specifies (i) the address of each
parcel of Owned Real Property and (ii) the owner of such Owned Real Property.
(d) Section B.07 of the Disclosure Schedules includes a true and
complete list of all agreements (together with any amendments thereof
collectively, the "Real Property Leases") pursuant to which the Lockheed
▇▇▇▇▇▇ Companies lease, sublease or otherwise occupy (whether as landlord,
tenant, subtenant or other occupancy arrangement) any real property used in
the Business (collectively, the "Leased Real Property"). Section B.07 of the
Disclosure Schedules specifies (i) the address of each parcel of Leased Real
Property and (ii) the owner of the leasehold, subleasehold or occupancy
interest for each Leased Real Property.
B.08. No Undisclosed Liabilities. To the knowledge of Lockheed
▇▇▇▇▇▇, there are no liabilities of Lockheed ▇▇▇▇▇▇ (or any Affiliated
Transferor) relating to the Business that constitute Assumed Liabilities of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, other than:
(a) liabilities disclosed or provided for in the December
Statement and liabilities for matters taken into account in the determination
of the Final Net Tangible Asset Amount;
(b) liabilities (i) disclosed in Section B.08 of the Disclosure
Schedules, (ii) known to the Individual Purchasers, (iii) related to any
Contract disclosed in the Disclosure Schedules or (iv) related to any
Employee Plan or Benefit Arrangements identified in Exhibit G or disclosed in
Section B.08 of the Disclosure Schedules;
(c) liabilities incurred in the ordinary course of business since
December 31, 1996;
(d) liabilities not required to be accrued for or reserved against
in accordance with GAAP as of December 31, 1996; and
(e) with respect to the bring down of this representation and
warranty as of the Closing Date, liabilities not required to be accrued for
or reserved against in accordance with GAAP as of the Closing Date.
B.09. Litigation; Contract-Related Matters.
(a) Except as set forth in Section B.09 of the Disclosure
Schedules or reserved against or referred to in the December Statement, there
is no action, suit, investigation or proceeding (except for actions, suits or
proceedings referred to in Section B.09(b)) pending against, or to the
knowledge of Lockheed ▇▇▇▇▇▇, threatened against or affecting, the Business
or any Transferred Asset before any court or arbitrator or any governmental
body, agency, official or authority which could reasonably be expected to
have a Material Adverse Effect on the Business.
(b) Except as set forth in Section B.09 of the Disclosure
Schedules or reserved against or referred to in the December Statement or
known to the Individual Purchasers, there is no action, suit, investigation
or proceeding relating to any Government Contract or Bid, or relating to any
proposed suspension or debarment of the Business or any of its employees,
pending against, or to the knowledge of Lockheed ▇▇▇▇▇▇, threatened against
or affecting the Business or any Transferred Asset before any court or
arbitrator or any governmental body, agency, official or authority which
could reasonably be expected to have a Material Adverse Effect on the
Business.
(c) None of the Lockheed ▇▇▇▇▇▇ Companies is, in connection with
the Business, subject to any unsatisfied monetary judgment, order or decree
that would materially affect Newco's ability to conduct the business and
operations of the Business immediately after Closing as the Lockheed ▇▇▇▇▇▇
Companies currently conduct them.
B.10. Material Contracts and Bids; Backlog.
(a) Except as set forth in Section B.10 of the Disclosure
Schedules, to the knowledge of Lockheed ▇▇▇▇▇▇, as of the date of this
Agreement, the Lockheed ▇▇▇▇▇▇ Companies, with respect to the Business, are
not parties to or otherwise bound by or subject to:
(i) any written employment, severance, consulting or sales
representative Contract which contains an obligation to pay more than
$100,000 per year and constitutes an Assumed Liability;
(ii) any Contract containing any covenant limiting the freedom
of the Lockheed ▇▇▇▇▇▇ Companies, with respect of the Business or the
operations of any of the Business Units, to engage in any line of
business or compete with any Person in any geographic area in any
material respect if such Contract will be binding on Newco after the
Closing;
(iii) any Contract in effect on the date of this Agreement
relating to the disposition or acquisition of the assets of, or any
interest in, any business enterprise which relates to the Business other
than in the ordinary course of business;
(iv) any Financial Support Arrangements;
(v) any indebtedness for borrowed money of the Business that
would constitute an Assumed Liability if in existence on the Closing
Date, other than indebtedness or borrowed money totaling not more than
$100,000 in the aggregate; or
(vi) any offset agreement entered into in connection with an
international sales transaction and relating to any Contract that
imposes on the Business an obligation to perform that will continue in
effect on or after the Closing Date.
Notwithstanding the foregoing or any other provisions of this Agreement, the
failure of Lockheed ▇▇▇▇▇▇ to include any Financial Support Arrangements in
Section B.10 of the Disclosure Schedules shall not constitute a breach of a
representation or warranty hereunder and shall have no effect on the rights,
duties and obligations of the parties under this Agreement, except that the
obligations of Newco under Section 8.03 in respect of Financial Support
Arrangements shall not include an obligation to seek the release of or comply
with Section 8.03(g) with respect to any Financial Support Arrangements in
existence on the date of this Agreement that are not disclosed in Section
B.10 of the Disclosure Schedules.
(b) Except as disclosed in Section B.10 of the Disclosure
Schedules, or known to the Individual Purchasers, to the knowledge of
Lockheed ▇▇▇▇▇▇ all cost or pricing data submitted or certified in connection
with Bids and Government Contracts were when filed current, accurate and
complete in accordance with the Truth in Negotiation Act, as amended, and the
rules and regulations thereunder, except any failures to be current, accurate
and complete which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Business.
(c) Except as disclosed in Section B.10 of the Disclosure
Schedules, or known to the Individual Purchasers, each Government Contract
and each other material Contract relating to the Business or any of the
Transferred Assets is a legal, valid and binding obligation of Lockheed
▇▇▇▇▇▇ (or the applicable Affiliated Transferor) enforceable against Lockheed
▇▇▇▇▇▇ (or the applicable Affiliated Transferor) in accordance with its terms
(except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally, including the effect of statutory and
other laws regarding fraudulent conveyances and preferential transfers, and
subject to the limitations imposed by general equitable principles regardless
of whether such enforceability is considered in a proceeding at law or in
equity), and Lockheed ▇▇▇▇▇▇ (or the applicable Affiliated Transferor) is not
in default and has not failed to perform any obligation thereunder, and, to
the knowledge of Lockheed ▇▇▇▇▇▇, there does not exist any event, condition
or omission which would constitute a breach or default (whether by lapse of
time or notice or both) by any other Person, except for any such default,
failure or breach as has not had, and could not reasonably be expected to
have, a Material Adverse Effect on the Business.
B.11. Licenses and Permits. To the knowledge of Lockheed ▇▇▇▇▇▇,
Lockheed ▇▇▇▇▇▇ (or the appropriate Affiliated Transferor) has all licenses,
franchises, permits and other similar authorizations affecting, or relating
in any way to, the Business required by law to be obtained by Lockheed ▇▇▇▇▇▇
(or the appropriate Affiliated Transferor) to permit Lockheed ▇▇▇▇▇▇ to
conduct the Business in substantially the same manner as the Business has
heretofore been conducted.
B.12. Finders' Fees. Except for Bear, ▇▇▇▇▇▇▇ & Co. Inc., whose
fees will be paid by Lockheed ▇▇▇▇▇▇, there is no investment banker, broker,
finder or other intermediary that has been retained by or is authorized to
act on behalf of Lockheed ▇▇▇▇▇▇ who might be entitled to any fee or
commission from Lockheed ▇▇▇▇▇▇, Newco or the Purchasers or any of their
Affiliates upon consummation of the contemplated Transactions.
B.13. Environmental Compliance. Except as disclosed in Section B.13
of the Disclosure Schedules or known to the Individual Purchasers, and except
as reserved against or referred to in the December Statement, to the
knowledge of Lockheed ▇▇▇▇▇▇ the Business is and has been in substantial
compliance with all applicable Environmental Laws, and has obtained all
material permits, licenses and other authorizations that are required under
applicable Environmental Laws. Except as set forth in Section B.13 of the
Disclosure Schedules or known to the Individual Purchasers, and except as
reserved against or referred to in the December Statement, to the knowledge
of Lockheed ▇▇▇▇▇▇ (i) the Business is and has been in material compliance
with the terms and conditions under which the permits, licenses and other
authorizations referenced in the preceding sentence were issued or granted,
(ii) the Lockheed ▇▇▇▇▇▇ Companies hold all permits required by Environmental
Laws that are appropriate to conduct the Business as presently conducted in
all material respects and to operate the Transferred Assets in all material
respects as they are presently operated; (iii) no suspension, cancellation or
termination of any of permit referred to in clause (ii) is pending or to
Lockheed ▇▇▇▇▇▇'▇ knowledge threatened; (iv) Lockheed ▇▇▇▇▇▇ has not received
written notice of any material Environmental Claim relating to or affecting
the Business or the Transferred Assets, and to the knowledge of Lockheed
▇▇▇▇▇▇, there is no such threatened Environmental Claim; (v) Lockheed ▇▇▇▇▇▇,
in connection with the Business or the Transferred Assets, has not entered
into, agreed in writing to, or is subject to any judgment, decree, order or
other similar requirement of any Governmental Authority under any
Environmental Laws.
B.14. Compliance with Laws. Except as set forth in Section B.14 of
the Disclosure Schedules and, except for violations or infringements of
Environmental Laws or orders, writs, injunctions or decrees relating to
Contracts or Bids and except for violations or infringements that have not
had, and may not reasonably be expected to have, a Material Adverse Effect on
the Business, to the knowledge of Lockheed ▇▇▇▇▇▇ the operation of the
Business and condition of the Transferred Assets have not violated or
infringed, and do not violate or infringe, in any respect any Applicable Law
or any order, writ, injunction or decree of any Governmental Authority.
B.15. Government Contracts.
(a) Except as set forth in Section B.15 of the Disclosure
Schedules or known to the Individual Purchasers, and except for inaccuracies
in the following as have not had, and may not reasonably be expected to have
a Material Adverse Effect on the Business, with respect to each fixed price
Government Contract with a backlog value in excess of $5,000,000, each "cost
plus" Government Contract with a backlog value in excess of $7,500,000 and
each Bid that, if accepted, would result in such a Government Contract (a
"Government Bid") to which Lockheed ▇▇▇▇▇▇ or any Affiliated Transferor is a
party with respect to the Business, (i) to the knowledge of Lockheed ▇▇▇▇▇▇,
Lockheed ▇▇▇▇▇▇ (or the applicable Affiliated Transferor) has complied with
all terms and conditions of such Government Contract or Government Bid,
including all clauses, provisions and requirements incorporated expressly, by
reference or by operation of law therein; (ii) to the knowledge of Lockheed
▇▇▇▇▇▇, Lockheed ▇▇▇▇▇▇ (or the applicable Affiliated Transferor) has
complied with all requirements of all Applicable Laws or agreements
pertaining to such Government Contract or Government Bid; (iii) to the
knowledge of Lockheed ▇▇▇▇▇▇, all representations and certifications
executed, acknowledged or set forth in or pertaining to such Government
Contract or Government Bid were complete and correct as of their effective
date, and Lockheed ▇▇▇▇▇▇ (or the applicable Affiliated Transferor) has
complied in all respects with all such representations and certifications;
(iv) neither the U.S. Government nor any prime contractor, subcontractor or
other Person has notified Lockheed ▇▇▇▇▇▇ (or the applicable Affiliated
Transferor) that Lockheed ▇▇▇▇▇▇ (or the applicable Affiliated Transferor)
has breached or violated any Applicable Law, certification, representation,
clause provision or requirement pertaining to such Government Contract or
Government Bid; (v) no termination for convenience, termination for default,
cure notice or show cause notice is currently in effect pertaining to such
Government Contract or Government Bid; (vi) to the knowledge of Lockheed
▇▇▇▇▇▇, no cost incurred by Lockheed ▇▇▇▇▇▇ (or the applicable Affiliated
Transferor) pertaining to such Government Contract or Government Bid has been
questioned or challenged, is the subject of any investigation or has been (or
could reasonably be expected to be) disallowed by the U.S. Government; (vii)
to the knowledge of Lockheed ▇▇▇▇▇▇, no money due to Lockheed ▇▇▇▇▇▇ (or the
applicable Affiliated Transferor) pertaining to such Government Contract or
Government Bid has been (or has attempted to be) withheld or set off and
Lockheed ▇▇▇▇▇▇ (or the applicable Affiliated Transferor) is entitled to all
progress payments with respect thereto and (viii) each Government Contract is
valid and subsisting.
(b) Except as set forth in Section B.15 of the Disclosure
Schedules or known to the Individual Purchasers, and except as has not had,
and may not reasonably be expected to have, a Material Adverse Effect on the
Business, with respect to the Business; (i) to the knowledge of Lockheed
▇▇▇▇▇▇, none of its respective employees, consultants or agents is (or during
the last five years has been) under administrative, civil or criminal
investigation, indictment or information by any Governmental Authority, or
any audit or investigation by Lockheed ▇▇▇▇▇▇ with respect to any alleged
irregularity, misstatement or omission arising under or relating to any
Government Contract or Government Bid; and (ii) during the last five years,
Lockheed ▇▇▇▇▇▇ has not conducted or initiated any internal investigation or,
to Lockheed ▇▇▇▇▇▇'▇ knowledge, had reason to conduct, initiate or report any
internal investigation, or made a voluntary disclosure to the U.S.
Government, with respect to any alleged irregularity, misstatement or
omission arising under or relating to a Government Contract or Government
Bid. Except as set forth in Section B.15 of the Disclosure Schedules or
known to the Individual Purchasers, Lockheed ▇▇▇▇▇▇ has no knowledge of any
irregularity, misstatement or omission arising under or relating to any
Government Contract or Government Bid that has led or could reasonably be
expected to lead, either before or after the Closing Date, to any of the
consequences set forth in clause (i) or (ii) of the immediately preceding
sentence or any other material damage, penalty assessment, recoupment of
payment or disallowance of cost.
(c) Except as set forth in Section B.15 of the Disclosure
Schedules or known to the Individual Purchasers, and except as has not had,
and may not reasonably be expected to have, a Material Adverse Effect on the
Business, with respect to the Business, to the knowledge of Lockheed ▇▇▇▇▇▇,
there exist (i) no outstanding claims against Lockheed ▇▇▇▇▇▇ or any
Affiliated Transferor, either by the U.S. Government or by any prime
contractor, subcontractor, vendor or other third party, arising under or
relating to any Government Contract or Bid referred to in Section B.15(a) and
(ii) no disputes between Lockheed ▇▇▇▇▇▇ or any Affiliated Transferor and the
U.S. Government under the Contract Disputes Act or any other Federal statute
or between Lockheed ▇▇▇▇▇▇ or any Affiliated Transferor and any prime
contractor, subcontractor or vendor arising under or relating to any such
Government Contract or Government Bid. Except as set forth in Section B.15
of the Disclosure Schedules or known to the Individual Purchasers, Lockheed
▇▇▇▇▇▇ has no knowledge of any fact that could reasonably be expected to
result in a claim or a dispute under clause (i) or (ii) of the immediately
preceding sentence.
(d) Except as set forth in Section B.15 of the Disclosure
Schedules or known to the Individual Purchasers, neither Lockheed ▇▇▇▇▇▇ (or
any Affiliated Transferor) (with respect to the Business), nor to Lockheed
▇▇▇▇▇▇'▇ knowledge, any of its employees, consultants or agents is (or during
the last five years has been) suspended or debarred from doing business with
the U.S. Government or is (or during such period was) the subject of a
finding of nonresponsibility or ineligibility for U.S. Government
contracting. Except as set forth in Section B.15 of the Disclosure Schedules
or known to the Individual Purchasers, Lockheed ▇▇▇▇▇▇ does not know of any
facts or circumstances that would warrant the suspension or debarment, or the
finding of nonresponsibility or ineligibility, on the part of Lockheed ▇▇▇▇▇▇
(or any Affiliated Transferor) or any of Lockheed ▇▇▇▇▇▇'▇ (or any Affiliated
Transferor's) employees, consultants or agents. Except as set forth in
Section B.15 of the Disclosure Schedules or known to the Individual
Purchasers, and except as has not had, and may not reasonably be expected to
have, a Material Adverse Effect on the Business, to Lockheed ▇▇▇▇▇▇'▇
knowledge, the Lockheed ▇▇▇▇▇▇ Companies have complied with all requirements
of all material laws pertaining to all Government Contracts and Bids.
(e) Except as set forth in Section B.15 of the Disclosure
Schedules or known to the Individual Purchasers, and except for any of the
following as has not had, and may not reasonably be expected to have, a
Material Adverse Effect on the Business, to the knowledge of Lockheed ▇▇▇▇▇▇,
all test and inspection results Lockheed ▇▇▇▇▇▇ (or any Affiliated
Transferor) has provided to the U.S. Government pursuant to any Government
Contract referred to in Section B.15(a) or to any other Person pursuant to
any such Government Contract or as a part of the delivery to the U.S.
Government pursuant to any such Government Contract of any article designed,
engineered or manufactured in the Business were complete and correct as of
the date so provided. Except as set forth in Section B.15 of the Disclosure
Schedules or known to the Individual Purchasers, and except for any of the
following as has not had, and may not reasonably be expected to have, a
Material Adverse Effect on the Business, to the knowledge of Lockheed ▇▇▇▇▇▇,
Lockheed ▇▇▇▇▇▇ (or an Affiliated Transferor) has provided all test and
inspection results to the U.S. Government pursuant to any such Government
Contract as required by Applicable Law and the terms of the applicable
Government Contracts.
(f) Except as set forth in Section B.15 of the Disclosure
Schedules or known to the Individual Purchasers, and except for any of the
following as has not had, and may not reasonably be expected to have, a
Material Adverse Effect on the Business, to the knowledge of Lockheed ▇▇▇▇▇▇,
no statement, representation or warranty made by Lockheed ▇▇▇▇▇▇ (or an
Affiliated Transferor) in any Government Contract, any exhibit thereto or in
any certificate, statement, list, schedule or other document submitted or
furnished to the U.S. Government in connection with any Government Contract
or Government Bid (i) contained on the date so furnished or submitted any
untrue statement of a material fact, or failed to state a material fact
necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading or (ii) contains on the
date hereof any untrue statement of a material fact, or fails to state a
material fact necessary to make the statements contained therein, in light of
the circumstances in which they are made, not misleading, except in the case
of both clauses (i) and (ii) any untrue statement or failure to state a
material fact that would not result in any material liability to the Business
as a result of such untrue statement or failure to state a material fact.
B.16. Intellectual Property. With respect to Intellectual Property
that constitute Transferred Assets, except as set forth in Section B.16 of
the Disclosure Schedules, to the knowledge of Lockheed ▇▇▇▇▇▇:
(a) Lockheed ▇▇▇▇▇▇ (or an Affiliated Transferor) owns, free and
clear of all Liens other than Permitted Liens, and subject to any licenses
granted by Lockheed ▇▇▇▇▇▇ and its Affiliates prior to the Closing Date, all
right, title and interest in such Intellectual Property. To the knowledge of
Lockheed ▇▇▇▇▇▇, the use of such Intellectual Property in connection with the
operation of the Business as heretofore conducted does not conflict with,
infringe upon or violate the intellectual property rights of any other
Persons;
(b) Lockheed ▇▇▇▇▇▇ (or an Affiliated Transferor) has the right to
use all Intellectual Property used by the Business and necessary for the
continued operation of the Business in substantially the same manner as its
operations have heretofore been conducted except where the failure to have
any such Intellectual Property has not had, and could not reasonably be
expected to have, a Material Adverse Effect on the Business; and
(c) Upon the consummation of the Closing hereunder, (i) Newco will
be vested with all of Lockheed ▇▇▇▇▇▇'▇ (or the Affiliated Transferors')
rights, title and interest in, and Lockheed ▇▇▇▇▇▇'▇ (or the Affiliated
Transferors') rights and authority to use in connection with the Business,
all of the Intellectual Property that constitute Transferred Assets and
(ii) such Intellectual Property, together with the Intellectual Property
licensed to Newco in accordance with Section 9.04 of the Agreement and any
other interests in Intellectual Property transferred hereunder will
collectively constitute such rights and interests in Intellectual Property
which are necessary for the continued operation of the Business as a whole in
substantially the same manner as its operations have heretofore been
conducted, except where any inaccuracy of clause (ii) has not had, and could
not reasonably be expected to have, a Material Adverse Effect on the
Business.
B.17. Government Furnished Equipment. Section B.17 of the
Disclosure Schedules incorporates the most recent schedule delivered to the
U.S. Government which identifies by description or inventory number certain
equipment and fixtures loaned, bailed or otherwise furnished to or held by
each Business Unit by or on behalf of the United States. To Lockheed
▇▇▇▇▇▇'▇ knowledge, such schedule was accurate and complete on its date and,
if dated as of the Closing Date, would contain only those additions and omit
only those deletions of equipment and fixtures that have occurred in the
ordinary course of business, except for such inaccuracies that could not
reasonably be expected to have a Material Adverse Effect on the Business.
B.18. Powers of Attorney. Section B.18 of the Disclosure Schedules
lists the names of each person holding powers of attorney from any of the
Lockheed ▇▇▇▇▇▇ Companies in connection with the Business.
B.19. Insurance. Section B.19 of the Disclosure Schedules contains
a correct and complete list of all material policies of insurance held by any
of the Lockheed ▇▇▇▇▇▇ Companies that have been procured specifically with
respect to the operation of the Business, other than workers' compensation
policies.
B.20. Affiliate Transactions. Except as set forth in Section B.20
of the Disclosure Schedule, (a) there is no ongoing agreement or arrangement
between Lockheed ▇▇▇▇▇▇ or any Affiliated Transferor, on the one hand, and
any of the Business Units, on the other hand, having an annual cost to a
Business Unit or any of the Lockheed ▇▇▇▇▇▇ Companies, individually, in
excess of $120,000; (b) there is no debt owed by any Business Unit to any of
the Lockheed ▇▇▇▇▇▇ Companies (other than another Business Unit), other than
debt which will be eliminated prior to the Closing or otherwise will not be
an Assumed Liability; and (c) there is no indemnification or similar
obligation owed by any Business Unit to Lockheed ▇▇▇▇▇▇ or any of its
Affiliates (other than another Business Unit), other than in connection with
or resulting from the failure of a Business Unit to perform its obligations
under any Contracts involving Lockheed ▇▇▇▇▇▇ or any of its Affiliates.
B.21. Employee Benefit Matters.
(a) To the knowledge of Lockheed ▇▇▇▇▇▇, Section B.21 of the
Disclosure Schedule lists each Employee Plan or Benefit Arrangement which
covers Transferred Employees or Transferred Beneficiaries and each collective
bargaining agreement covering Transferred Employees.
(b) Except as set forth in Section B.21 of the Disclosure Schedule
and with respect to the Business:
(i) Neither Lockheed ▇▇▇▇▇▇ nor any member of its "Controlled
Group" (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code Sections 414(b), (c),
(m) or (o)) has ever contributed to or had any liability to a multi-
employer plan, as defined in Section 3(37) of ERISA, which could
reasonably be expected to have a Material Adverse Effect on the
Business;
(ii) To the knowledge of Lockheed ▇▇▇▇▇▇, except to the extent
known by the Individual Purchasers with respect to the Business Units
other than the Communications Systems Business Unit, no fiduciary of any
funded Employee Plan has engaged in a "prohibited transaction" (as that
term is defined in Section 4975 of the Code and Section 406 of ERISA)
which could subject Newco to a penalty tax imposed by Section 4975 of
the Code;
(iii) No Employee Plan that is subject to Section 412 of the
Code has incurred an "accumulated funding deficiency" within the meaning
of Section 412 of the Code, whether or not waived;
(iv) To the knowledge of Lockheed ▇▇▇▇▇▇, except to the extent
known by the Individual Purchasers with respect to the Business Units
other than the Communications Systems Business Unit, each Employee Plan
and Benefit Arrangement has been established and administered in
accordance with its terms and in compliance with Applicable Law;
(v) To the knowledge of Lockheed ▇▇▇▇▇▇, except to the extent
known by the Individual Purchasers with respect to the Business Units
other than the Communications Systems Business Unit, no Employee Plan
subject to Title IV of ERISA has incurred any material liability under
such title other than for the payment of premiums to the Pension Benefit
Guaranty Corporation ("PBGC"), all of which to the knowledge of Lockheed
▇▇▇▇▇▇ and the Individual Purchasers have been paid when due;
(vi) No defined benefit Employee Plan has been terminated; nor
have there been any "reportable events" (as that term is defined in
Section 4043 of ERISA and the regulations thereunder), other than
reportable events arising directly from the Contemplated Transactions,
which would present a risk that an Employee Plan would be terminated by
the PBGC in a distress termination;
(vii) Each Employee Plan intended to qualify under Section 401
of the Code has received a determination letter that it is so qualified
and to the knowledge of Lockheed ▇▇▇▇▇▇, except to the extent known by
the Individual Purchasers with respect to the Business Units other than
the Communications Systems Business Unit, no event has occurred with
respect to any such Employee Plan which could cause the loss of such
qualification or exemption;
(viii) With respect to each Employee Plan listed on Section B.21
of the Disclosure Schedule, Lockheed ▇▇▇▇▇▇ has made available to Newco
the most recent copy (where applicable) of (A) the plan document; (B)
the most recent determination letter; (C) any summary plan description;
(D) Form 5500; and (E) actuarial valuation report; and with respect to
each Benefit Arrangement that covers any Transferred Employee or
Transferred Beneficiary, Lockheed ▇▇▇▇▇▇ has made available to Newco a
current, accurate and complete copy (or, to the extent that no such copy
exists, an accurate description) thereof; and
(ix) To the knowledge of Lockheed ▇▇▇▇▇▇, except to the extent
known by the Individual Purchasers with respect to the Business Units
other than the Communications Systems Business Unit, no Employee Plan or
Benefit Arrangement exists which could result in the payment to any
Transferred Employee or Transferred Beneficiary of any money or other
property or rights or accelerate or provide any other rights or benefits
to any Transferred Employee or Transferred Beneficiary as a result of
the transaction contemplated by this Agreement, whether or not such
payment would constitute a parachute payment (within the meaning of
Section 280G of the Code).
EXHIBIT C
REPRESENTATION AND WARRANTIES OF ▇▇▇▇▇▇
▇▇▇▇▇▇ hereby represents and warrants to Lockheed ▇▇▇▇▇▇ and the
individual Purchasers and, upon the Closing, to Newco that:
C.01. Organization and Existence. ▇▇▇▇▇▇ is a limited partnership
duly formed, validly existing and in good standing under the laws of the
State of Delaware and has all partnership powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted, except where the failure to have such licenses,
authorizations, consents and approvals has not had and may not reasonably be
expected to have, a Material Adverse Effect on ▇▇▇▇▇▇. ▇▇▇▇▇▇ is duly
qualified to do business as a foreign limited partnership in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities make such qualification necessary to carry on its
business as now conducted, except for those jurisdictions where failure to be
so qualified has not had, and may not reasonably be expected to have, a
Material Adverse Effect on ▇▇▇▇▇▇.
C.02. Authorizations. The execution, delivery and performance by
▇▇▇▇▇▇ of the Transaction Documents and the consummation by ▇▇▇▇▇▇ of the
Contemplated Transactions are within the partnership powers of ▇▇▇▇▇▇ and
have been duly authorized by all necessary partnership action on the part of
▇▇▇▇▇▇. Each of the Transaction Documents constitutes a legal, valid and
binding agreement of ▇▇▇▇▇▇, enforceable against ▇▇▇▇▇▇ in accordance with
its terms (i) except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to or affecting creditors' rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and (ii) subject to the limitations
imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
C.03. Governmental Authorization.
(a) The execution, delivery and performance by ▇▇▇▇▇▇ of the
Transaction Documents require no action by or in respect of, consents or
approvals of, or filing with, any governmental body, agency, official or
authority other than:
(i) compliance with any applicable requirements of the HSR
Act; and
(ii) compliance with any applicable requirements of the 1933
Act.
(b) To the actual knowledge of ▇▇▇▇▇▇, there are no facts relating
to the identity or circumstances of ▇▇▇▇▇▇ or any of its Affiliates that
would prevent or materially delay obtaining the consents or approvals
referred to in Section C.03(a).
C.04. Non-Contravention. The execution, delivery and performance by
▇▇▇▇▇▇ of the Transaction Documents do not and will not (i) contravene or
conflict with the certificate of limited partnership or Amended and Restated
Agreement of Limited Partnership of ▇▇▇▇▇▇, (ii) assuming compliance with the
matter referred to in Section C.03, contravene or conflict with or constitute
a violation of any provision of any law, regulation, judgment, injunction,
order or decree binding upon or applicable to ▇▇▇▇▇▇, or (iii) constitute a
default under or give rise to any right of termination, cancellation or
acceleration of any right or obligation of ▇▇▇▇▇▇ or to a loss of any benefit
to which ▇▇▇▇▇▇ is entitled under any provision of any agreement, contract or
other instrument binding upon ▇▇▇▇▇▇ or any license, franchise, permit or
other similar authorization held by ▇▇▇▇▇▇, 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 ▇▇▇▇▇▇.
C.05. Finders' Fees. Except for ▇▇▇▇▇▇ Brothers Inc., there is no
investment banker, broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of ▇▇▇▇▇▇ who might be entitled
to any fee or commission from Newco, Lockheed ▇▇▇▇▇▇ or any of its
Affiliates, or either of the Individual Purchasers, upon consummation of the
Contemplated Transactions by the Transaction Documents.
C.06. Litigation. There is no action, suit, investigation or
proceeding pending against, or to the actual knowledge of ▇▇▇▇▇▇, threatened
against or affecting, ▇▇▇▇▇▇ 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. ▇▇▇▇▇▇ is an informed and sophisticated
participant in the Contemplated Transactions, and has engaged expert
advisors, experienced in the evaluation and purchase of enterprises such as
the Business. ▇▇▇▇▇▇ has undertaken an investigation and has been provided
with, has evaluated and has relied upon certain documents and information to
assist ▇▇▇▇▇▇ in making an informed and intelligent decision with respect to
the execution of the Transaction Documents. ▇▇▇▇▇▇ will undertake prior to
Closing such further investigation and request such additional documents and
information as it deems necessary. ▇▇▇▇▇▇ acknowledges that Lockheed ▇▇▇▇▇▇
has made no representation or warranty as to the prospects, financial or
otherwise of the Business. ▇▇▇▇▇▇ agrees that Newco shall accept the
Transferred Assets and the Assumed Liabilities as they exist on the Closing
Date based upon ▇▇▇▇▇▇'▇ and the Individual Purchasers' inspection,
examination and determination with respect thereto as to all matters, and
without reliance upon any express or implied representations or warranties of
any nature, whether in writing, orally or otherwise, made by or on behalf of
or imputed to Lockheed ▇▇▇▇▇▇ except as expressly set forth in the
Transaction Documents.
C.08. Financing. ▇▇▇▇▇▇ has available to it cash, marketable
securities or other investments, or presently available sources of credit, to
enable it to purchase the shares of Newco Class A Stock contemplated by this
Agreement.
EXHIBIT D
REPRESENTATIONS AND WARRANTIES OF THE INDIVIDUAL PURCHASERS
Each of the Individual Purchasers hereby represents and warrants, with
respect to himself, to Lockheed ▇▇▇▇▇▇ and ▇▇▇▇▇▇ and, upon the Closing, to
Newco that:
D.01. Governmental Authorization.
(a) The execution, delivery and performance by each Individual
Purchaser of the Transaction Documents require no action by or in respect of,
consents or approvals of, or filing with, any governmental body, agency,
official or authority other than:
(i) compliance with any applicable requirements of the HSR
Act; and
(ii) compliance with any applicable requirements of the ▇▇▇▇
▇▇▇.
(b) To the knowledge of each of the Individual Purchasers, there
are no facts relating to the identity or circumstances of the Individual
Purchasers that would prevent or materially delay obtaining any of the
consents or approvals referred to in Section D.01(a).
D.02. Non-Contravention. The execution, delivery and performance by
each of the Individual Purchasers of the Transaction Documents do not and
will not (i) assuming compliance with the matters referred to in Section
D.01, contravene or conflict with or constitute a violation of any provision
of any law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Individual Purchasers or (ii) constitute a default under or
give rise to any right of termination, cancellation or acceleration of any
right or obligation of either of the Individual Purchasers or to a loss of
any benefit to which either of the Individual Purchasers is entitled under
any provision of any agreement, contract or other instrument binding upon
either of the Individual Purchasers or any license, franchise, permit or
other similar authorization held by either of the Individual Purchasers,
except for any such contravention, conflict, violation, default, termination,
cancellation, acceleration or loss that is immaterial to the Contemplated
Transactions and the operation of the Business after Closing.
D.03. Finders' Fees. There is no investment banker, broker, finder
or other intermediary that has been retained by or is authorized to act on
behalf of either of the Individual Purchasers who might be entitled to any
fee or commission from Newco, Lockheed ▇▇▇▇▇▇ or ▇▇▇▇▇▇, or any of their
Affiliates, upon consummation of the Contemplated Transactions.
D.04. Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of either of the Individual
Purchasers, threatened against or effecting, either of the Individual
Purchasers before any court or arbitrator or any governmental body, agency or
official which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the Contemplated Transactions.
D.05. Inspections. Each of the Individual Purchasers is an informed
and sophisticated participant in the Contemplated Transactions, and has
engaged such expert's advisors as he deems appropriate. Each of the
Individual Purchasers has undertaken an investigation and has been provided
with, has evaluated and has relied upon certain documents and information to
assist him in making an informed and intelligent decision with respect to the
execution of the Transaction Documents. Each of the Individual Purchasers
will undertake prior to Closing such further investigation and request such
additional documents and information as he deems necessary. Each of the
Individual Purchasers acknowledges that Lockheed ▇▇▇▇▇▇ has made no
representation or warranty as to the prospects, financial or otherwise of the
Business. Each of the Individual Purchasers agrees that Newco shall accept
the Transferred Assets and the Assumed Liabilities as they exist on the
Closing Date based upon ▇▇▇▇▇▇'▇ and the Individual Purchasers' inspection,
examination and determination with respect thereto as to all matters, and
without reliance upon any express or implied representations or warranties of
any nature, whether in writing, orally or otherwise, made by or on behalf of
or imputed to Lockheed ▇▇▇▇▇▇, except as expressly set forth in the
Transaction Documents.
D.06. Financing. Each of the Individual Purchasers has available
sufficient cash, marketable securities or other investments, or presently
available sources of credit, to enable him to purchase the shares of Newco
Class B Stock contemplated by this Agreement.
EXHIBIT E
REPRESENTATION AND WARRANTIES OF NEWCO
Newco hereby represents and warrants to Lockheed Martin, Lehman and the
Individual Purchasers that:
E.01. Organization and Existence. Newco is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and has (or, prior to the Closing Date, will have) all
corporate powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted, except where
the failure to have such licenses, authorizations, consents and approvals has
not had and may not reasonably be expected to have, a Material Adverse Effect
on Newco (after giving effect to the Contemplated Transactions). As of the
Closing Date, Newco will be duly qualified to do business as a foreign
corporation in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities (after giving effect to the
Contemplated Transactions) make such qualification necessary to carry on its
business as now conducted, except for those jurisdictions where failure to be
so qualified has not had, and may not reasonably be expected to have, a
Material Adverse Effect on Newco (after giving effect to the Contemplated
Transactions).
E.02. Corporate Authorizations. The execution, delivery and
performance by Newco of the Transaction Documents and the consummation by
Newco of the Contemplated Transactions are within the corporate powers of
Newco and have been (or, prior to the Closing, will have been) duly
authorized by all necessary corporate action on the part of Newco. Each of
the Transaction Documents constitutes a legal, valid and binding agreement of
Newco, enforceable against Newco in accordance with its terms (i) except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and preferential
transfers and (ii) subject to the limitations imposed by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
E.03. Governmental Authorization.
(a) Except as set forth on Attachment X, the execution, delivery
and performance by Newco of the Transaction Documents require no action by or
in respect of, consents or approvals of, or filing with, any governmental
body, agency, official or authority other than:
(i) compliance with any applicable requirements of the HSR
Act; and
(ii) compliance with any applicable requirements of the 1933
Act.
(b) There are no facts relating to the identity or circumstances
of Newco known to Newco that would prevent or materially delay obtaining any
of the consents or approvals referred to in Section E.03(a).
E.04. Non-Contravention. The execution, delivery and performance by
Newco of the Transaction Documents do not and will not (i) contravene or
conflict with the charter or bylaws of Newco, (ii) assuming compliance with
the matters referred to in Section E.03, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to Newco, or
(iii) constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Newco or to a loss
of any benefit to which Newco is entitled under any provision of any
agreement, contract or other instrument binding upon Newco or any license,
franchise, permit or other similar authorization held by Newco, except, in
the case of clauses (ii) and (iii), for any such contravention, conflict,
violation, default, termination, cancellation, acceleration or loss that
could not reasonably be expected to have a Material Adverse Effect on Newco.
E.05. Finders' Fees. Except for ▇▇▇▇▇▇ Brothers Inc., there is no
investment banker, broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of Newco who might be entitled
to any fee or commission from Lockheed ▇▇▇▇▇▇ or ▇▇▇▇▇▇ (or any of their
Affiliates), or from either of the Individual Purchasers, upon consummation
of the Contemplated Transactions.
EXHIBIT F
TAX MATTERS
F.01. Tax Definitions. The following terms shall have the following
meanings:
"Allocation Tax Loss" means an amount equal to 20% of the first
$5,000,000 of the Tax Basis Shortfall and 25% of the next $20,000,000 of
the Tax Basis Shortfall.
"Basis Liabilities" means Assumed Liabilities which upon the Tax Closing
Date give rise to the creation of, or increase in, basis to Newco of one
or more Transferred Assets for Income Tax purposes.
"Cash Sale" means a transfer of assets to Newco pursuant to the
Transaction Agreement whereby Lockheed ▇▇▇▇▇▇ or any of its Affiliated
Transferors, as the case may be, does not receive any Newco Class A
Stock as Exchange Consideration for Transferred Assets.
"Code" means the Internal Revenue Code of 1986, as amended.
"Final Determination" means a determination as defined in Section
1313(a) of the Code or any other event which finally and conclusively
establishes the amount of any liability for Taxes.
"Income Taxes" means any Taxes determined by reference to net income.
"Post-Closing Tax Period" means that portion of any Tax period ending
after the Tax Closing Date, which is after the Tax Closing Date.
"Pre-Closing Tax Period" means that portion of any Tax period ending on
or before the Tax Closing Date, which is on or before the Tax Closing
Date.
"Section 351 Transfer" means a transfer of assets to Newco pursuant to
the Transaction Agreement whereby Lockheed ▇▇▇▇▇▇ or any of its
Affiliated Transferors, as the case may be, receives Newco Class A Stock
as part or all of the Exchange Consideration for Transferred Assets.
"Tax" means any tax imposed of any nature including federal, state,
local or foreign net income tax, alternative or add-on minimum tax,
profits or excess profits tax, franchise tax, gross income, adjusted
gross income or gross receipts tax, employment related tax (including
employee withholding or employer payroll tax, FICA, or FUTA), real or
personal property tax or ad valorem tax, sales or use tax, excise tax,
stamp tax or duty, any withholding or backup withholding tax, value
added tax, severance tax, prohibited transaction tax, premiums tax,
occupation tax, together with any interest or any penalty, addition to
tax or additional amount imposed by any Governmental Authority
responsible for the imposition of any such tax.
"Tax Basis Shortfall" means the amount by which Newco's adjusted tax
basis in the Transferred Assets (after the recognition of gains pursuant
to Section F.07.(a)(i)(C)) is less than $525,000,000 plus or minus any
adjustment to the Exchange Consideration in accordance with Sections
2.03 and 2.04 and plus the Basis Liabilities.
"Tax Closing Date" means the Effective Date.
F.02. Tax Return Packages. Newco will use its reasonable efforts to
cause appropriate employees of the Business to prepare usual and customary
Tax return packages (in the form provided to the Business Units for the 1996
calendar year) with respect to (1) the taxable period ended December 31,
1996, in the event that such packages have not been prepared prior to Closing
and (2) the tax period beginning January 1, 1997 and ending as of the Tax
Closing Date. In the event that Tax return packages for the taxable period
ended December 31, 1996 have not been prepared prior to Closing, then Newco
will use reasonable efforts to cause the Tax return packages for such taxable
period to be delivered to Lockheed ▇▇▇▇▇▇ no later than 30 days subsequent to
Closing. Newco will use reasonable efforts to cause the Tax return packages
for the period beginning on January 1, 1997 and ending as of the Tax Closing
Date to be delivered to Lockheed ▇▇▇▇▇▇ no later than the last day of the
third calendar month succeeding the month in which the Closing occurs.
F.03.A. Assumed Liabilities. The term Assumed Liabilities as defined
in Exhibit A shall include any and all liabilities and obligations of
Lockheed ▇▇▇▇▇▇ and the Affiliated Transferors for Taxes arising from or with
respect to the Transferred Assets or the operation of the Business with
respect to any period ending prior to on or after the Tax Closing Date other
than (i) income or franchise taxes arising from or with respect to the
Transferred Assets or the operations of the Business for the Pre-Closing Tax
Period (other than state or local income or franchise taxes attributable to
the Business with respect to a Pre-Closing Tax Period to the extent
reimbursable (but not actually reimbursed as of the Tax Closing Date) by the
U.S. Government pursuant to the principles of Federal Acquisition Regulation
Part 31, Contract Cost Principles and Procedures), and (ii) income or
franchise taxes imposed on Lockheed ▇▇▇▇▇▇ or any of the Affiliated
Transferors with respect to gain or loss on the disposition of the
Transferred Assets pursuant to the Transaction Agreement (other than Taxes
borne by Newco pursuant to Section 15.03). Notwithstanding the foregoing,
the parties agree that, with respect to Tax liabilities attributable to the
Communications Systems Business Unit relating to the Pre-Closing Tax Period,
Newco shall not assume any liability or obligation other than and only to the
extent (i) disclosed or provided for in the December Statement or taken into
account in the determination of the Final Net Tangible Asset Amount or (ii)
relating to Tax periods for which Tax returns (including any applicable
extensions) are not required to have been filed prior to the Tax Closing
Date.
F.03.B. Excluded Liabilities. The term Excluded Liabilities as
defined in Exhibit A shall include any and all liabilities or obligations for
any and all Taxes arising from or with respect to the Transferred Assets or
operations of the Business that are not Assumed Liabilities as defined in
Section F.03.A.
F.04.A. Transferred Assets. The term Transferred Assets as defined in
Exhibit A shall include any and all refunds, credits or rights of recovery in
respect of any Taxes that are Assumed Liabilities as defined in Section
F.03.A.
F.04.B. Excluded Assets. The term Excluded Assets as defined in
Exhibit A shall include any refund, credit or right of recovery in respect of
any Taxes that are not Assumed Liabilities as defined in Section F.03.A.
F.05. Allocation of Exchange Consideration.
(a) Within 30 days after the appraisal of the Transferred Assets
by Coopers & ▇▇▇▇▇▇▇ L.L.P. as referred to in Section F.07 has been
completed, Lockheed ▇▇▇▇▇▇ shall prepare a schedule (the "Exchange
Consideration Schedule") setting forth the allocation of the cash amount of
the Exchange Consideration among Lockheed ▇▇▇▇▇▇ and each of the Affiliated
Transferors. The allocation shall be determined based on such appraisal by
Coopers & ▇▇▇▇▇▇▇ L.L.P., and shall take into account the allocation of Newco
Class A Stock among Lockheed ▇▇▇▇▇▇ and the Affiliated Transferors, as
determined by Lockheed ▇▇▇▇▇▇ in its sole discretion. In connection with the
preparation of the Exchange Consideration Schedule, Lockheed ▇▇▇▇▇▇ shall
give Newco reasonable access to the books and records of Lockheed ▇▇▇▇▇▇ in
respect of the Transferred Assets and the Basis Liabilities. Lockheed ▇▇▇▇▇▇
agrees to make reasonable efforts to allocate the Exchange Consideration in
the Exchange Consideration Schedule in a manner calculated to allow Newco to
obtain a tax basis in the Transferred Assets equal to, but not greater than,
$525,000,000 plus or minus any adjustment to the Exchange Consideration in
accordance with Sections 2.03 and 2.04 and plus the Basis Liabilities.
Lockheed ▇▇▇▇▇▇ covenants and agrees that the Exchange Consideration will be
allocated so that the adjusted tax basis of Newco in the Transferred Assets,
based on the allocation in the Exchange Consideration Schedule, will be not
less than $500,000,000 plus or minus any adjustment to the Exchange
Consideration in accordance with Sections 2.03 and 2.04 and plus the Basis
Liabilities.
(b) The Allocation Tax Loss shall be determined jointly by
Lockheed ▇▇▇▇▇▇ and Newco within 90 days after the Exchange Consideration
Schedule is delivered to Newco. Any dispute with respect to the
determination of the Allocation Tax Loss shall be resolved in the manner
specified in Section 2.03 (b) (regarding determination of the Final Net
Tangible Asset Amount). Within 10 days after the Allocation Tax Loss is
determined, Lockheed ▇▇▇▇▇▇ shall pay to Newco the amount of the Allocation
Tax Loss with interest thereon from the Closing Date to the date of payment
at a rate per annum equal to the per annum interest rate announced from time
to time by Bank of America National Trust and Savings Association as its
reference rate in effect. Such payment shall be made in immediately
available funds by wire transfer to a bank account designated in writing by
Newco. Newco agrees that the aforementioned payment by Lockheed ▇▇▇▇▇▇ shall
satisfy all obligations assumed by Lockheed ▇▇▇▇▇▇ pursuant to this Section
F.05. Lockheed ▇▇▇▇▇▇ shall have no further obligation to indemnify Newco
with regard to any adjustment to the tax basis of the Transferred Assets in
the hands of Newco as a result of an audit by the Internal Revenue Service or
any other Tax authority, or as a result of any other adjustment which is
treated for Tax purposes as an adjustment to the Exchange Consideration.
F.06. Representations and Warranties of Lockheed ▇▇▇▇▇▇. Lockheed
▇▇▇▇▇▇ hereby represents prior to but not after the Closing to the
Purchasers, and as of and after the Closing to Newco that:
(a) there are no liens on any of the Transferred Assets that arose
in connection with any failure (or alleged failure) to pay any Tax;
(b) neither Lockheed ▇▇▇▇▇▇ nor any of the Affiliated Transferors
will take part in both a Section 351 Transfer and a Cash Sale in the context
of the Contemplated Transactions;
(c) neither Lockheed ▇▇▇▇▇▇ nor any of the Affiliated Transferors
has transferred or otherwise altered the ownership of any of the Transferred
Assets in anticipation of the Contemplated Transactions.
F.07. Consistent Reporting.
(a) Section 351 Transfers
(i) Unless there has been a Final Determination to the
contrary, Lockheed ▇▇▇▇▇▇, the Affiliated Transferors and Newco covenant
and agree, for all Tax purposes including all Tax returns and Tax
controversies, to (and to cause any Affiliate or successor to their
assets or business to) take each of the positions set forth in
subparagraph (A) through (E) below with respect to Section 351
Transfers.
(A) The transfer of assets by each transferor will
qualify under Section 351(b) of the Internal Revenue Code of 1986.
(B) The amount of cash received in exchange for any
Transferred Asset will be determined by (A) allocating Basis Liabilities
to the Transferred Assets in proportion to the adjusted tax basis of
such Transferred Assets, and then (B) allocating the total amount of
cash received by the transferor among the Transferred Assets in
proportion to the net fair market value of such Transferred Assets (the
net fair market value being the fair market value of a Transferred Asset
reduced by the amount of any Basis Liabilities allocated to the asset).
(C) The tax basis of each Transferred Asset to be
received by Newco will be the same as the tax basis of such asset in the
hands of the transferor increased by the amount of any gain recognized
by the transferor on the transfer of such asset.
(D) The fair market value of each category of
Transferred Assets will be determined based on an independent appraisal
by Coopers & ▇▇▇▇▇▇▇ L.L.P.
(E) Neither Newco, nor any successor to its assets or
businesses will be entitled to claim any deduction in respect of any
Basis Liability to the extent previously deducted by the transferor,
unless such previous deduction is later denied.
(ii) Lockheed ▇▇▇▇▇▇ and the Affiliated Transferors will file
with their consolidated federal income tax return for the tax period
which includes the Tax Closing Date the information required by Treas.
Reg. 1.351-3(a) and will deliver copies of such statements, including
attachments, to Newco at least 10 days prior to the date on which such
return is filed, and Newco will file with its federal income tax return
for the taxable period within which the Tax Closing Date falls the
information required by Treas. Reg. 1.351-(b) and will deliver a copy of
that statement to Lockheed ▇▇▇▇▇▇ within ten days thereafter. Within
180 days after the Closing Date, Lockheed ▇▇▇▇▇▇ will deliver to Newco
all of the cost and other basis information relating to the Transferred
Assets and Basis Liabilities reasonably required for Newco to prepare
the Statement required by Treas. Reg. 1.351-3(b)(2).
(iii) Lockheed ▇▇▇▇▇▇ and Newco will jointly prepare schedules
showing (A) the amount of any gain recognized on the transfer of each
category of Transferred Assets, (B) the tax basis of each category of
Transferred Assets in the hands of the transferor, and (C) the amount
previously deducted in respect of each category of Basis Liabilities.
Such schedules will be prepared in a manner consistent with each of the
positions described in Section F.07.(a)(i). In the event of any
adjustment to the tax basis of the Transferred Assets or Basis
Liabilities, as the result of an audit or otherwise, Lockheed ▇▇▇▇▇▇,
the Affiliated Transferors and Newco will jointly prepare any necessary
revisions to such schedules. Unless there has been a Final
Determination to the contrary, Lockheed ▇▇▇▇▇▇, the Affiliated
Transferors and Newco covenant and agree, for all Income Tax purposes,
including all Income Tax returns and any Income Tax controversies, not
to take (and to cause any Affiliate or successors to their assets or
businesses not to take) any position inconsistent with the basis in
assets shown on such schedules (including any revised schedules from and
after the date of revision) prepared pursuant to this Section
F.07.(a)(iii).
(iv) Lockheed ▇▇▇▇▇▇ and the Affiliated Transferors covenant
and agree to make the election necessary under Section 197(f)(9)(B) of
the Code and pay the Tax that is required to be paid thereunder, so that
intangible assets will be amortizable to the extent allowable under
Section 197 of the Code. Lockheed ▇▇▇▇▇▇ will deliver a copy of the
election to Newco within 10 days of filing or making such election.
(b) Cash Sales
With respect to Cash Sales, the Exchange Consideration shall
be allocated among the Transferred Assets in accordance with Section 1060 of
the Code and Treasury Regulations thereunder. Such allocation shall be based
on an independent appraisal by Coopers & ▇▇▇▇▇▇▇ L.L.P. Lockheed ▇▇▇▇▇▇, the
Affiliated Transferors and Newco shall not take any position on their
respective Tax returns that is inconsistent with such allocation of the
Exchange Consideration for purposes of determining the amount of gain or loss
recognized by Lockheed ▇▇▇▇▇▇ and/or any of the Affiliated Transferors
pursuant to Cash Sales, and Lockheed ▇▇▇▇▇▇ and Newco shall duly prepare and
timely file such reports and information returns as may be required to report
the allocation, including Internal Revenue Service Form 8594. Lockheed
▇▇▇▇▇▇ and Newco will each deliver a copy of Form 8594, including
attachments, to the other at least 10 days prior to filing it with its tax
return.
F.08. Allocation of Income, Deductions and Other Items. For
purposes of the Transaction Agreement, income, deductions, and other items
will be allocated between the Pre-Closing Tax Period and the Post-Closing Tax
Period based on an actual closing of the books of the Business on the Tax
Closing Date. Income, deductions and other items attributable to the Pre-
Closing Tax Period will be included in the federal and state income and/or
franchise tax returns of Lockheed ▇▇▇▇▇▇. Income, deductions and other items
attributable to the Post-Closing Tax Period will be included in the federal
and state income and/or franchise tax returns of Newco.
F.09. Allocation of Taxes. Any pre-paid asset or accrued liability
for real property tax, personal property tax or any similar ad valorem
obligation levied with respect to any Transferred Asset for a Post-Closing
Tax Period which includes the Tax Closing Date will be apportioned as of the
Tax Closing Date and included in the determination of the Estimated Final Net
Tangible Asset Amount, the Proposed Final Net Tangible Asset Amount and the
Final Net Tangible Asset Amount based on the number of days of such taxable
period included in the Pre-Closing Tax Period and the number of days of such
taxable period included in the Post-Closing Tax Period.
F.10. Credit for Increasing Research Activities. Lockheed ▇▇▇▇▇▇,
the Affiliated Transferors and Newco agree that the transfers of assets
pursuant to the Transaction Agreement constitute dispositions of trades or
businesses within the meaning of Section 41(f)(3) of the Code. Lockheed
▇▇▇▇▇▇ and the Affiliated Transferors agree to provide Newco within 150 days
after the Closing Date with all information necessary to permit Newco to
timely apply the provisions of Section 41(f)(3)(A) of the Code with respect
to the Businesses.
F.11. Costs and Expenses of Appraisal. The costs and expenses of
the appraisal by Coopers & ▇▇▇▇▇▇▇ L.L.P. which is referred to in Sections
F.05., F.07.(a)(i)(D) and F.07.(b) shall be shared equally by Lockheed ▇▇▇▇▇▇
and Newco.
F.12. Resale Certificates. Within 45 days after the Closing Date,
where applicable, Newco shall remit to Lockheed ▇▇▇▇▇▇ such properly
completed resale exemption certificates or similar certificates or
instruments as are necessary to claim exemptions from the payment of sales,
transfer, use or other similar taxes under Applicable Law.
EXHIBIT G
EMPLOYMENT AND EMPLOYEE BENEFIT MATTERS
G.01. Employee Benefits Definitions. The following terms shall have
the following meanings:
"Benefit Arrangement" means each employment, severance, continuation
pay, termination pay, layoff, or other similar written contract, arrangement
or policy and each written plan or arrangement providing for health, medical,
life or other welfare or fringe benefit coverage (including any insurance,
self-insurance or other arrangements), workers' compensation, severance pay,
retention agreements, disability benefits, supplemental unemployment
benefits, holiday, education or vacation benefits, retirement benefits or
deferred compensation, profit-sharing, benefits in the event of a sale of the
Business or other change in the control, management or the ownership of the
Business, bonuses, stock options, stock appreciation rights and other forms
of incentive compensation or post-retirement insurance, compensation or
benefits which (i) is not an Employee Plan, (ii) is or has been entered into,
maintained, administered or contributed to, as the case may be, by Lockheed
▇▇▇▇▇▇ or any of its Affiliates and (iii) covers any Transferred Employee,
Transferred Beneficiary and/or his or her dependent, spouse or beneficiary or
for which a Transferred Employee would be eligible upon retirement or other
termination of service.
"Camden Transferee" means each Transferred Employee who worked in the
Communications Systems Business Unit immediately prior to Closing and any
Transferred Beneficiary related to such Transferred Employee.
"Employee Plan" means each "employee benefit plan", as such term is
defined in Section 3(3) of ERISA, which (i) is subject to any provision of
ERISA, (ii) is or has been entered into, maintained, administered or
contributed to by Lockheed ▇▇▇▇▇▇ or any of its Affiliates and (iii) covers
any Transferred Employee and/or Transferred Beneficiary.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Transferred Employee" means any Person who, (i) on the Closing Date, is
actively employed in the Business, or who, with respect to the Business, is
on vacation, approved illness absence, long-term disability, authorized leave
of absence (including leave under the Family and Medical Leave Act) or
military service leave of absence as of the Closing Date, (ii) was laid off
from the Business and has recall rights with respect to the Business, or
(iii) is identified on Attachment XI, to be delivered to Newco at the same
time as the Disclosure Schedules are delivered.
"Transferred Beneficiary" means any Person who, at Closing, is not a
Transferred Employee but (i) who was formerly employed in the Business (other
than at the Communications Systems Business Unit)(whether by Lockheed ▇▇▇▇▇▇
and/or its Affiliates or by their predecessors with respect to the Business)
and to whom or with respect to whom Lockheed ▇▇▇▇▇▇ or any of its Affiliates
now has or may have in the future any obligation or liability (whether or not
contingent) arising from that Person's employment in the Business or who is
now or may become entitled to any coverage or benefit (whether or not
contingent) provided under any Employee Plan or Benefit Arrangement as a
result of his or her employment in the Business; (ii) who is the spouse,
dependent or beneficiary of a Person who qualifies as a Transferred Employee
or a Person described in clause (i), if that spouse, dependent or beneficiary
is or may become entitled to any coverage or benefit (whether or not
contingent) provided under any Employee Plan or Benefit Arrangement as a
result of that Person's employment in the Business.
G.02. Employees and Offers of Employment.
(a) Newco shall offer employment to commence on the Closing Date
to all Transferred Employees; provided that, for any Transferred Employee who
is on vacation, approved illness absence, authorized leave of absence
(including leave under the Family and Medical Leave Act), long-term
disability or military service leave of absence as of the Closing, the offer
shall remain open until the date he or she is able to return to active
employment to the extent consistent with any applicable collective bargaining
agreement and/or existing company policy; provided, further, that any Camden
Transferee entitled to recall rights shall be offered employment by Newco in
accordance with the terms of the applicable bargaining agreement. Each
Transferred Employee shall be offered a position by Newco similar to his or
her position immediately prior to the Closing Date, at the same job and
salary or wage levels, with non-equity based bonus and incentive plans and
other non-equity based employee benefit plans substantially similar to those
provided by Lockheed ▇▇▇▇▇▇ and its Affiliates immediately prior to the
Closing Date. Such offers of employment shall be at the same respective
locations as those at which such Transferred Employees are employed
immediately prior to the Closing. Subject to Applicable Law and this
Agreement, Newco shall have the right to dismiss any Transferred Employee at
any time, with or without cause, and to change the terms of employment of any
Transferred Employee.
(b) Lockheed ▇▇▇▇▇▇ shall provide any notices to Transferred
Employees which may be required under the Worker Adjustment Retraining and
Notification Act, 29 USC Section 2101 et seq., ("WARN") with respect to
events which occur prior to the Closing Date and Newco shall provide any
notices to Transferred Employees which may be required under WARN with
respect to events which occur on or after the Closing Date.
(c) Commencing on the Closing Date, Newco shall assume all
responsibility and liability for all matters arising out of or relating to
Transferred Employees and Transferred Beneficiaries regardless of whether
such matter arises from or relates to events prior to, on or after the
Closing Date, including but not limited to (i) accrued but unpaid wages,
bonuses and salary; (ii) all liabilities for workers compensation claims made
at any time by Transferred Employees or Transferred Beneficiaries whether or
not reported as of the Closing Date and all expenses of administration of
such claims; (iii) all incurred but not reported claims for life insurance,
medical, disability or similar benefits; (iv) all claims relating to the
terms and conditions of employment, hiring, firing, supervision, occupational
safety and health, workplace, wages and hours promotion, employment practices
or treatment of Transferred Employees or Transferred Beneficiaries; provided,
however, that with respect to any responsibility and liability relating to a
Camden Transferee for a matter described in clause (iv), Newco shall only
assume such responsibility and liability if it arises from or relates to (A)
a matter described in Section B.09 of the Disclosure Schedule, or (B) events
occurring on or after the Closing Date.
G.03. Plans Following the Closing.
(a) Except to the extent changes are (i) required by Applicable
Law; (ii) necessary to maintain the tax favored status of any employee plan
or benefit arrangement; (iii) permitted or required under any applicable
collective bargaining agreement; or (iv) necessary to eliminate the use of
any equity securities as the basis for any equity-based incentive
compensation, during the one-year period following the Closing, Newco will
maintain employee compensation and employee plans and benefit arrangements
for the benefit of the Transferred Employees and Transferred Beneficiaries,
in either case, who are not covered by collective bargaining agreements, that
are substantially similar to the Employee Plans and Benefit Arrangements
(excluding any stock options, stock appreciation or other equity based
incentive compensation) in effect on the Closing Date; provided, however,
that layoff, severance and retention benefits (including the Special
Severance Program) shall be identical during this period; provided, further,
that post-retirement benefits for Camden Transferees shall also be provided
in accordance with Sections G.03(b) and G.05(f). During such period, for
Transferred Employees and Transferred Beneficiaries who are covered by
collective bargaining agreements, Newco shall provide such benefits as are
required by any and such collective bargaining agreements as are assumed
pursuant to Section G.04. Newco will give Transferred Employees full credit
for purposes of eligibility, vesting and benefit accrual under any such plans
or arrangements maintained by Newco pursuant to this Section G.03 for such
Transferred Employees' service recognized for such purposes under the
Employee Plans and Benefit Arrangements at Closing; provided, however, that
any Newco pension plan may offset pension benefits provided under Newco's
pension plan to a Transferred Employee and attributable to service before the
Closing Date by any pension benefits provided to that Transferred Employee
under any Lockheed ▇▇▇▇▇▇ pension plan and attributable to that same pre-
Closing service.
(b) Effective as of the Closing Date, Lockheed ▇▇▇▇▇▇ and its
Affiliates shall cease to have any liability or obligation to provide post-
retirement medical and life insurance benefits to Transferred Employees and
Transferred Beneficiaries and Newco shall assume all such liabilities and
obligations to provide post- retirement life and medical benefits and shall
provide post-retirement medical and life insurance benefits in accordance
with Section G.03(a). In addition, Newco will provide (i) substantially
equivalent post-retirement medical benefits for Camden Transferees who meet
the age and service requirements for those benefits (as such requirements are
in effect under the applicable Lockheed ▇▇▇▇▇▇ plan immediately prior to the
Closing Date) by the five-year anniversary of the Closing Date and who retire
before that 5th year anniversary; (ii) substantially equivalent post
retirement life insurance benefits for those Camden Transferees who were at
least age 50 as of December 31, 1994 and have ten years of continuous service
at retirement; and (iii) post-retirement medical benefits and life insurance
for Transferred Employees and Transferred Beneficiaries covered by a
collective bargaining agreement in accordance with the terms of that
agreement. Notwithstanding the foregoing, nothing herein shall prevent Newco
from increasing the cost to Transferred Employees or Transferred
Beneficiaries who became participants in such plans to the extent permitted
by law, but only if the proportion of any required payments by such
participants does not change in relation to the payments made prior to the
Closing Date by such participant's employer; provided, however, nothing
herein permits the level of benefits provided under the plans to be
decreased.
(c) Newco's plans that are welfare plans (as defined in Section
3(1) of ERISA) shall not contain a clause excluding coverage for preexisting
conditions of Transferred Employees or Transferred Beneficiaries (unless and
only to the extent and for the period that such pre-existing condition as of
the Closing Date would be excluded from coverage under the welfare plans of
the Business) and shall provide that any expenses incurred by a Transferred
Employee or Transferred Beneficiary during 1997 on or before the Closing
shall be taken into account from the Closing until December 31, 1997 under
such welfare plans for the purposes of deductible and coinsurance
requirements and satisfaction of maximum out-of-pocket provisions to the same
extent as if such expenses had been incurred after the Closing.
(d) Effective as of the Closing Date, Newco and Lockheed ▇▇▇▇▇▇
shall enter into a benefit administration agreement or agreements, whereby
Newco shall provide to Lockheed ▇▇▇▇▇▇ and Lockheed ▇▇▇▇▇▇ shall provide to
Newco, upon reasonable request, assistance in the administration of benefit
plans and arrangements after the Closing Date. Newco and Lockheed ▇▇▇▇▇▇
agree to negotiate in good faith the cost of such services and actual terms
of such benefit administration agreement(s).
G.04. Collective Bargaining Agreements. Newco shall (i) expressly
recognize any collective bargaining representative recognized by Lockheed
▇▇▇▇▇▇ or any of its Affiliates as of the Closing for bargaining units
consisting of Transferred Employees; (ii) expressly assume any and all of
Lockheed ▇▇▇▇▇▇'▇ and its Affiliates' obligations under the collective
bargaining agreements set forth on Section B.21 of the Disclosure Schedules
with respect to the Transferred Employees; and (iii) be a successor employer
for purposes of such collective bargaining agreements.
G.05. Pension Plan Obligations
(a) Transferred Employees currently participate in the following
defined benefit pension plans: (i) Lockheed ▇▇▇▇▇▇ Tactical Defense Systems
Retirement Plan; (ii) Lockheed ▇▇▇▇▇▇ Corporation Retirement Income Plan II;
(iii) Lockheed ▇▇▇▇▇▇ Corporation Pension Plan for Employees in Participating
Bargaining Units; (iv) The ▇▇▇▇▇ Microwave Corporation Pension Plan; (v)
Lockheed ▇▇▇▇▇▇ Tactical Systems, Inc. Pension Plan; (vi) Lockheed ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Corporation Retirement Plan; (vii) Lockheed ▇▇▇▇▇▇ Hycor Pension
Plan; (viii) Lockheed ▇▇▇▇▇▇ Retirement Income Plan; (ix) Lockheed ▇▇▇▇▇▇
Supplemental Retirement Income Plan; (x) Lockheed ▇▇▇▇▇▇ Retirement Plan for
Certain Salaried Employees; (xi) Lockheed ▇▇▇▇▇▇ Tactical Systems, Inc.
Supplemental Executive Retirement Plan; (xii) Lockheed ▇▇▇▇▇▇ Corporation
Supplementary Pension Plan for Employees of Transferred GE Operations; (xiii)
Supplemental Executive Retirement Plan for Certain Management Employees of
the ▇▇▇▇▇ Microwave Corporation; (xiv) Lockheed ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Corporation
Supplemental Benefit Plan; (xv) Lockheed ▇▇▇▇▇▇ Supplemental Executive
Retirement Plan ("Lockheed ▇▇▇▇▇▇ Pension Plans"). As of the Closing Date,
Transferred Employees shall cease to accrue service credit or benefits under
Lockheed ▇▇▇▇▇▇ Pension Plans, other than the Assumed Plans described in
Section G.05(b).
(b) With respect to The ▇▇▇▇▇ Microwave Corporation Pension Plan
("▇▇▇▇▇ Plan") and the Lockheed ▇▇▇▇▇▇ Hycor Pension Plan ("Hycor Plan")
(collectively, the "Assumed Plans"), as of the Closing Date, Lockheed ▇▇▇▇▇▇
and its Affiliates shall cease to sponsor, administer, pay benefits or
contribute to the Assumed Plans (other than for contributions due prior to
the Effective Date) and thereby cease to be responsible for any acts,
omissions and transactions under or in connection with any such Assumed Plan,
whether occurring before or after Closing. Effective as of the Closing Date,
Newco shall become the sponsor of the Assumed Plans. Contingent upon receipt
of the Initial Transfer Amount in the case of the ▇▇▇▇▇ Plan or the transfer
of sponsorship of the trust in the case of the Hycor Plan, Newco shall assume
all liabilities with respect to such Assumed Plan (including liabilities with
respect to Transferred Beneficiaries), shall assume responsibility for paying
pension benefits in respect of Transferred Employees and Transferred
Beneficiaries, and shall become responsible for all acts, omissions and
transactions under or in connection with that Assumed Plan, whether arising
before or after the Closing. As soon as practicable after the Closing Date,
the parties shall cause the sponsorship of the trust agreement maintained to
fund the Hycor Plan to be transferred to Newco and Newco, as of the Closing
Date, shall assume all of Lockheed ▇▇▇▇▇▇'▇ and its Affiliates rights,
obligations and duties under that trust agreement. Lockheed ▇▇▇▇▇▇ shall
cause the trusts holding the assets of the ▇▇▇▇▇ Plan to transfer the assets
attributable to the ▇▇▇▇▇ Plan (determined as of the end of the month in
which the Closing Date occurs) to be transferred to a trust (or trusts)
designated by Newco for the purpose of holding the assets of the ▇▇▇▇▇ Plan.
(c) With respect to the (i) Lockheed ▇▇▇▇▇▇ Tactical Defense
Systems Retirement Plan; (ii) Lockheed ▇▇▇▇▇▇ Corporation Retirement Income
Plan II; (iii) Lockheed ▇▇▇▇▇▇ Corporation Pension Plan for Employees in
Participating Bargaining Units; (iv) Lockheed ▇▇▇▇▇▇ Tactical Systems, Inc.
Pension Plan; (v) Lockheed ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Corporation Retirement Plan; and
(vi) Lockheed ▇▇▇▇▇▇ Retirement Income Plan (the "Spinoff Plans"), Newco
shall establish a defined benefit plan or plans which provide substantially
similar benefits in accordance with Section G.03(a), where applicable,(the
"Newco Spinoff Plans") for the benefit of the Transferred Employees and
Transferred Beneficiaries participating in the Spinoff Plans. As soon as
practicable following the Closing, Lockheed ▇▇▇▇▇▇ shall cause its actuary to
calculate the Accrued Liability of all participants in each of the Spinoff
Plans and then to compare, on a plan by plan basis, the Accrued Liability of
all the participants in each of the Spinoff Plans to the fair market value of
the assets in the respective Spinoff Plan as of the end of the month in which
the Closing Date occurs. If the Accrued Liability of all participants in the
respective Spinoff Plan is less than the fair market value of the assets in
that Spinoff Plan, then Lockheed ▇▇▇▇▇▇ shall cause assets (determined as of
the end of the month in which the Closing Date occurs) to be transferred to a
trust established to hold assets of the respective Newco Spinoff Plan equal
to such fair market value of the assets multiplied by a fraction the
numerator of which is the Accrued Liability of Transferred Employees and
Transferred Beneficiaries under such Spinoff Plan and the denominator of
which is the Accrued Liability of all participants in such plan. If the
Accrued Liability of all participants in the respective Spinoff Plan is equal
to or more than the fair market value of the assets in that Spinoff Plan,
then Lockheed ▇▇▇▇▇▇ shall cause its actuary to determine the amount of
assets allocable to the liabilities of Transferred Employees and Transferred
Beneficiaries participating in that plan based on Section 4044 of ERISA
("Section 4044 Amount"). Lockheed ▇▇▇▇▇▇ shall cause assets in cash equal to
the Section 4044 Amount applicable to Transferred Employees and Transferred
Beneficiaries under such Spinoff Plan to be transferred to a trust
established by Newco to hold assets of the respective Newco Spinoff Plans.
Contingent upon the transfer of the Initial Transfer Amount (as described in
Section G.05(b)) to each Newco Spinoff Plan, Newco shall assume all
liabilities of Lockheed ▇▇▇▇▇▇ and its affiliates with respect to Transferred
Employees and Transferred Beneficiaries under the Spinoff Plan from which
that transfer was made and shall become with respect to such Transferred
Employees and Transferred Beneficiaries responsible for all acts, omissions
and transactions under or in connection with such Spinoff Plan, whether
arising before or after the Closing; provided, however, that in the case of
liabilities with respect to Camden Transferees, Newco shall only assume
liabilities and shall only become responsible for all acts, omissions and
transactions under or in connection with that Spinoff Plan arising on or
after the Closing or disclosed in Section B.21 of the Disclosure Schedules.
(d) All transfers to the ▇▇▇▇▇ Plan and the Newco Spinoff Plans
shall be made in accordance with the provisions of this Section G.05(d).
Within 30 days of the Closing Date, or if later, 20 days following the date
on which Lockheed ▇▇▇▇▇▇ has been provided evidence reasonably satisfactory
to it that Newco has established a trust (or trusts) to hold the assets of
the ▇▇▇▇▇ Plan and the Newco Spinoff Plans and that the Newco Spinoff Plans
are qualified under Section 401(a) of the Code and the trusts holding assets
of the Newco Spinoff Plans or ▇▇▇▇▇ Plan are tax exempt under Section 501(a)
of the Code ("Initial Transfer Date"), Lockheed ▇▇▇▇▇▇ shall cause its trusts
to make an initial transfer of assets in cash equal to 85% of the amount
estimated by Lockheed ▇▇▇▇▇▇ in good faith to be equal to X (as defined
below) with respect to each plan (using the same assumptions and
methodologies consistent with estimates previously provided to Newco and as
set forth in a schedule to be presented at Closing by Lockheed ▇▇▇▇▇▇)
("Initial Transfer Amount"). In addition, prior to the Initial Transfer Date
Lockheed ▇▇▇▇▇▇ shall provide Newco with evidence reasonably satisfactory to
Newco that the appropriate Lockheed ▇▇▇▇▇▇ Pension Plans remain qualified
under Section 401(a) of the Code. As soon as practicable after the final
determination of the amounts to be transferred ("True-Up Date"), Lockheed
▇▇▇▇▇▇ shall cause a second transfer to be made in cash of the "True-Up
Amount." The True-Up Amount shall be equal to the sum of the following
amount with respect to the ▇▇▇▇▇ Plan and each Spinoff Plan:
(X minus Initial Transfer Amount), minus benefit payments,
adjusted for Earnings,
where X equals in the case of the Spinoff Plans, the Accrued Liability or the
Section 4044 Amount, whichever is applicable, and in the case of the ▇▇▇▇▇
Plan, the fair market value of the assets attributable to the ▇▇▇▇▇ Plan at
the end of the month in which the Closing Date occurs. Earnings shall be
calculated (i) from the last day of the month following the Closing until the
Initial Transfer Date on the amount equal to the Initial Transfer Amount
using the rate paid on a 90-day Treasury ▇▇▇▇ on the auction date coincident
with or immediately preceding the Closing, (ii) from the Initial Transfer
Date until the True-Up Date on an amount equal to X minus the sum of the
Initial Transfer Amount and the benefit payments using (A) with respect to
the period from the Closing Date to the last day of the month preceding the
True-Up Date, the cumulative rate of return (considering both gain and loss)
earned or lost on the assets of the trust from which the True-Up Amount is
being transferred and (B) with respect to the period from the first day of
the month in which the True-Up Date occurs and the True-Up Date the rate paid
on a 90-Day Treasury ▇▇▇▇ on the auction date coincident with or immediately
preceding the first day of the month in which the True-Up Date occurs. If
the Initial Transfer Amount exceeds X with respect to any plan, as soon as
practicable following such determination Newco shall cause a transfer to be
made to the respective Lockheed ▇▇▇▇▇▇ Pension Plan equal to the difference
between the Initial Transfer Amount and X, adjusted to reflect Earnings (i)
from the last day of the month in which the Closing occurs until the Initial
Transfer Date using the rate paid on a 90-day Treasury ▇▇▇▇ on the auction
date coincident with or immediately preceding the Closing; (ii) from the
Initial Transfer Date until the date of transfer, such Earnings shall be
calculated using (A) with respect to the period from that Initial Transfer
Date to the last day of the month preceding such transfer, the cumulative
rate of return (considering both gain and loss) on the assets of the plan
from which the transfer is being transferred and (B) with respect to the
period from the first day of the month in which the transfer occurs and the
date of such transfer, the rate paid on a 90-Day Treasury ▇▇▇▇ on the auction
date coincident with or immediately preceding the first day of the month in
which the transfer occurs. The True-Up Amount shall be transferred in cash
except benefits of Transferred Employees and Transferred Beneficiaries
attributable to ▇▇▇▇ ▇▇▇▇▇▇▇ Group Annuity Contract 8474 shall be transferred
in kind. Unless the parties agree otherwise, all transfers will occur on the
last business day of a month. Notwithstanding anything contained herein to
the contrary, the transfers contemplated by this section G.05(d) shall be
determined in accordance with Section 414(l) of the Code and Treasury
Regulation 1.414(l)-1. The amounts to be transferred pursuant to this
section G.05(d) shall be reduced to the extent necessary to satisfy Section
414(l) of the Code, and any regulations promulgated thereunder, ERISA Section
4044, and any regulations promulgated thereunder.
(e) For the purposes of this Section, the term "Accrued Liability"
shall mean the present value of the accrued benefit of the Transferred
Employee or Transferred Beneficiary, determined on a termination basis using
the interest factors specified by the PBGC for an immediate or deferred
annuity as appropriate for such Transferred Employee or Transferred
Beneficiary and the other methods and factors specified in the regulations of
the PBGC for the valuation of accrued benefits upon plan termination,
including, but not limited to, expected retirement ages and expense load
assumptions published by the PBGC, and the 1983 Group Annuity Mortality
Table. The interest factors shall be those in effect on the Closing Date.
The Accrued Liability and Section 4044 Amount shall be determined by an
enrolled actuary designated by Lockheed ▇▇▇▇▇▇. Lockheed ▇▇▇▇▇▇ shall
provide any actuary designated by Newco with all information reasonably
necessary to review the calculation of the Accrued Liability and the Section
4044 Amount in all material respects and to verify that such calculations
have been performed in a manner consistent with the terms of this Agreement.
If there is a good faith dispute between Lockheed ▇▇▇▇▇▇'▇ actuary and
Newco's actuary as to the amount to be transferred to any plan, and such
dispute remains unresolved for 30 days, the chief financial officers of the
respective companies shall endeavor to resolve the issue. Should such
dispute remain unresolved for 60 days, Lockheed ▇▇▇▇▇▇ and Newco shall select
and appoint a third actuary who is mutually satisfactory to both of the
parties hereto. The decision of such third party actuary shall be rendered
within 30 days and shall be conclusive as to any dispute for which it was
appointed. The cost of such third party actuary shall be divided equally
between Lockheed ▇▇▇▇▇▇ and Newco. Each party shall be responsible for the
cost of its own actuary.
(f) Newco shall take all action necessary to qualify each Newco
Spinoff Plan under the applicable provisions of the Code and Newco and
Lockheed ▇▇▇▇▇▇ shall cooperate to make any and all filings and submissions
to the appropriate governmental agencies required to be made by Newco as are
appropriate in effectuating the provisions hereof. The Newco Spinoff Plans
and Assumed Plans and any successor plans thereto shall contain appropriate
provisions providing that through the first year anniversary of the Closing
(fifth anniversary in the case of Lockheed ▇▇▇▇▇▇ Retirement Income Plan II
and Lockheed ▇▇▇▇▇▇ Retirement Income Plan), each Newco Spinoff Plan shall
provide for a benefit formula that is no less favorable than the formula
provided in the corresponding Spinoff Plan at Closing. The Newco Spinoff
Plans or Assumed Plans receiving a transfer from the Lockheed ▇▇▇▇▇▇
Corporation Retirement Income Plan II and the Lockheed ▇▇▇▇▇▇ Corporation
Pension Plan for Employees in Participating Bargaining Units and any
successor plans thereto shall contain appropriate provisions providing that
(i) to the extent assets transferred are attributable to assets transferred
from the GE Pension Plan or are governed by collective bargaining agreements,
any such assets shall be held by trusts forming a part of such Newco Spinoff
Plans (or successor plans) and shall be held for the exclusive benefit of the
participants in such Newco Spinoff Plans (or successor plans) and such assets
shall not upon termination of those Newco Spinoff Plans (or successor plans)
revert to the employer or sponsor of such Newco Spinoff Plans (or successor
plans); (ii) the accrued benefits as of the Closing of Transferred Employees
under such plans may not be decreased by amendment or otherwise; and (iii)
each Transferred Employee retiring under Newco Spinoff Plans (or successor
plans) will be entitled to receive pension benefits no less than what would
have been received under the GE Pension Plan as in effect as of April 5,
1993, taking into account the Transferred Employee's combined service with
Newco, Lockheed ▇▇▇▇▇▇, ▇▇, and RCA and each of their Affiliates.
(g) With respect to the (i) Lockheed ▇▇▇▇▇▇ Tactical Systems, Inc.
Supplemental Executive Retirement Plan ("LMTS SERP"); (ii) the Lockheed
▇▇▇▇▇▇ Corporation Supplementary Pension Plan for Employees of Transferred GE
Operations ("Supplementary Plan"), the Lockheed ▇▇▇▇▇▇ Supplemental Executive
Retirement Plan, the Lockheed ▇▇▇▇▇▇ Supplemental Retirement Income Plan (the
"Camden SERPs"); and (iii) the Supplemental Executive Retirement Plan for
Certain Management Employees of ▇▇▇▇▇ Microwave Corporation, and Lockheed
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Corporation Supplemental Benefit Plan, (the plans in (i),
(ii), and (iii) collectively referred to as the "LMC SERPs"), Newco shall
establish a nonqualified plan or plans (the "Newco SERP") for the benefit of
Transferred Employees and Transferred Beneficiaries participating in the LMC
SERPs as of the Closing Date and Newco shall assume all obligations and
liabilities under the LMC SERPs, with respect to the Transferred Employees
and the Transferred Beneficiaries. Effective as of the Closing Date, all
Transferred Employees will cease to accrue benefits under the LMC SERPs.
With respect to the Supplementary Plan, Newco will provide an equivalent plan
for Transferred Employees and Transferred Beneficiaries eligible to
participate in that plan as of the Closing Date that provides equivalent
benefits during the entire term of their employment with Newco, its
Affiliates and their successors. With respect to the LMC SERPs (other than
the Supplementary Plan), Newco shall provide a substantially similar plan in
accordance with the provisions of Section G.03(a). As soon as practicable
(but not more than 180 days) after the Closing Date, Lockheed ▇▇▇▇▇▇ shall
cause its actuary to calculate the SERP Liability of all participants in the
LMTS SERP and the Camden SERPS, respectively, and the SERP Liability for
Transferred Employees and Transferred Beneficiaries in the LMTS and Camden
SERPS respectively and shall cause the following transfers. As soon as
practicable thereafter, but in no event later than the later of (i) the
acceptance of the calculation of the SERP Liability by Newco or (ii) 20 days
following submission to Lockheed ▇▇▇▇▇▇ of evidence reasonably satisfactory
to it that Newco has established a corresponding rabbi trust or trusts,
Lockheed ▇▇▇▇▇▇ shall cause a transfer of assets from the rabbi trust
established in connection with the LMTS SERP ("LMTS Trust") to a rabbi trust
established by Newco in an amount equal to the product of the (i) fair market
value of the assets of the LMTS Trust as of the last day of the month in
which the Closing Date occurs; and (ii) a fraction, the numerator of which is
the "SERP Liability" for Transferred Employees and Transferred Beneficiaries
participating in the LMTS SERP and the denominator of which is the SERP
Liability for all participants in the LMTS SERP. Lockheed ▇▇▇▇▇▇ shall also
cause a transfer of assets from the rabbi trust established in connection
with the Camden SERPs ("Camden Trust") to a rabbi trust established by Newco
in an amount equal to the product of the (i) fair market value of the assets
of the Camden Trust as of the last day of the month in which the Closing Date
occurs; and (ii) a fraction, the numerator of which is the "SERP Liability"
for Transferred Employees and Transferred Beneficiaries participating in the
Camden SERPs and the denominator of which is the SERP Liability for all
participants in the Camden SERPs. The amount of the transfer shall be
reduced by benefits paid by Lockheed ▇▇▇▇▇▇ prior to the transfer. If the
amount of the benefits paid exceeds the amount of the transfer, Newco shall
promptly pay Lockheed ▇▇▇▇▇▇ such excess. For the purpose of this section,
the "SERP Liability" with respect to a participant shall be the lump sum
present value (determined as of the end of the month in which the Closing
Date occurs) of the accrued benefit of the participant under the applicable
SERP calculated utilizing the assumptions used by Lockheed ▇▇▇▇▇▇ for
reporting accrued benefit obligations relative to Seller Pension Plans under
FAS No. 87 in its 1996 Annual Report. The calculation of the amount to be
transferred shall be subject to the review and dispute resolution procedures
contained in subsection (e).
(h) No later than the True-Up Date, Lockheed ▇▇▇▇▇▇ shall also
cause the Lockheed ▇▇▇▇▇▇ Federal Systems, Inc. Retirement Plan ("Federal
Systems Plan") to make a transfer to a qualified defined benefit plan
designated by Newco in an amount equal to the accrued benefit of the
Transferred Employees who participated in the Federal Systems Plan
immediately prior to the Closing. For the purposes of this section, the
accrued benefit of the Transferred Employees shall mean the present value of
the accrued benefit determined on a termination basis using the interest
factors for an immediate or deferred annuity as appropriate for each such
Transferred Employee. The assumptions used in determining the accrued
benefit of each such Transferred Employee shall be the same as the
assumptions used to determine Accrued Liability under Section G.05(e). The
transfer shall be contingent upon Newco providing evidence reasonably
satisfactory to Lockheed ▇▇▇▇▇▇ that such designated plan is qualified under
Section 401(a) of the Code and the trust of which it is a part is exempt from
taxation under Section 501(a) of the Code. Lockheed ▇▇▇▇▇▇ shall also
provide to Newco evidence reasonably satisfactory to Newco that the Federal
Systems Plan is qualified under Section 401(a) of the Code and the trust of
which it is a part is exempt from taxation under Section 501(a) of the Code.
Upon receipt of such transfer of assets, Newco shall assume all liabilities
of Lockheed ▇▇▇▇▇▇ and its Affiliates with respect to such Transferred
Employees under the Federal Systems Plan and shall become with respect to
such Transferred Employees responsible for all acts, obligations, omissions
and transactions under or in connection with the Federal Systems Plan,
whether arising before or after the Closing. Lockheed ▇▇▇▇▇▇ shall cause the
benefits accrued as of the Closing Date by any Transferred Employee or
Transferred Beneficiary under the Lockheed ▇▇▇▇▇▇ Retirement Plan for Certain
Salaried Employees (the "Lockheed Plan") or any other defined benefit pension
plan that is not listed in Schedule G.05(a) or this G.05(h) to be fully
vested at the Closing Date and any such Transferred Employee or Transferred
Beneficiary shall be eligible on the Closing Date to participate in the Newco
defined benefit plans (the "Newco Plans") established for other Transferred
Employees or Transferred Beneficiaries who were formerly employed in the
Communications Systems Business Unit (or such other plan as Newco designates
in the case of Transferred Employees covered under any plan other than the
Lockheed Plan). Newco shall credit such Transferred Employees and
Transferred Beneficiaries with all service recognized under the Lockheed Plan
or such other plans as the case may be. If the Transferred Employee
participated in the plan for more than one year, Lockheed ▇▇▇▇▇▇ shall credit
such Transferred Employees and Transferred Beneficiaries with all service
recognized under the Newco Plans for all purposes, other than benefit accrual
and will recognize Newco compensation for calculating pensionable earnings
under the Lockheed Plan or any other such plan which is a final average pay
plan.
G.06. Savings Plan Obligations.
(a) Transferred Employees currently participate in the following
defined contribution plans: (i) Lockheed ▇▇▇▇▇▇ Defense Systems Savings and
Investment Plan; (ii) Lockheed ▇▇▇▇▇▇ Salaried Savings Plan; (iii) Lockheed
▇▇▇▇▇▇ Salaried Savings Plan II; (iv) Lockheed ▇▇▇▇▇▇ Performance Sharing
Plan; (v) Lockheed ▇▇▇▇▇▇ Supplemental Savings Plan; (vi) Conic Corporation
Deferred Income Retirement Plan; (vii) ▇▇▇▇▇ Microwave Supplemental
Retirement Savings Plan; (viii) ▇▇▇▇▇ Western Operations 401(k) Deferred
Income Retirement Plan; (ix) Lockheed ▇▇▇▇▇▇ Tactical Systems, Inc. Deferred
Income Savings Plan; (x) Lockheed ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Corporation Savings Plan;
(xi) Randtron Employees Retirement Savings Plan; (xii) Microcom Corporation
401(k) Plan; (xiii) Profit Sharing Plan and Trust of Lockheed ▇▇▇▇▇▇ Hycor,
Inc., (xiv) Lockheed ▇▇▇▇▇▇ Tactical Systems Inc. Frequency Sources, Inc.
401(k) Retirement Plan and (xv) Lockheed ▇▇▇▇▇▇ Federal Systems Deferred
Income Retirement Plan (collectively, "Lockheed ▇▇▇▇▇▇ Defined Contribution
Plans"). The plans listed in (i), (vi), (vii), (viii), (ix), (xiv) and (xv)
are all sub-plans in the Lockheed ▇▇▇▇▇▇ Tactical Systems Master Savings
Plan.
(b) Effective as of the Closing Date, Lockheed ▇▇▇▇▇▇ and Newco
shall cause (i) Randtron Employees Retirement Plan; (ii) Microcom Corporation
401K Plan; (iii) Profit Sharing Plan and Trust of Lockheed ▇▇▇▇▇▇ Hycor, Inc.
("Transferred Savings Plans") to be amended to provide that sponsorship and
maintenance thereof shall be transferred to Newco and Newco shall assume all
of the obligations and liabilities of Lockheed ▇▇▇▇▇▇ and its Affiliates with
respect to each such Transferred Plan (including liabilities with respect to
Transferred Beneficiaries) and contingent upon receipt of the transferred
assets described in Section G.06(c), shall become responsible for all acts,
omissions and transactions under or in connection with the Transferred
Savings Plan, whether arising before or after Closing. Effective as of the
Closing Date, Lockheed ▇▇▇▇▇▇ and/or its Affiliates shall cease to sponsor,
administer or contribute (other than contributions in respect of benefits
accrued prior to the Effective Date) to the Transferred Savings Plans and
thereby cease to be responsible for any acts, omissions and transactions
under or in connection with any such Transferred Savings Plan.
(c) With respect to all Lockheed ▇▇▇▇▇▇ Defined Contribution Plans
except the Transferred Savings Plans described in Section G.06(b) (the
"Lockheed ▇▇▇▇▇▇ Savings Plans"), the Transferred Employees shall cease to
accrue benefits and service credits under such plans as of the Closing Date
and, effective as of the Closing Date, Newco shall establish new savings
plans ("Newco's Savings Plans") and associated trusts to hold the assets of
those plans for the Transferred Employees, to be effective as of the Closing
Date, and shall provide to Lockheed ▇▇▇▇▇▇ evidence reasonably satisfactory
to Lockheed ▇▇▇▇▇▇ that Newco's Savings Plans and the associated trusts have
been established and that the Newco's Savings Plans qualify under the
requirements of Section 401(a) of the Code, and that the trusts are exempt
from tax under Section 501(a) of the Code. Lockheed ▇▇▇▇▇▇ shall provide to
Newco evidence reasonably satisfactory to Newco that the Lockheed ▇▇▇▇▇▇
Savings Plans remain qualified under the requirements of Section 401(a) of
the Code. Provided Lockheed ▇▇▇▇▇▇ and Newco have received evidence
reasonably satisfactory to them in accordance with the preceding sentences,
as soon as is reasonably practicable following the Closing Date, in no event
later than 60 days following receipt of such mutually satisfactory evidence,
Lockheed ▇▇▇▇▇▇ shall take or cause to be taken all action required or
appropriate to transfer the account balances of all Transferred Employees and
Transferred Beneficiaries to the respective trusts associated with Newco's
Savings Plans. Such transfers shall be made in cash in an amount equal to
the value of the account balances to be transferred, determined as of the
close of business on the last business day immediately preceding the
transfer, except that (i) to the extent a participant's or beneficiary's
account balance in the transferor plan includes one or more promissory notes
evidencing a participant loan or loans, such promissory notes shall be
transferred in kind for the participant's or beneficiary's credit under the
transferee plan and (ii) any assets in the transferor trust consisting of
securities issued by Lockheed ▇▇▇▇▇▇, ▇▇▇▇▇▇ Marietta Materials, Inc. or
Loral Space & Communications, Ltd. that are allocable to the respective
transferee plan shall be transferred in kind. For the period from the
Closing Date until the transfer, Newco shall collect by payroll deduction and
promptly pay over to the respective Lockheed ▇▇▇▇▇▇ Defined Contribution Plan
all loan payments required on participant loans made by the respective plan
to any Transferred Employee and Lockheed ▇▇▇▇▇▇ shall cause the respective
Lockheed ▇▇▇▇▇▇ Defined Contribution Plan to administer and pay all
distributions, withdrawals and loans payable under the terms of the
respective plan to any Transferred Employee or Transferred Beneficiary until
the transfer. Contingent upon the transfer of the account balances to each
of Newco's Savings Plans, Newco shall assume all liabilities of Lockheed
▇▇▇▇▇▇ and its affiliates with respect to Transferred Employees and
Transferred Beneficiaries under the Lockheed ▇▇▇▇▇▇ Defined Contribution Plan
from which that transfer was made and shall become with respect to such
Transferred Employees and Transferred Beneficiaries responsible for all acts,
omissions and transactions under or in connection with such Lockheed ▇▇▇▇▇▇
Defined Contribution Plan, whether arising before or after the Closing;
provided, however, that in the case of liabilities with respect to Camden
Transferees, Newco shall only assume liabilities and shall only become
responsible for all acts, omissions and transactions under or in connection
with that Lockheed ▇▇▇▇▇▇ Defined Contribution Plan arising after the Closing
or disclosed in Section B.21 of the Disclosure Schedules.
G.07. GE Special Benefits Protections. Pursuant to Section V.II of
Exhibit V to a Transaction Agreement (the "GE Agreement") dated November 22,
1992, as amended, among GE, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Corporation, a Maryland
corporation and Lockheed ▇▇▇▇▇▇, Lockheed ▇▇▇▇▇▇ has agreed to reimburse GE
(the "GE Reimbursement Obligations") for certain specified expenses relating
to benefits for certain individuals who were formerly employed by GE and who
became employees of Lockheed ▇▇▇▇▇▇ or its Affiliates as a result of the
transaction contemplated by the GE Agreement (the "Former GE Employees").
Newco shall assume, effective on the Closing Date, all of the GE
Reimbursement Obligations in respect of Transferred Employees and Transferred
Beneficiaries for such specified expenses, and shall indemnify and hold
harmless Lockheed ▇▇▇▇▇▇ and its Affiliates from any and all such GE
Reimbursement Obligations. Lockheed ▇▇▇▇▇▇ shall provide Newco with copies
of any documentation it receives from GE documenting the basis for such
expenses.
G.08. Severance and Retention Agreements. In accordance with
Section 6.9 of the Agreement and Plan of Merger dated as of January 7, 1996,
by and among Loral Corporation, Lockheed ▇▇▇▇▇▇ Corporation and LAC
Acquisition Corporation, Lockheed ▇▇▇▇▇▇ Tactical Systems, Inc. has adopted
the Supplemental Severance Program. Lockheed ▇▇▇▇▇▇ has entered into Key
Employee Supplemental Severance Program and Key Executive Supplemental
Severance Program agreements (the "Program Agreements"). In addition,
Lockheed ▇▇▇▇▇▇ has entered into Retention Agreements (collectively with the
Supplemental Severance Program and the Program Agreements, the "Supplemental
Agreements") with certain Transferred Employees who participate in the
Supplemental Severance Program. Other than with respect to the Transferred
Employees set forth on Section B.21 of the Disclosure Schedules, Newco
assumes all obligations and liabilities of Lockheed ▇▇▇▇▇▇ and its Affiliates
under the Supplemental Agreements for all claims made after the Closing Date
by Transferred Employees, including claims based on the Contemplated
Transactions, which shall be Assumed Liabilities for purposes of this
Agreement. All obligations and liabilities of Lockheed ▇▇▇▇▇▇ with respect
to the Transferred Employees on Section B.21 of the Disclosure Schedules and
any other individual covered by a Supplemental Agreement who is not a
Transferred Employee shall constitute Excluded Liabilities.
G.09. Vacation and Holidays. As of the Closing, Newco shall adopt
at its expense, vacation and holiday plans for Transferred Employees to
succeed Lockheed ▇▇▇▇▇▇'▇ and its Affiliates' vacation and holiday plans.
For the 12-month period beginning with the Closing Date, such plans shall
provide for accrued vacation and holidays no less favorable than, and in
substitution for, those Lockheed ▇▇▇▇▇▇ and its Affiliates would have
provided to such Transferred Employees had they remained employees of
Lockheed ▇▇▇▇▇▇ and its Affiliates, and Lockheed ▇▇▇▇▇▇ and its Affiliates
shall have no liability or obligation to pay or provide any vacation or
holiday payments claimed on or after the Closing Date. Thereafter, such
plans shall provide vacation, accrued vacation and holidays to each eligible
Transferred Employee on the basis of his or her continuous service with
Lockheed ▇▇▇▇▇▇, Newco and their Affiliates.
G.10. Other Employee Plans.
(a) Newco shall, as of the Closing Date, assume all obligations
and liabilities of Lockheed ▇▇▇▇▇▇ and its Affiliates in respect of
Transferred Employees and Transferred Beneficiaries under the Deferred
Management Incentive Compensation Plan.
(b) Newco shall, as of the Closing Date, assume all obligations
and liabilities (including, without limitation, all obligations and
liabilities attributable to the period prior to the Closing Date) of Lockheed
▇▇▇▇▇▇ and its Affiliates in respect of Transferred Employees and Transferred
Beneficiaries under each Employee Plan and Benefit Arrangement not covered
under Sections ▇.▇▇, ▇.▇▇, ▇.▇▇, ▇.▇▇, ▇.▇▇, G.10(a) and G.10(c) and shall be
a successor employer with respect to such plans; provided, however, that with
respect to obligations and liabilities to Camden Transferees arising from
events occurring prior to the Closing Date, Newco shall assume such
obligations and liabilities only to the extent that they (i) arise under a
Benefit Arrangement or Employee Plan disclosed in Section B.21 of the
Disclosure Schedules; (ii) are reflected in the Final Net Tangible Asset
Amount; or (iii) are incurred after the Effective Date.
(c) With respect to each Employee Plan and Benefit Arrangement
(other than those referred to in Sections ▇.▇▇, ▇.▇▇, ▇.▇▇, ▇.▇▇, ▇.▇▇ and
G.10(a)), including any employment agreement, that covers only Transferred
Employees and/or Transferred Beneficiaries ("Transferred Benefit Plans"),
Lockheed ▇▇▇▇▇▇ and Newco shall cause each Transferred Benefit Plan to be
amended to provide that sponsorship and maintenance thereof shall be trans-
ferred as of the Closing Date to Newco and Newco shall assume all obligations
and liabilities of Lockheed ▇▇▇▇▇▇ and its Affiliates with respect to each
such plan (including liabilities with respect to Transferred Beneficiaries),
and shall become responsible for all acts, omissions and transactions under
or in connection with the Transferred Benefit Plans, whether arising before
or after Closing; provided, however, that with respect to obligations and
liabilities to Camden Transferees under or otherwise arising in connection
with an Employee Plan or Benefit Arrangement arising from events occurring
prior to the Closing Date, Newco shall assume such obligations and
liabilities only to the extent that they (i) arise under an Employee Plan or
Benefit Arrangement disclosed in Section B.21 of the Disclosure Schedules;
(ii) are reflected in the Final Net Tangible Asset Amount; or (iii) are
incurred after the Closing Date. Effective as of the Closing Date, Lockheed
▇▇▇▇▇▇ and/or its Affiliates shall cease to sponsor, administer or contribute
to the Transferred Benefit Plans and thereby cease to be responsible for any
acts, omissions and transactions under or in connection with any such
Transferred Benefit Plan, whether occurring before or after Closing. Except
as otherwise agreed to by the parties or as it relates solely to an
Individual Purchaser, Lockheed ▇▇▇▇▇▇ agrees to transfer any assets which are
separately identifiable or attributable to the Employee Plans and Benefit
Arrangements described in this Section G.10(c).
(d) As of the Closing Date, Transferred Employees and Transferred
Beneficiaries shall cease to accrue or enjoy benefits under any Employee
Plans and Benefit Arrangements (excluding those referred to in Sections
G.05(b), G.06(b), ▇.▇▇, ▇.▇▇, ▇.▇▇ and G.10(c)) and shall commence accrual of
benefits and participation in those employee compensation and benefit plan
and arrangements maintained by Newco pursuant to Section G.03.
(e) For any full or partial contract year or plan year prior to
the Closing Date of any Employee Plan or Benefit Arrangement covering
Transferred Employees or Transferred Beneficiaries (other than Camden
Transferees): (i) Lockheed ▇▇▇▇▇▇ agrees to carve out and transfer to the
corresponding Newco plan, any surpluses, refunds or rebates received by or
attributable to Lockheed ▇▇▇▇▇▇ for any Employee Plan or Benefit Arrangement
and (ii) Newco agrees to transfer to the corresponding Lockheed ▇▇▇▇▇▇ Plan
an amount equal to any deficit charged to or attributable to Lockheed ▇▇▇▇▇▇
for any Employee Plan or Benefit Arrangement, in either case that is
attributable to Transferred Employees and/or Transferred Beneficiaries.
(f) The flexible spending accounts established on behalf of the
Transferred Employees and Transferred Beneficiaries in accordance with
Section G.03(a) will be maintained through the end of the applicable plan
year in which the Closing occurs in a manner that ensures that each
Transferred Employee and Transferred Beneficiary receives no more and no less
than he or she would have received had the Contemplated Transactions not
occurred. Lockheed ▇▇▇▇▇▇ and Newco shall coordinate management of their
respective flexible spending accounts to achieve this result. As soon as
practicable following the close of the 1997 plan year, Lockheed ▇▇▇▇▇▇ and
Newco shall reconcile flexible spending account balances so as to achieve an
equitable result as between Lockheed ▇▇▇▇▇▇ and Newco.
G.11. Necessary Action. Newco and Lockheed ▇▇▇▇▇▇ agree to take all
action which may be necessary in order to effectuate the transactions
contemplated by this Exhibit G, including, without limitation, adopting any
necessary amendments to the Employee Plans and Benefit Arrangements and
making all filings and submissions to the appropriate governmental agencies
required to be made in connection with the segregation and/or transfer of
assets contemplated by Sections G.05 and G.06.
G.12. Third Party Beneficiaries. No provision of this Exhibit G
shall create any third party beneficiary rights in any employee or former
employee of the Business (including any beneficiary or dependent thereof)
including, without limitation, any right to continued employment or
employment in any particular position by Newco for any specified period of
time after the Closing Date.
G.13. Plan Administration. Newco shall prepare and file all Forms
5500 and other government reports or returns that are required to be filed
after the Closing Date with respect to each of the Assumed Plans described in
Section G.05(b), the Transferred Savings Plans described in Section G.06(b)
and the Transferred Benefit Plans described in Section G.10(c).
G.14. Mutual Assistance. At all times after the Closing Date, Newco
and Lockheed ▇▇▇▇▇▇ agree to make reasonably available to each other and each
other's agents, employees, accountants and other representatives such
actuarial, financial, personnel and related information as may be requested
with respect to any Employee Plan or Benefit Arrangement, Transferred
Employee or Transferred Beneficiary, including but not limited to benefit
records, compensation and employment histories, policies, interpretations and
other records relating to the Employee Plans and Benefit Arrangements.
G.15. ▇▇▇▇▇▇▇▇ v. G.E. Newco shall not by reason of the
transactions contemplated by this Agreement or otherwise be deemed to have
assumed any liability or obligation with respect to any claim or cause of
action asserted against GE or Lockheed ▇▇▇▇▇▇ in the lawsuit ▇▇▇▇▇▇▇▇ v. G.E.
filed in the federal district court in Connecticut in March, 1993. All such
claims and causes of action shall constitute Excluded Liabilities for
purposes of this Agreement. Nothing in this Section G.15. or elsewhere,
however, shall be deemed to require Lockheed ▇▇▇▇▇▇ to indemnify or otherwise
to relieve Newco of any liability or obligation it may incur as a result of a
purported claim or purported cause of action asserted against Newco which is
based on this Agreement, the Contemplated Transactions, or any actions or
transactions that occur on or after the date of this Agreement.
---------------------------------------------------------------------------
AMENDMENT NO. 1
Dated as of April 11, 1997
to
TRANSACTION AGREEMENT
Dated as of March 28, 1997
By and Among
LOCKHEED ▇▇▇▇▇▇ CORPORATION
▇▇▇▇▇▇ BROTHERS CAPITAL PARTNERS III, L.P.
FRANK C. LANZA
ROBERT V. LAPENTA
and
L-3 COMMUNICATIONS HOLDINGS, INC.
---------------------------------------------------------------------------
AMENDMENT NO. 1 TO TRANSACTION AGREEMENT
This Amendment No. 1 to Transaction Agreement (the "Amendment") is made
as of the 11th day of April, 1997, by and among Lockheed Martin Corporation,
a Maryland corporation ("Lockheed Martin"), Lehman Brothers Capital Partners
III, L.P., a Delaware limited partnership ("Lehman"), Frank C. Lanza
("Lanza"), Robert V. LaPenta ("LaPenta"; and together with Lanza, the
"Individual Purchasers") and L-3 Communications Holdings, Inc., a Delaware
corporation ("Newco"). For purposes of this Amendment, Lehman, Lanza and
LaPenta each are individually referred to as a "Purchaser" and collectively
referred to as the "Purchasers."
W I T N E S S E T H:
WHEREAS, Lockheed Martin, in its own right and through certain of its
direct and indirect Subsidiaries is engaged in the Business;
WHEREAS, Lockheed Martin and the Purchasers, upon the terms and subject
to the conditions of the Agreement have agreed to the formation and
organization of Newco;
WHEREAS, upon the terms and subject to the conditions of the Agreement,
Lockheed Martin has agreed to transfer, or to cause the Affiliated
Transferors to transfer, substantially all of the assets held or owned by, or
used to conduct, the Business and to assign certain liabilities associated
with the Business to Newco, and Newco has agreed to receive such assets and
assume such liabilities; and
WHEREAS, Lockheed Martin, Newco and the Purchasers desire to amend the
Agreement in accordance with the terms of this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
Section 1. Capitalized terms used but not defined herein have the
meanings given to them in the Transaction Agreement dated as of March 28,
1997, by and among Lockheed Martin, Newco and the Purchasers.
Section 2. Section 15.13(a) of the Agreement is amended by deleting
the reference to "April 14, 1997" in the second sentence of Section 15.13(a)
and inserting in its place and stead "April 17, 1997."
Section 3. Section 15.13(c) of the Agreement is amended by deleting
the references to "April 11, 1997" in each of the last two sentences of
Section 15.13(c) and inserting in its place and stead "April 18, 1997."
IN WITNESS WHEREOF, the parties hereto caused this Amendment to be duly
executed by their respective authorized officers on the day and year first
above written.
WITNESS: LOCKHEED MARTIN CORPORATION
____________________________ By:________________________________
Name:
Title:
LEHMAN BROTHERS CAPITAL
PARTNERS III, L.P.
By: LEHMAN BROTHERS HOLDINGS INC.,
its General Partner
____________________________ By:___________________________
Name:
Title:
FRANK C. LANZA
____________________________ ___________________________________
ROBERT V. LAPENTA
____________________________ ___________________________________
L-3 COMMUNICATIONS HOLDINGS, INC.
____________________________ By:________________________________
Name:
Title:
---------------------------------------------------------------------------
AMENDMENT NO. 2
Dated as of April 30, 1997
to
TRANSACTION AGREEMENT
Dated as of March 28, 1997
By and Among
LOCKHEED MARTIN CORPORATION
LEHMAN BROTHERS CAPITAL PARTNERS III, L.P.
FRANK C. LANZA
ROBERT V. LAPENTA
and
L-3 COMMUNICATIONS HOLDINGS, INC.
---------------------------------------------------------------------------
AMENDMENT NO. 2 TO TRANSACTION AGREEMENT
This Amendment No. 2 to Transaction Agreement (the "Amendment") is made
as of the 30th day of April, 1997, by and among Lockheed Martin Corporation,
a Maryland corporation ("Lockheed Martin"), Lehman Brothers Capital Partners
III, L.P., a Delaware limited partnership ("Lehman"), Frank C. Lanza
("Lanza"), Robert V. LaPenta ("LaPenta"; and together with Lanza, the
"Individual Purchasers") and L-3 Communications Holdings, Inc., a Delaware
corporation ("Newco"). For purposes of this Amendment, Lehman, Lanza and
LaPenta each are individually referred to as a "Purchaser" and collectively
referred to as the "Purchasers."
W I T N E S S E T H:
WHEREAS, Lockheed Martin, in its own right and through certain of its
direct and indirect Subsidiaries is engaged in the Business;
WHEREAS, Lockheed Martin and the Purchasers, upon the terms and subject
to the conditions of the Agreement have agreed to the formation and
organization of Newco;
WHEREAS, upon the terms and subject to the conditions of the Agreement,
Lockheed Martin has agreed to transfer, or to cause the Affiliated
Transferors to transfer, substantially all of the assets held or owned by, or
used to conduct, the Business and to assign certain liabilities associated
with the Business to Newco, and Newco has agreed to receive such assets and
assume such liabilities; and
WHEREAS, Lockheed Martin, Newco and the Purchasers desire to amend the
Agreement in accordance with the terms of this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
Section 1. Capitalized terms used but not defined herein have the
meanings given to them in the Transaction Agreement dated as of March 28,
1997, by and among Lockheed Martin, Newco and the Purchasers, as amended by
Amendment No. 1 to Transaction Agreement dated as of April 11, 1997 (as
amended, the "Agreement").
Section 2. The list of Attachments set forth in the index to the
Agreement is revised by amending the description of Attachment XI to read as
follows: "Other Transferred Employees".
Section 3. Section 2.04(i) of the Agreement is amended by deleting
the references to "$269,118,000" in the first parenthetical of that Section
and inserting in their place and stead "$272,618,000".
Section 4. Notwithstanding the provisions of Section 15.13(c) of the
Agreement, for purposes of the Agreement, Attachment IV shall be as set forth
in Exhibit A to this Amendment.
Section 5. Notwithstanding the provisions of Section 15.13(c) of the
Agreement, for purposes of the Agreement, Attachment V shall be as set forth
in Exhibit B to this Amendment.
Section 6. Notwithstanding the provisions of Section 15.13(c) of the
Agreement, for purposes of the Agreement, Attachment VIII shall be as set
forth in Exhibit C to this Amendment.
Section 7. Notwithstanding the provisions of Section 15.13(c) of the
Agreement, for purposes of the Agreement, Attachment IX shall be as set forth
in Exhibit D to this Amendment.
Section 8. Notwithstanding the provisions of Section 15.13(b) of the
Agreement, for purposes of the Agreement, Attachment X shall as set forth in
Exhibit E to this Amendment.
Section 9. Notwithstanding the provisions of Section 15.13(c) of the
Agreement, for purposes of the Agreement, Attachment XI shall be as set forth
in Exhibit F to the Amendment.
Section 10. For purposes of the Agreement, Attachment XIV shall be as
set forth in Exhibit G to this Amendment.
Section 11. Notwithstanding the provisions of Section 15.13(c) of the
Agreement, for purposes of the Agreement, Attachment XV shall be as set forth
in Exhibit H to this Amendment.
Section 12. The Disclosure Schedules attached to this Amendment as
Exhibit I are, and for all purposes shall be, the Disclosure Schedules
referenced in the Agreement.
Section 13. Section 7.04 of the Agreement is amended by deleting the
reference to "Attachment XI" in the second parenthetical of the first
sentence and inserting in its place and stead the phrase "writing by Lockheed
Martin and Newco on or prior to the Closing Date".
Section 14. Section 8.04 of the Agreement is amended by deleting the
reference to "Attachment XI" in the second parenthetical of the first
sentence and inserting in its place and stead the phrase "writing by Lockheed
Martin and Newco on or prior to the Closing Date".
Section 15. Section 13.02(b) of the Agreement is amended by deleting
the word "or" before the beginning of clause (v); inserting the phrase ", or
(vi) the Universal Litigation" after clause (v) and before the semicolon;
deleting the word "and" before "(v)" in the proviso; and inserting the phrase
"and (vi)" after "(v)" in the proviso.
Section 16. Section 13.04(b)(iii) of the Agreement is amended by
deleting the word "and" after the semicolon.
Section 17. Section 13.04(b)(iv) of the Agreement is amended by
deleting the period at the end and inserting in its place and stead the
phrase "; and".
Section 18. Section 13.04(b) of the Agreement is amended by adding a
new clause (v) as follows:
"(v) with respect to the matter described in clause (vi)
of Section 13.02(b) (after giving effect to the proviso
thereto), to the extent of 50% of the aggregate Damages
incurred by all Indemnified Parties as the result thereof in
excess of the Reserve Amount but not in excess of the Reserve
Amount plus $1,000,000 (it being understood that Lockheed
Martin's maximum liability under Section 13.02(b)(vi) and this
Section 13.04(b)(v) shall be $500,000)."
Section 19. Section 15.01 of the Agreement is amended to change the
notice address for notices to Newco to the following:
"L-3 Communications Holdings, Inc.
600 Third Avenue
New York, New York 10016
Attention: Robert V. LaPenta
Telecopy: (212) 805-5470"
Section 20. Section (a) of Exhibit A to the Agreement is amended by
adding the following after the definition of "Prime Government Contract" and
before the definition of "Remedial Action(s)":
""Reserve Amount" means the amount referenced in the
letter from Lockheed Martin to Newco dated as of the Closing
Date making specific reference to the Agreement and this
definition.
Section 21. Section (a) of Exhibit A to the Agreement is amended by
adding the following after the definition of "Transferred Assets" and before
the definition of "U.S. Government":
""Universal Litigation" means the matter titled Universal
---------
Navigation Corporation, a California corporation; and
-----------------------------------------------------
Microcomputer Electronics Corporation, a Washington
---------------------------------------------------
corporation v. Loral Corporation, a New York corporation; and
-------------------------------------------------------------
Loral Fairchild Corp., a Delaware corporation (CIV93-743TUC
---------------------------------------------
WDB) pending in the United States District Court for the
District of Arizona."
Section 22. Clause (ii) of the definition of "Transferred Employee"
in Section G.01 of Exhibit G to the Agreement is amended by deleting the
existing provision in its entirety and inserting in its place and stead the
following:
"(ii) was laid off from the Business and has recall rights
with respect to the Business other than any Person with such
rights who is either employed by Lockheed Martin on the
Closing Date (other than in the Business) or who has recall
rights at another Lockheed Martin facility, or"
Section 23. Section G.08 of Exhibit G to the Agreement is amended by
deleting the existing provision in its entirety and inserting in its place
and stead the following:
"G.08. Severance and Retention Agreements. In accordance with
----------------------------------
Section 6.9 of the Agreement and Plan of Merger dated as of January 7,
1996, by and among Loral Corporation, Lockheed Martin Corporation and
LAC Acquisition Corporation, Lockheed Martin Tactical Systems, Inc. has
adopted the Supplemental Severance Program. Lockheed Martin has entered
into Key Employee Supplemental Severance Program and Key Executive
Supplemental Severance Program agreements (the "Program Agreements").
In addition, Lockheed Martin has entered into Retention Agreements
(collectively with the Supplemental Severance Program and the Program
Agreements, the "Supplemental Agreements") with certain Transferred
Employees who participate in the Supplemental Severance Program.
Lockheed Martin also sponsors the Lockheed Martin Tactical Systems
Severance Plan (the "Tactical Severance Plan"), the Severance Benefit
Plan for Employees of Lockheed Martin Corporation (the "LMC Severance
Plan") and the Special Supplemental Severance Program relating to the
retention (as set forth in a memorandum from Steve Jackson dated October
28, 1996 of C3I and Systems Integration Sector administrative personnel
(collectively with the Supplemental Agreements, the Tactical Severance
Plan and the LMC Severance Plan, the "Severance Arrangements"). Other
than with respect to the Transferred Employees set forth on Section B.21
of the Disclosure Schedules, Newco assumes all obligations and
liabilities of Lockheed Martin and its Affiliates under the Severance
Arrangements and any other severance benefit obligation (collectively
with the Severance Arrangements, the "Severance Obligations") whether
oral or written, for all claims made after the Closing Date by
Transferred Employees, including claims based on the Contemplated
Transactions, which shall be Assumed Liabilities for purposes of this
Agreement. All obligations and Liabilities of Lockheed Martin with
respect to any Severance Obligation for the Transferred Employees on
Section B.21 of the Disclosure Schedules and any other individual
covered by a Supplemental Agreement under any Severance Obligation who
is not a Transferred Employee shall constitute Excluded Liabilities."
IN WITNESS WHEREOF, the parties hereto caused this Amendment to be duly
executed by their respective authorized officers on the day and year first
above written.
LOCKHEED MARTIN CORPORATION
By:________________________________
Name:
Title:
LEHMAN BROTHERS CAPITAL
PARTNERS III, L.P.
By: LEHMAN BROTHERS HOLDINGS INC.,
its General Partner
By:___________________________
Name:
Title:
FRANK C. LANZA
___________________________________
ROBERT V. LAPENTA
___________________________________
L-3 COMMUNICATIONS HOLDINGS, INC.
By:________________________________
Name:
Title:
AMENDMENT NO. 3
Dated as of May 21, 1997
to
TRANSACTION AGREEMENT
Dated as of March 28, 1997
By and Among
LOCKHEED MARTIN CORPORATION
LEHMAN BROTHERS CAPITAL PARTNERS III, L.P.
LEHMAN BROTHERS HOLDINGS INC.
FRANK C. LANZA
ROBERT V. LAPENTA
L-3 COMMUNICATIONS HOLDINGS, INC.
and
L-3 COMMUNICATIONS CORPORATION
AMENDMENT NO. 3 TO TRANSACTION AGREEMENT
This Amendment No. 3 to Transaction Agreement (the "Amendment") is
made as of the 15th day of May, 1997, by and among Lockheed Martin
Corporation, a Maryland corporation ("Lockheed Martin"), Lehman Brothers
Capital Partners III, L.P., a Delaware limited partnership, Lehman Brothers
Holdings Inc., a Delaware corporation (together with Lehman Brothers Capital
Partners III, L.P., "Lehman"), Frank C. Lanza ("Lanza"), Robert V. LaPenta
("LaPenta"; and together with Lanza, the "Individual Purchasers"), L-3
Communications Holdings, Inc., a Delaware corporation ("Newco"), and L-3
Communications Corporation, a Delaware corporation. For purposes of this
Amendment, Lehman, Lanza and LaPenta each are individually referred to as a
"Purchaser" and collectively referred to as the "Purchasers."
W I T N E S S E T H
WHEREAS, Lockheed Martin, in its own right and through certain of
its direct and indirect Subsidiaries previously was engaged in the Business;
WHEREAS, Lockheed Martin and the Purchasers, upon the terms and
subject to the conditions of the Agreement have formed and organized Newco;
WHEREAS, upon the terms and subject to the conditions of the
Agreement, Lockheed Martin has transferred or caused the Affiliated
Transferors to transfer, substantially all of the assets held or owned by, or
used to conduct, the Business and to assign certain liabilities associated
with the Business to Newco, and Newco has received such assets and assumed
such liabilities;
WHEREAS, Lehman Brothers Capital Partners III L.P. has assigned
certain of its rights and obligations under the Agreement to Lehman Brothers
Holdings Inc., and Newco has assigned certain of its rights and obligations
under the Agreement to L-3 Communications Corporation, a Delaware corporation
and wholly owned subsidiary of Newco; and
WHEREAS, Lockheed Martin, Newco and the Purchasers desire to amend
the Agreement in accordance with the terms of this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties contained herein, the parties agree as follows:
Section 1. Capitalized terms used but not defined herein have the
meanings given to them in the Transaction Agreement dated as of March 28,
1997, by and among Lockheed Martin, Newco and the Purchasers, as amended by
Amendment No. 1 to Transaction Agreement dated as of April 11, 1997, and by
Amendment No. 2 to the Transaction Agreement dated as of April 30, 1997 (as
amended, the "Agreement").
Section 2. Section G.06(c) of the Transaction Agreement shall be
amended to read as follows:
With respect to all Lockheed Martin Defined Contribution Plans
except the Transferred Savings Plans described in Section
G.06(b) (the "Lockheed Martin Savings Plans"), the Transferred
Employees shall cease to accrue benefits and service credits
under such plans as of the Closing Date and, effective as of
the Closing Date, Newco shall establish new savings plans
("Newco's Savings Plans") and associated trusts to hold the
assets of those plans for the Transferred Employees, to be
effective as of the Closing Date, and shall provide to
Lockheed Martin evidence reasonably satisfactory to Lockheed
Martin that Newco's Savings Plans and the associated trusts
have been established and that Newco's Savings Plans qualify
under the requirements of Section 401(a) of the Code, and that
the trusts are exempt from tax under Section 501(a) of the
Code. Lockheed Martin shall provide to Newco evidence
reasonably satisfactory to Newco that the Lockheed Martin
Savings Plans remain qualified under the requirements of
Section 401(a) of the Code. Provided Lockheed Martin and Newco
have received evidence reasonably satisfactory to them in
accordance with the preceding sentences, as soon as is
reasonably practicable following the Closing Date, but in no
event later than 60 days following receipt of such mutually
satisfactory evidence, (i) Lockheed Martin shall take all
action required or appropriate to transfer the account
balances of all Transferred Employees and Transferred
Beneficiaries (other than account balances in the Lockheed
Martin Savings Plan, Lockheed Martin Savings Plan II and
Lockheed Martin Performance Sharing Plan, collectively the
"Camden Plans") to the respective trust associated with
Newco's Savings Plans; and (ii) with respect to account
balances in the Camden Plans, Lockheed Martin shall amend the
Camden Plans, to the extent permitted by Section 401(k)(10) of
the Code, to permit each Transferred Employee or Transferred
Beneficiary with an account balance in the Camden Plans during
the period between the Closing and the end of the second
calendar year following the Closing, to (x) receive a
distribution from the Camden Plans; (y) make a direct rollover
in accordance with Section 401(a)(31) of the Code; or (z)
leave his or her account balances in the Camden Plans.
Transfers shall be made in the form of cash in an amount equal
to the value of the account balances to be transferred,
determined as of the close of business on the last business
day immediately preceding the transfer, except that (i) to the
extent a participant's or beneficiary's account balance in the
transferor plan includes one or more promissory notes
evidencing a participant loan or loans, such promissory note
shall be transferred in kind for the participant's or
beneficiary's credit under the transferee plan and (ii) any
assets in the transferor trust consisting of securities issued
by Lockheed Martin, Martin Marietta Materials, Inc. and Loral
Space & Communications, Ltd. that are allocable to the
respective transferee plan shall be transferred in kind.
Amounts distributed or rolled over from the Camden Plans shall
be payable in cash only. For the period from the Closing Date
until such time as the Transferred Employee or Transferred
Beneficiary no longer has an account balance in any Lockheed
Martin Defined Contribution Plan, Newco shall collect by
payroll deduction and promptly pay over to the respective
Lockheed Martin Defined Contribution Plan all loan payments
required on participant loans made by the respective plan to
any Transferred Employee and Lockheed Martin shall cause the
respective Lockheed Martin Defined Contribution Plan to
administer and pay all distributions, withdrawals and loans
payable under the terms of the respective plan. Contingent
upon the transfer of an account balance to each of Newco's
Savings Plans, Newco shall assume all liabilities of Lockheed
Martin and its affiliates with respect to that Transferred
Employee or Transferred Beneficiary under the Lockheed Martin
Defined Contribution Plan from which that transfer was made
and shall become with respect to such Transferred Employee and
Transferred Beneficiary responsible for all acts, omissions
and transactions under or in connection with such Lockheed
Martin Defined Contribution Plan, whether arising before or
after the Closing; provided, however, that in the case of any
liabilities with respect to Camden Transferees (other than
Camden Transferrees for whom no such transfer was made), Newco
shall only assume liabilities and shall only become
responsible for all acts, omissions and transactions under or
in connection with that Lockheed Martin Defined Contribution
Plan arising after the Closing or disclosed in Section B.21 of
the Disclosure Schedules."
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed by their respective authorized officers on the day and
year first above written.
WITNESS: LOCKHEED MARTIN CORPORATION
_______________________________ By: ____________________________
Name: Marian S. Block
Title: Associate General
Counsel
LEHMAN BROTHERS CAPITAL
PARTNERS III, L.P.
By: LEHMAN BROTHERS HOLDINGS
INC., its General Partner
_______________________________ By: ____________________________
Name: Robert B. Millard
Title: Managing Director
LEHMAN BROTHERS HOLDINGS INC.
_______________________________ By: ____________________________
Name: Steven J. Berger
Title: Managing Director
L-3 COMMUNICATIONS HOLDINGS,
INC.
_______________________________ By: ____________________________
Name: Michael T. Strianese
Title: VP Finance and
Controller
FRANK C. LANZA
_______________________________ ____________________________
ROBERT V. LAPENTA
_______________________________ ____________________________
L-3 COMMUNICATIONS CORPORATION
_______________________________ By: ____________________________
Name: Michael T. Strianese
Title: VP Finance and
Controller