ASSET PURCHASE AGREEMENT
BY AND AMONG
MARTIN MARIETTA CORPORATION,
AS PURCHASER,
AND
GENERAL DYNAMICS CORPORATION,
GENERAL DYNAMICS SPACE SYSTEMS COMPANY
AND
GENERAL DYNAMICS COMMERCIAL LAUNCH SERVICES, INC.,
AS SELLERS
DATED AS OF DECEMBER 22, 1993
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
ARTICLE II BASIC TRANSACTION 17
2.1 Purchase and Sale of Assets 17
2.2 Assumption of Liabilities 17
2.3 Purchase Consideration 17
2.4 Purchase from GDC, SSC, and CLS 17
ARTICLE III CERTAIN AGREEMENTS OF THE PARTIES 18
3.1 Certain Provisions Relating to Assets 18
ARTICLE IV POST-CLOSING ADJUSTMENT 20
4.1 Preparation of August Balance Sheet 20
4.2 Preparation of Initial Statement of
Net Assets to be Sold and Initial
Reconciling Statement 20
4.3 Preparation of Closing Date
Balance Sheet 21
4.4 Preparation of Closing Statement of
Net Assets to be Sold and Closing
Reconciling Statement 21
4.5 Audit 23
4.6 Review of Closing Statement of
Net Assets to be Sold 24
4.7 Adjustment of Purchase Price 26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER 27
5.1 Organization and Authority of Seller 27
5.2 Authorization of Agreements 27
5.3 No Conflicts 27
5.4 Consents 28
5.5 Financial Statements 28
5.6 Forecasts 29
5.7 Absence of Certain Developments 29
5.8 Material Contracts 29
5.9 Employee Benefit Plans 31
5.10 Litigation; Violation of Law 34
5.11 Tax and Other Returns and Reports 35
5.12 Absence of Undisclosed Liabilities 36
5.13 Affiliate Agreements 37
5.14 Contracts for the Sale of Products
or Services 37
5.15 Export Control and Related Matters 40
5.16 Cooperative Business Agreements 40
5.17 Personal Property 41
5.18 Environmental Matters 41
5.19 Inventory and Receivables 43
5.20 Real Property 44
5.21 Intellectual Property 48
5.22 Employees and Employee Relations 50
5.23 Insurance 51
5.24 Backlog 52
5.25 Brokers' and Finders' Fees 52
5.26 Full Disclosure 52
5.27 Unimpaired Operation 53
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER 54
6.1 Organization and Authority of Purchaser 54
6.2 Authorization of Agreements 54
6.3 No Conflicts 54
6.4 Consents 55
6.5 Litigation 55
6.6 Brokers' and Finders' Fees 55
ARTICLE VII COVENANTS 56
7.1 Investigations by Purchaser 56
7.2 Satisfaction of Conditions 57
7.3 Conduct of Seller 57
7.4 HSR Act Compliance 60
7.5 Pending or Threatened Litigation 60
7.6 Assignments; Novations 60
7.7 [Intentionally Ommitted] 62
7.8 Noncompete 62
7.9 Non-Solicitation 63
7.10 Certain Payments to Employees 63
7.11 Use of Stationery, etc. 64
7.12 Administration of Accounts 64
7.13 1993 Financial Statements 64
7.14 Audited Financial Statements 65
ARTICLE VIII CONDITIONS TO THE CLOSING 66
8.1 Conditions to Purchaser's Obligation to
Effect the Closing 66
8.2 Conditions to Seller's Obligations to
Effect the Closing 69
ARTICLE IX THE CLOSING: TERMINATION OF AGREEMENT 72
9.1 The Closing 72
9.2 Termination 72
ARTICLE X DELIVERIES AT THE CLOSING 73
10.1 Deliveries by Seller at the Closing 73
10.2 Deliveries by Purchaser at the Closing 74
ARTICLE XI EMPLOYEES AND EMPLOYEE BENEFITS
11.1 Employment 76
11.2 Collective Bargaining Agreements 78
11.3 Retiree Medical and Life Insurance
Benefits 78
11.4 Health and Welfare Benefits for
Active Employees 79
11.5 Pension Benefits 81
11.6 Savings Plans 82
11.7 Procedural Matters 82
11.8 Incentive Closing Agreements 82
11.9 Indemnification 83
11.11 Intellectual Property 83
ARTICLE XII CLOSING AND POST-CLOSING COVENANTS;
INDEMNIFICATION 84
12.1 Survival of Representations and Warranties 84
12.2 Indemnification 84
12.3 Payment of Brokers' or Finders' Fees 91
12.4 Tax Matters 91
12.5 [Intentionally Omitted] 94
12.6 Liquidating Events 95
ARTICLE XIII GENERAL 97
13.1 Amendments 97
13.2 Integrated Contract 97
13.3 Governing Law 97
13.4 Notices 97
13.5 Assignment 98
13.6 Headings 98
13.7 Counterparts 98
13.8 Expenses 98
13.9 Further Assurances 99
13.10 Public Announcements 99
13.11 Bulk Sales Compliance 99
13.12 No Third Party Beneficiaries 99
13.13 Agreement Regarding EAC's 99
EXHIBITS, NONDISCLOSURE SCHEDULES AND ADDITIONAL DOCUMENTS
EXHIBITS
EXHIBIT A - Form of Assumption Agreement
EXHIBIT B - Form of Bill of Sale
EXHIBIT C - Form of Kearny Mesa Lease Agreement
EXHIBIT D - Form of License Agreement
EXHIBIT E - Form of Service Agreement
EXHIBIT F - Form of Sycamore Canyon Lease
NONDISCLOSURE SCHEDULES
Schedule 1(A) - Assumed Liabilities
Schedule 1(B) - Excluded Assets
Schedule 1(C) - Leased Assets
Schedule 1(D) - Real Property Interests
Schedule 2.2 - Non-Exclusive List of Excluded Liabilities
Schedule 3.1(b) - Certain Required Consents
Schedule 4.2 - EAC Assumptions
ADDITIONAL DOCUMENTS
August Balance Sheet, Initial Statment of Net Assets to Be Sold
and Initial Reconciling Statement
Agreement Regarding Schedules and Other Matters
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement dated as of December 22, 1993, by
and between MARTIN MARIETTA CORPORATION, a Maryland corporation
("Purchaser"), GENERAL DYNAMICS CORPORATION, a Delaware corporation
("GDC"), GENERAL DYNAMICS SPACE SERVICES COMPANY, a Delaware
corporation ("SSC") and a wholly-owned subsidiary of GDC, and
GENERAL DYNAMICS COMMERCIAL LAUNCH SERVICES, INC., a Delaware
corporation ("CLS") and a wholly-owned subsidiary of GDC. GDC, SSC
and CLS are collectively referred to herein as the "Seller."
W I T N E S S E T H :
WHEREAS, GDC, directly and through SSC and CLS, is
engaged, through the Space Systems Division (as hereinafter
defined), in the business of design, development, production,
processing, sale and launching of expendable launch vehicles and
upper stage rockets, and also is engaged in other advanced space
programs and energy and magnetics programs for commercial customers
and the United States Government and certain foreign governments;
and
WHEREAS, Purchaser desires to acquire from Seller and
Seller desires to sell to Purchaser substantially all of the assets
and business of the Space Systems Division (collectively, the
"Business").
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants, and agreements
hereinafter set forth, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Each reference contained in this Agreement to:
"Adverse Environmental Condition" shall mean any of the
matters referred to in clauses (i), (ii) or (iii) of the definition
of Environmental Claim.
"Affiliate" shall mean, with respect to any given Person,
any other Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person. The term "control" (including, with
correlative meaning, the terms "controlled by" and "under common
control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" shall refer to this Asset Purchase Agreement,
as the same may be amended from time to time.
"Allocation Arbiter" shall have the meaning ascribed
thereto in Section 12.4(e) hereof.
"AMSC Letter Agreement" shall refer to the letter
agreement to be executed between Purchaser and GDC at the Closing.
"Ancillary Agreements" shall refer to the Assumption
Agreement, the Bill of Sale, the License Agreement, the Services
Agreement and the Facility Leases.
"Arthur Andersen" shall refer to the public accounting
firm of Arthur Andersen & Co. or any successor organization.
"Arbiter" shall have the meaning ascribed to such term in
Section 4.6(a) hereof.
"Assets" shall refer, collectively, to the Purchased
Assets and the Leased Assets.
"Assumed Liabilities" shall refer to those liabilities and
obligations of Seller which are identified on Schedule 1(A) hereto.
"Assumption Agreement" shall refer to the Assumption
Agreement to be executed at Closing by Purchaser, substantially in
the form of Exhibit A hereto.
"Atlas Program" shall mean the program of the Space
Systems Division consisting of the planned and actual design,
development, production and launch of 62 Atlas launch vehicles
currently estimated to be completed in the year 2000.
"Attestation Report" shall have the meaning ascribed to
such term in Section 4.5 hereof.
"Audited Financial Statements" shall have the meaning
ascribed to such term in Section 7.14 hereof.
"August Balance Sheet" shall have the meaning ascribed to
such term in Section 4.1(a) hereof.
"Authorization" shall refer to any federal, state, local
or other governmental consent, license, permit, grant or
authorization.
"Basket Limited Liabilities" shall have the meaning
ascribed to such term on Schedule 1(A) hereto.
"Bill of Sale" shall refer to the Bill of Sale to be
executed at Closing by Seller, substantially in the form of Exhibit
B hereto.
"Business" shall have the meaning set forth in the second
recital to this Agreement.
"Business Day" shall refer to a day, other than a Saturday
or a Sunday, on which commercial banks are not required or
authorized to close in the City of New York.
"CERCLA" shall have the meaning ascribed to such term in
the definition of Environmental Laws.
"Closing" shall refer to the consummation of the several
transactions provided for in Article II, all upon the terms and
subject to the conditions set forth in this Agreement, which
closing shall commence at 9:00 A.M., E.S.T., at the location
specified in Section 9.1 hereof.
"Closing Date Balance Sheet" shall have the meaning
ascribed to such term in Section 4.3 hereof.
"Closing Date" and "day of the Closing" shall refer to the
day upon which the consummation of the several transactions
provided for in Article II occurs.
"Closing Reconciling Statement" shall have the meaning
ascribed to such term in Section 4.4 hereof.
"Closing Statement of Net Assets To Be Sold" shall have
the meaning ascribed to such term in Section 4.4 hereof.
"Code" shall refer to the Internal Revenue Code of 1986,
as amended.
"Confidentiality Agreement" shall have the meaning
ascribed to such term in Section 7.1(b) hereof.
"Contaminant" shall mean, collectively, any (a) petroleum
or petroleum products, or derivative or fraction thereof, flammable
material, explosives, radioactive materials (including radon gas,
other than that which is naturally occurring), asbestos in any form
that is or could become friable, urea formaldehyde foam insulation
("UFI"), and polychlorinated biphenyls ("PCBs"), and (b) any
chemical, material or substance (i) which is now or hereafter
becomes defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "toxic
substances", "restricted hazardous wastes", "contaminants",
"pollutants" or words of similar import under any applicable
Environmental Laws or (ii) the emission, discharge, release,
storage, transport, disposal, management, handling or use of which
is now or hereafter regulated under or subject to any applicable
Environmental Laws.
"Contracts" shall mean, whether written or oral, all bids,
quotations, proposals, options, guarantees, offset agreements,
subcontracts, contracts (including subcontracts thereunder),
including (without limitation) the Contracts listed on Schedules
5.8 and 5.14, agreements, leases, understandings, commitments,
teaming arrangements, Memoranda of Understanding ("MOUs"), and
Memoranda of Agreements ("MOAs") and sales and purchase orders of
Seller or the Space Systems Division relating to the Business.
"Damages" shall refer, in respect of any obligation to
indemnify any Person pursuant to the terms of this Agreement, to
any losses, claims, damages, liabilities (liquidated or
unliquidated, accrued, contingent or otherwise), obligations,
judgments, settlements, reasonable out-of-pocket costs, expenses
and attorneys' fees (including such costs, expenses and attorneys'
fees incurred in connection with any investigation or in enforcing
such right of indemnification against any Indemnitor), fines and
penalties, if any.
"Documents" shall refer to any books, records, files,
papers, tapes, microfilms, computer records (including, without
limitation, books and records stored in computerized storage media)
and any other documents.
"DoD Manual" shall have the meaning ascribed to such term
in Section 5.4 hereof.
"Employee Benefit Plan" shall have the meaning ascribed to
such term by Section 3(3) of ERISA.
"Employee Pension Plan" shall have the meaning ascribed to
such term by Section 3(2) of ERISA.
"Employees" shall have the meaning ascribed to such term
in Section 11.1(a) hereof.
"Environmental Claim" shall mean any accusation,
allegation, notice of violation, claim, demand, abatement or other
order or directive (conditional or otherwise), judgment, lien or
other assessment by any governmental authority or any Person for
personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment, nuisance,
pollution, contamination or other adverse effects on the
environment, or for fines, penalties or restrictions, resulting
from or based upon (i) the existence, or the continuation of the
existence, of a Release (including, without limitation, sudden or
non-sudden, accidental or non-accidental leaks or spills), of, or
exposure to, or Release of any Contaminant, odor or audible noise
in, into or onto the environment, including, without limitation,
the air, groundwater, surface water or any surface or subsurface
strata, at, in, by, from, or related to the Facilities, (ii) the
transportation, storage, treatment or disposal of any Contaminant
in connection with the operation of the Facilities or (iii) the
violation, or alleged violation, of any applicable Environmental
Laws or any Permits.
"Environmental Laws" shall mean all applicable federal,
state and local laws, statutes, ordinances and regulations, now or
hereafter in effect, and in such case as amended or supplemented
from time to time, and any judicial or administrative
interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or
judgment relating to the regulation and protection of human health,
safety, the environment and natural resources (including, without
limitation, ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include, but are not limited to,
the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42. U.S.C. 9601 et seq.)
("CERCLA"); the Hazardous Material Transportation Act, as amended
(49 U.S.C. sec. 1801 et seq.); the Federal Insecticide, Fungicide,
and Rodenticide Act, as amended (7 U.S.C. sec. 136 et seq.); the
Resource Conservation and Recovery Act, as amended (42 U.S.C. sec.
6901 et seq.) ("RCRA"); the Toxic Substances Control Act, as
amended (15 U.S.C. sec. 2601 et seq.); the Clean Air Act, as
amended (42 U.S.C. sec. 7401 et seq.); the Federal Water Pollution
Control Act, as amended (33 U.S.C. sec. 1251 et seq.); the
Occupational Safety and Health Act, as amended (29 U.S.C. sec. 651
et seq.) ("OSHA"); and the Safe Drinking Water Act, as amended (41
U.S.C. sec. 300f et seq.), and any and all regulations promulgated
thereunder, and all applicable analogous state and local
counterparts, equivalents, or similar statutes or ordinances, rules
or regulations, including, without limitation, the California
Health & Safety Code sec. 1 et seq., as amended, and any transfer
of ownership notification or approval statutes such as the New
Jersey Industrial Site Recovery Act (N.J. Stat. Ann. sec. 13:1K-6
et seq.) ("ISRA").
"ERISA" shall refer to the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" shall refer to any trade or business,
whether or not incorporated, under common control of Seller within
the meaning of Section 414(b), (c), (m) or (o) of the Code.
"Excluded Assets" shall refer to those assets owned or
leased by Seller which would otherwise be Assets and which are
listed on Schedule 1(B).
"Excluded Liabilities" shall refer to any and all
obligations, commitments or liabilities of any and every nature
whatsoever of Seller or the Space Systems Division, whether due or
to become due, asserted or unasserted, accrued or unaccrued,
liquidated or unliquidated, contingent, executory or otherwise,
howsoever or whenever arising, which are not Assumed Liabilities,
including (without limitation) all obligations, commitments or
liabilities (whether recourse or non-recourse to Seller or the
Space Systems Division) which are secured by or otherwise encumber
any of the Assets or for which a claim otherwise could be made
against the Purchaser or any of the Assets as a result of the
transactions contemplated by this Agreement and, in each case,
which are not Assumed Liabilities.
"Export Control Laws" shall mean all Laws, now or
hereafter in effect, and in each case as amended or supplemented
from time to time, and any judicial or administrative
interpretations thereof, relating to the export or reexport of
commodities and technologies. Export Control Laws include, but are
not limited to, the Export Administration Act of 1979 (24 U.S.C.
sec. 2401-2420); the International Emergency Economic Powers Act
(50 U.S.C. sec. 1701-1706); the Trading with the Enemy Act (50
U.S.C. sec. 1 et seq); the Arms Export Control Act (22 U.S.C. sec.
2778, 2779); and the International Boycott Provisions of Section
999 of the Code.
"Exhibit" shall refer to one of several written Exhibits
to this Agreement each of which is hereby incorporated into and
made a part of this Agreement for all purposes.
"Facilities" shall mean real property owned, leased or
used by the Space Systems Division.
"Facility Leases" shall mean collectively, the Kearny Mesa
Lease and the Sycamore Canyon Lease.
"Final Closing Net Assets to be Sold" shall mean the
assets and liabilities of the Space Systems Division as shown on
the Final Closing Statement of Net Assets to be Sold.
"Final Closing Statement of Net Assets to be Sold" shall
have the meaning ascribed to such term in Section 4.6(a).
"Financial Statements" shall have the meaning ascribed to
such term in Section 5.5(a) hereof.
"GAAP" shall refer to generally accepted accounting
principles in the United States as of the date of this Agreement,
without references to changes therein as might otherwise be
applicable to subsequent periods, consistently applied.
"GD Employee Benefit Plans" shall have the meaning
ascribed thereto in Section 5.9(a) hereof.
"GD Employee Pension Plans" shall have the meaning
ascribed thereto in Section 5.9(a) hereof.
"GD Savings Plans" shall have the meaning ascribed thereto
in Section 5.9(b) hereof.
"GD Savings and Welfare Plans" shall have the meaning
ascribed thereto in Section 5.9(b) hereof.
"General Industry Developments" shall mean any change, or
any development involving a prospective change, which relates to
the defense and space launch vehicle industries generally as
opposed to a change or prospective change, the effects of which
will impact primarily the Space Systems Division.
"Government Contract" shall refer to any bid, quotation,
proposal, contract, option, agreement, commitment or sale or
purchase order that is with the United States Government or a
department or agency thereof or any foreign government or a
department or agency thereof, including, among other things, all
contracts to supply goods and services, and subcontracts
thereunder.
"HSR Act" shall refer to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indemnification Event" shall refer to any action,
proceeding or claim for which a Person is entitled to
indemnification under this Agreement.
"Indemnitor" shall refer to the indemnifying Person in the
case of any obligation to indemnify established pursuant to the
terms of this Agreement.
"Initial Net Assets to be Sold" shall mean the assets and
liabilities of the Space Systems Division as shown on the Initial
Statement of Net Assets to be Sold.
"Initial Reconciling Statement" shall have the meaning
ascribed to such term in Section 4.2 hereof.
"Initial Statement of Net Assets to be Sold" shall have
the meaning ascribed thereto in Section 4.2 hereof.
"Interests" shall have the meaning ascribed to such term
in Section 3.1(a) hereof.
"Intellectual Property" shall refer to all inventions,
improvements, domestic and foreign patents and applications
therefor, trade secrets, know how, customer lists, trade names,
common law trademarks and service marks, trademark and service mark
registrations and applications therefor, copyrights, copyright
registrations and applications therefor, mask works, mask work
registrations and applications therefor, rights in computer
software, all rights granted or retained in licenses under any of
the foregoing and all rights to use data retained by the Space
Systems Division under any Contract.
"Kearny Mesa Facility" shall mean the Kearny Mesa facility
located in San Diego, California, which is owned by GDC and used in
the Space Systems Division.
"Kearny Mesa Lease" shall mean the lease agreement to be
executed by Purchaser and GDC at Closing relating to the Kearny
Mesa Facility substantially in the form of Exhibit C hereto.
"Law" shall mean any federal, state, local, or foreign law
(including common law), constitution, statute, code, ordinance,
rule, regulation, executive order, or other requirement.
"Lease Contract" shall refer to any Contract which is a
lease of or rental agreement with respect to Property (other than
the Facility Leases and other Leases) or an installment sale
contract arising out of the sale of Property.
"Leased Assets" shall refer to those assets leased to
Seller which, if owned by Seller, would be Purchased Assets
(excluding the Leased Properties) and which are listed on Schedule
1(C).
"Leased Property" shall have the meaning ascribed to such
term in Section 5.20(a) hereof.
"Leases" shall have the meaning ascribed to such term in
Section 5.20(a) hereof.
"License Agreement" shall refer to the Cross License
Agreement between Seller and Purchaser, substantially in the form
of Exhibit D hereto.
"Liens" shall have the meaning ascribed to such term in
Section 5.17 hereof.
"Loss" shall mean any loss, cost, damage, liability,
deficiency, fine, penalty or expense (including, without
limitation, reasonable attorney's and other professional fees),
investigation, removal, cleanup and remedial costs (voluntarily or
involuntarily incurred) and those modification costs incurred to
permit continued or resumed normal operation of the Facilities.
"Material Adverse Effect" shall mean any material and
adverse effect on the business, condition (financial or otherwise),
revenues, earnings, assets, prospects or results of operations of
the specified Person.
"Multiemployer Plans" shall have the meaning ascribed to
such term by Section 4001(a)(3) of ERISA.
"Multiple Employer Plans" shall have the meaning ascribed
thereto in Section 5.9(a) hereof.
"1954 Code" shall refer to the Internal Revenue Code of
1954, as amended and in effect immediately prior to the enactment
of the Tax Reform Act of 1986.
"Owned Property" shall have the meaning ascribed to such
term in Section 5.20(a) hereof.
"PBGC" shall refer to the Pension Benefit Guaranty
Corporation.
"Permit" shall mean any permit, approval, authorization,
license, variance, or permission required by a governmental
authority under any applicable Environmental Laws.
"Person" shall include an individual, a partnership, a
corporation, or a division or business unit thereof, a trust, an
unincorporated organization, a government or any department or
agency thereof and any other entity.
"Plant 19" shall mean the facility designated as Plant 19
located in San Diego, California, which is owned by the United
States Air Force and used in the Space Systems Division pursuant to
the Plant 19 Facilities Agreement.
"Plant 19 Facilities Agreement" shall mean the Facilities
Agreement by and between the Seller and the United States Air Force
relating to Plant 19.
"Pre-Medicare Plan" shall have the meaning ascribed
thereto in Section 11.3 hereof.
"Product Warranty Insurance" shall have the meaning
ascribed thereto in Section 5.23 hereof.
"Property" or "Properties" shall include all property and
all other assets of whatsoever nature including, without
limitation, real and personal property, whether tangible or
intangible, and claims, rights and choses in action, other than
Intellectual Property.
"Purchase Order" shall have the meaning ascribed thereto
in Section 12.5(b) hereof.
"Purchase Price" shall have the meaning ascribed thereto
in Section 2.3 hereof.
"Purchased Assets" shall refer to all the business,
properties, assets, goodwill, rights and claims of whatever kind
and nature, real or personal, tangible or intangible, known or
unknown, actual or contingent and wherever situated, which are
owned by Seller or any Affiliate of Seller and used in, held for
use by, or related to the business of, the Space Systems Division
(other than any Excluded Assets or any fee interest in the Leased
Assets), including, without limitation, the following assets:
(a) all leasehold interests (including,
without limitation, the Facility Leases (other than the
landlord's interest therein), the Leases, the Plant 19
Facilities Agreement and leasehold interests in the Leased
Assets) and other interests in real property listed on
Schedule 1(D), in each case together with all
improvements, fixtures and all other appurtenances thereto
and rights in respect thereof;
(b) all work in process, raw materials,
finished goods, goods in transit and other properties and
rights associated with the performance of Contracts or the
business or operations of the Space Systems Division,
supplies, machinery, equipment, interests in government
furnished equipment, test equipment, computers, tools,
dies, spare parts, components, subassemblies, vehicles,
furniture, office materials and other tangible personal
property and leasehold interests therein, whether or not
such assets are located at the properties referred to in
clause (a) above;
(c) all accounts receivable, notes
receivable, unbilled revenues and other claims for money
or other obligations due (or which hereafter will become
due) to Seller arising out of the business or operations
of the Space Systems Division;
(d) all of Seller's interest in Intellectual
Property, including, without limitation, all results of
research and development activities and other Intellectual
Property developed or acquired by or on behalf of the
Space Systems Division, whether related to, or of use or
potential use in connection with any current or
contemplated potential future products of the Space
Systems Division or parts, components or subassemblies
thereof used or purchased by the Space Systems Division;
(e) all proceeds under any insurance
contract or arrangement relating to the Business in
respect of Assumed Liabilities or damage to Assets;
(f) all right, title and interest in, to and
under all Contracts, subject in each case to the terms of
such Contracts;
(g) all Documents of the Space Systems
Division (including such books and records as are
contained in computerized storage media), including
(without limitation) all inventory, purchasing,
accounting, sales, export, import, research, engineering,
manufacturing, maintenance, repairs, marketing, banking,
legal, Intellectual Property, shipping records, records
relating to GD Employee Benefit Plans to the extent they
relate to Assumed Liabilities, personnel files for
Transferred Employees and all files, customer and supplier
lists, records, literature and correspondence, whether or
not physically located on any of the premises referred to
in clause (a) above; PROVIDED, HOWEVER, that Seller shall
have the right to (A) keep and use for itself and its
Affiliates a copy of any such list, file, book, record or
Document and (B) transfer to a third party, a copy of any
such list, file, book, record or Document transferred
hereunder to Purchaser that is not exclusive to the Space
Systems Division and that does not contain any
confidential or proprietary information concerning the
Space Systems Division;
(h) any other tangible assets of Seller
which are used primarily in the Space Systems Division and
which are of a nature not customarily reflected in the
books and records of a business, such as assets which have
been written off for accounting purposes but which are
still used by or of value to the Space Systems Division;
(i) all Authorizations which are or, with
the consent of a third party, may be transferable and
which are used in the business and operations of the Space
Systems Division, as presently conducted;
(j) all goodwill associated with the
Business, other than the goodwill associated with the name
"General Dynamics";
(k) all rights under non-disclosure
agreements with employees and agents of Seller and under
confidentiality agreements with prospective purchasers of
the Space Systems Division;
(l) all deposits and advance payments,
prepaid charges, sums and fees, refunds, causes of action,
rights of recovery, rights of set-off and rights of
recoupment of Seller in connection with the Business(other
than intercompany accounts between the Space Systems
Division and Seller, or any other divisions, units,
Affiliates or Subsidiaries of Seller);
(m) to the extent assets have been
accumulated in connection with any GD Employee Benefit
Plan as of the Closing Date, the allocable portion of the
balance existing as of the Closing Date in any trust,
voluntary employee beneficiary association, reserve,
premium stabilization account or other similar account or
arrangement established by Seller or any other Person
which is attributable to the Assumed Liabilities; and
(n) any other asset of Seller in respect of
which there is an Assumed Liability.
"Purchased Intellectual Property" shall refer to the
Intellectual Property included in Assets.
"Purchaser" shall refer to Martin Marietta Corporation, a
Maryland corporation having its principal executive office at 6801
Rockledge Drive, Bethesda, Maryland 20817.
"Purchaser's Plans" shall have the meaning ascribed
thereto in Section 11.5(b) hereof.
"Release" shall mean any release, spill, emission,
abandonment of any container or receptacle containing any
Contaminant, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, or migration into the environment,
or into or out of any property owned, leased or used by the Space
Systems Division, including the movement or migration, gradual or
otherwise, of any Contaminant through or in the air, soil, surface
water, groundwater, or land surface or subsurface strata or
formation.
"Remedial Action" shall mean all actions required under
Environmental Laws and all reasonable voluntary efforts to (1)
clean up, remove, treat, monitor or in any other way address the
Release of any Contaminant in the environment; (2) prevent the
further Release or threat of further Release, or minimize the
further Release of any Contaminant so it does not migrate or
endanger or threaten to endanger public health or welfare of the
environment; or (3) perform pre-remedial studies and investigations
and post-remedial monitoring and care with respect to any Release
or any threatened Release.
"Restricted Business" shall have the meaning ascribed to
such term in Section 7.8(a) hereof.
"Schedule" shall refer to one of several written Schedules
to this Agreement, each of which is hereby incorporated into and
made a part of this Agreement for all purposes.
"Seller" shall refer to General Dynamics Corporation, a
Delaware corporation, having its principal executive office at 3190
Fairview Park Drive, Falls Church, Virginia 22042-4523, General
Dynamics Space Services Company, a Delaware corporation, having its
principal office at 710 Mulcet Road, Cape Canaveral, Florida 32920,
and General Dynamics Commercial Launch Services, Inc., a Delaware
corporation, having its principal office at 5001 Kearny Villa Road,
San Diego, California 92123.
"Seller's Knowledge" shall mean the actual or constructive
knowledge obtainable after due investigation by those officers,
directors, employees or agents of the Seller named on or meeting
the criteria set forth on Schedule 1(E) hereto.
"Seller Property" shall have the meaning ascribed to such
term in Section 5.20(a) hereof.
"Services Agreement" shall refer to the Services Agreement
to be executed at Closing between Purchaser and Seller,
substantially in the form of Exhibit E hereto.
"Software" shall have the meaning ascribed to such term in
Section 5.21(a)(4) hereof.
"Space Systems Division" shall refer to the Space Systems
Division of Seller (including each of GDC, SSC and CLS) and all of
the businesses thereof involving the design, development,
production, processing, launching, sale and servicing of (i)
expendable launch vehicles, including Atlas launch vehicles, (ii)
upper stage rockets, including all Centaur programs, and (iii)
advanced space systems, including space exploration, advanced upper
stages, and next generation launch systems programs and supporting
research and development, (iv) any other launch vehicles, rockets,
rocket motors and related products and services, (v) programs
conducted with respect to energy and magnetics, and (vi) special
access required programs related to any of the foregoing,
including, without limitation, in each such case all IR&D/R&D,
B&P/PD, Market Assist and MP&E of Seller in connection with the
Space Systems Division (in each case as defined in Seller's
Corporate Policy and Procedures as in effect as of the date
hereof).
"Subsidiary" shall refer to a corporation (or equivalent
legal entity under foreign law) of which another Person owns
directly or indirectly more than 50% of the stock, the holders of
which are ordinarily and generally, in the absence of contingencies
or understandings, entitled to vote for the election of directors
and any partnership (or equivalent legal entity under foreign law)
in which such other Person owns directly or indirectly more than a
50% interest.
"Sycamore Canyon Facility" shall mean the Sycamore Canyon
facility located in San Diego, California, which is owned by GDC
and used in the Space Systems Division.
"Sycamore Canyon Lease" shall mean the lease agreement to
be executed by Purchaser and GDC at Closing relating to the
Sycamore Canyon Facility substantially in the form of Exhibit F
hereto.
"Taxes" shall mean all federal, state, local and foreign
taxes, charges, fees, levies, imposts, duties or other assessments,
including, without limitation, income, gross receipts, excise,
employment, sales, use transfer, license, payroll, franchise,
severance, stamp, occupation, windfall profits, environmental
(including taxes under Code section 59A), premium, federal highway
use, commercial rent, customs duties, capital stock, paid up
capital, profits, withholding Social Security, single business and
unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on
minimum, estimated, or other tax or governmental fee of any kind
whatsoever, imposed or required to be withheld by the United States
or any state, local, foreign government or subdivision or agency
thereof, including any interest, penalties or additions thereto,
whether disputed or not.
"Tax Return" shall mean any report, return, information
return or other information required to be supplied to a taxing
authority in connection with Taxes.
"Termination Date" shall have the meaning ascribed to such
term in Section 9.2(c) hereof.
"Transferred Employees" shall have the meaning ascribed to
such term in Section 11.1(b) hereof.
"Transferred Non-Union Employees" shall have the meaning
ascribed to such term in Section 11.1(b) hereof.
"Transferred Union Employees" shall have the meaning
ascribed to such term in Section 11.1(b) hereof.
"Unresolved Changes" shall have the meaning ascribed to
such term in Section 4.6(a) hereof.
ARTICLE II
BASIC TRANSACTION
Upon the terms and subject to the conditions set forth in
this Agreement, at the Closing the following transactions shall
occur:
2.1 Purchase and Sale of Assets. On the terms and
subject to the conditions set forth in this Agreement, at the
Closing, Purchaser will purchase from Seller, and Seller will sell,
transfer, assign, convey and deliver to Purchaser, all of Seller's
right, title and interest in and to the Assets.
2.2 Assumption of Liabilities. On the terms and
subject to the conditions set forth in this Agreement, at the
Closing, Purchaser will assume and become responsible for all of
the Assumed Liabilities. The parties to this Agreement expressly
understand and agree that the Purchaser shall not and does not
hereby assume or become liable for any obligations, commitments,
liabilities or indebtedness of GDC, SSC, CLS or of any of their
respective Subsidiaries or the Space Systems Division, which are
Excluded Liabilities or otherwise are not expressly assumed by the
Purchaser pursuant to this Section 2.2. Schedule 2.2 hereof sets
forth a non-exclusive listing of some of the liabilities and
obligations of Seller which Purchaser has not assumed or agreed to
pay, perform or discharge, it being understood that such listing is
not intended to limit in any manner whatsoever the foregoing
sentence or the definition of Excluded Liabilities.
2.3 Purchase Consideration. On the terms and
subject to the conditions set forth in this Agreement, Purchaser
agrees to pay to Seller, by bank wire transfer of immediately
available Federal funds to an account designated in writing by
Seller not later than three (3) Business Days prior to the Closing
Date, an amount equal to $208,500,000 (the "Purchase Price"). The
Purchase Price shall be subject to post-Closing adjustments as
provided in Article IV hereof.
2.4 Purchase from GDC, SSC and CLS. It is
acknowledged that (i) Purchaser will acquire the Assets
constituting the Business from each of GDC, SSC and CLS (as well as
from any other Affiliate of GDC holding such assets), (ii)
Purchaser will not acquire the stock of SSC and CLS, (iii)
Purchaser may elect to purchase all or part of the Purchased Assets
through one or more of its direct or indirect Subsidiaries, as
provided in Section 13.5 hereof and (iv) each Seller will execute
such documents as may be reasonably necessary to facilitate the
foregoing.
ARTICLE III
CERTAIN AGREEMENTS OF THE PARTIES
3.1 Certain Provisions Relating to Assets. (a)
Except for Government Contracts, to the extent that a Contract,
Authorization or other asset which would otherwise be included
within the definition of "Assets", or any claim, right or benefit
arising thereunder or resulting therefrom (each an "Interest" and
collectively the "Interests"), is not capable of being sold,
assigned, transferred or conveyed without the approval, consent or
waiver of the issuer thereof or the other party thereto, or any
third Person (including a government or governmental unit or
agency), and such approval, consent or waiver has not been obtained
prior to the Closing, or if such sale, assignment, transfer or
conveyance or attempted sale, assignment, transfer or conveyance
would constitute a breach thereof or a violation of any law,
decree, order, regulation or other governmental edict, this
Agreement shall not constitute a sale, assignment, transfer or
conveyance thereof, or an attempted sale, assignment, transfer or
conveyance thereof.
(b) Anything in this Agreement to the
contrary notwithstanding, Seller is not obligated to sell, assign,
transfer or convey to Purchaser any of its rights and obligations
in and to any of the Interests without first obtaining all
necessary approvals, consents or waivers. Seller shall cooperate
with Purchaser to obtain all approvals, consents or waivers
necessary to convey to Purchaser each such Interest as soon as
practicable; PROVIDED, HOWEVER, that neither Seller nor Purchaser
shall be obligated to pay any consideration therefor to the third
party from whom such approval, consent or waiver is requested
except as set forth in Section 7.2 hereof. The failure by Seller
to obtain any approval, consent or waiver necessary to convey any
Interest to Purchaser, except with respect to those approvals and
consents listed on Schedule 3.1(b) (which is to be prepared by
Purchaser after its review of the Contracts), shall not affect the
obligations of the parties to close hereunder.
(c) To the extent any of the approvals,
consents or waivers necessary to convey any Interest to Purchaser
(other than the approvals and consents referred to in Section
3.1(b)) have not been obtained by Seller as of the Closing or to
the extent any Interest cannot be transferred to Purchaser by the
Closing, Seller shall, during the remaining term of such Interest,
use all reasonable efforts, to (1) at the request of Purchaser,
cooperate with Purchaser to obtain the consent of any such third
party; provided that neither Seller nor Purchaser shall be
obligated to pay any consideration therefor except as set forth in
Section 7.2 hereof, (2) at the request of Purchaser, cooperate with
Purchaser in any reasonable and lawful arrangements designed to
provide the benefits of such Interest to Purchaser (including, with
respect to any Property leased by Seller which would otherwise be
an Asset and as to which Seller has been unable to obtain the
lessor's consent to the assignment thereof to Purchaser, to
sublease such Property (to the extent permitted under the pertinent
lease) to Purchaser, upon substantially the same terms and
conditions as are set forth in such lease with respect to Seller),
so long as Purchaser cooperates with Seller in such arrangements
and promptly reimburses Seller for any and all payments required to
be made by Seller after the Closing Date by the terms of the
document governing such Interest (as the same shall be in effect on
the date hereof) and any fees, costs and expenses of any nature
incurred by Seller in connection with any such arrangements, and
(3) enforce, at the request of Purchaser and at the expense and for
the account of Purchaser, any rights of Seller arising from such
Interest against the issuer thereof or the other party or parties
thereto (including the rights to elect to terminate any such
Interest in accordance with the terms thereof upon the advice of
Purchaser). To the extent that Seller enters into lawful
arrangements reasonably satisfactory to Purchaser designed to
provide the benefits of any Interest to Purchaser as set forth in
clauses (1) and (2) above, such Interest shall be deemed to have
been conveyed to Purchaser for the purposes of this Agreement;
PROVIDED, HOWEVER, that the approvals and consents listed on
Schedule 3.1(b) shall be obtained as a condition to Closing, unless
waived by Purchaser.
ARTICLE IV
POST-CLOSING ADJUSTMENT
Purchaser and Seller acknowledge that they may have
differences of opinion regarding the underlying assumptions used
for the earnings accrual rates and estimates at completion in the
Atlas Program. The purpose of the preparation of the Closing
Statement of Net Assets to be Sold is to determine the net change
in the economic value of the Space Systems Division between that
existing on August 29, 1993 and that existing on the Closing Date,
by comparing financial statements as of those dates prepared by
Seller on a consistent basis; the purpose is not to resolve any
differences of opinion that may exist with respect to the
underlying assumptions used for the earnings accrual rates and
estimates at completion in the Atlas Program.
4.1 Preparation of August Balance Sheet. Seller
has provided to Purchaser prior to the execution of this Agreement
a balance sheet, including related footnotes thereto, of the Space
Systems Division as of August 29, 1993 (the "August Balance
Sheet"), which August Balance Sheet (i) except as provided in
clause (ii) hereof, has been prepared in accordance with GAAP
consistently applied and (ii) takes into account all accruals and
other adjustments (a) required to present the Space Systems
Division as a stand alone entity, including certain liabilities or
reserves which may previously have been recorded at the
headquarters level, and (b) appropriate for a balance sheet being
prepared at a financial year end.
4.2 Preparation of Initial Statement of Net Assets to be
Sold and Initial Reconciling Statement. Seller has provided to
Purchaser prior to the execution of this Agreement the Initial
Statement of Net Assets to be Sold which is based upon the August
Balance Sheet and which (i) except as otherwise provided in the
remainder of this Section 4.2, has been prepared in accordance with
GAAP on a basis consistent with the August Balance Sheet and the
basis of accounting described in the footnotes to the Initial
Statement of Net Assets to be Sold, which footnotes are attached to
the Initial Statement of Net Assets to be Sold, (ii) has been based
upon estimate-at-complete assumptions set forth on Schedule 4.2,
and (iii) includes the following adjustments to the August Balance
Sheet:
(a) Excluded Assets and Excluded Liabilities
(except for the Space Systems Division's investment and
related customer deposits with respect to AMSC) have been
excluded;
(b) All intercompany accounts between
the Space Systems Division and Seller, or any other divisions,
units, Affiliates or Subsidiaries of Seller, have been
eliminated;
(c) To the extent that any such fee or
expense would not otherwise have been incurred by the Space
Systems Division in the ordinary course of business,
liabilities or reserves with respect to any accounting, legal,
investment or other professional or advisory fees or expenses
relating to the negotiation of this Agreement or the
transactions contemplated herein have been excluded;
(d) An adjustment has been made to include any
employee or employee benefit matters that have been designated
as Assumed Liabilities in Article XI and which are not
otherwise included on the August Balance Sheet; and
(e) eliminate all accrued liabilities or
benefits for current or deferred federal income taxes and all
accrued liabilities or benefits for deferred state income
taxes (including deferred state franchise taxes).
The resulting document shall hereinafter be referred to as the
"Initial Statement of Net Assets to be Sold." Seller has provided
to Purchaser in conjunction with the Initial Statement of Net
Assets to be Sold an Initial Reconciling Statement which traces,
reconciles and explains in reasonable detail all adjustments made
to the August Balance Sheet in order to comply with this Section
4.2. The resulting document shall hereinafter be referred to as
the "Initial Reconciling Statement."
4.3 Preparation of Closing Date Balance Sheet. As promptly
as practicable, but no later than sixty (60) days after the Closing
Date, Seller shall prepare or cause to be prepared a balance sheet
of the Space Systems Division as of the close of business on the
day preceding the Closing Date (the "Closing Date Balance Sheet")
which balance sheet shall (i) except as provided in clause (ii)
hereof, be prepared in accordance with GAAP consistently applied
and (ii) shall take into account all accruals and other adjustments
(a) required to present the Space Systems Division as a stand alone
entity, including certain liabilities or reserves which may
previously have been recorded at the headquarters level and were
included in the August Balance Sheet, and (b) appropriate to a
balance sheet being prepared at a financial year end. Purchaser
shall, at the request of Seller, cooperate with Seller in the
preparation of the Closing Date Balance Sheet.
4.4 Preparation of Closing Statement of Net Assets to be
Sold and Closing Reconciling Statement. As promptly as
practicable, but no later than sixty (60) days following the
Closing Date, Seller shall prepare, or cause to be prepared, the
Closing Statement of Net Assets to be Sold, which shall be based
upon the Closing Date Balance Sheet and which shall:
(i) except as otherwise provided in the
remainder of this Section 4.4, be prepared in accordance with GAAP
on a basis consistent with the Closing Date Balance Sheet;
(ii) make the same adjustments as
were made to the Initial Statement of Net Assets to be Sold as
provided for by Section 4.2;
(iii) be adjusted to remove the effects, if
any, resulting from any change in the assets or liabilities of the
Space Systems Division during the period after the Initial
Statement of Net Assets to be Sold through the Closing Date, caused
by any write-ups or similar re-evaluations in the book value of any
of the Assets that are not realizable within 12 months after the
Closing Date Balance Sheet;
(iv) include an adjustment for any
differences noted between a physical count of all fixed assets,
equipment and inventories which are noted as a result of any
physical inventory observation procedures conducted by Arthur
Andersen;
(v) except as otherwise provided in
clause (vi), for those Contracts accounted for under the percentage
of completion method (Titan/Centaur program), the earnings accrual
rates applied to Contracts in process, and for those Contracts
accounted for under the completed contract method (Atlas Program),
the estimates at completion applied to Contracts in process, shall,
in each case, be identical to those used in the preparation of the
Initial Statement of Net Assets to be Sold (the significant
estimate-at-complete assumptions underlying the Initial Statement
of Net Assets to be sold are reflected in Schedule 4.2);
(vi) except with respect to the Atlas Program,
make those adjustments to the earnings accrual rates and estimates
at completion underlying the Closing Statement of Net Assets to be
Sold which are of such a nature as would under GAAP consistently
applied require a change in the cost estimates at completion;
(vii) eliminate any amount that has been
recorded in any asset account to the extent that the benefits
associated with the related asset cannot be transferred to or
realized by Purchaser, including, without limitation, any amounts
(i) intended to reflect potential prospective benefits of the
carryover of losses or of tax benefits or attributes of the Space
Systems Division from periods prior to or ending on or as of the
Closing Date Balance Sheet, and (ii) in respect of any insurance
policy covering any of the Assets if such insurance policy and the
benefits thereof will not be assigned or otherwise transferred to
the Purchaser at the Closing; provided, however, that, for the
purposes of the foregoing, Purchaser and Seller agree that this
subsection shall not be construed to prevent an amount from being
recorded in an asset account if Purchaser's sole basis for
excluding it is that the benefit will not be realized because the
estimates at completion on the Atlas Program are not sufficiently
conservative; and
(viii) eliminate all cash balances,
including all negative cash balances.
The resulting document shall hereinafter be referred to as the
"Closing Statement of Net Assets to be Sold." Seller shall provide
to Purchaser in conjunction with the Closing Statement of Net
Assets to be Sold, the Closing Reconciling Statement which shall
trace, reconcile and explain in reasonable detail all adjustments
made to the Closing Date Balance Sheet in order to comply with this
Section 4.4. The resulting document shall hereinafter be referred
to as the "Closing Reconciling Statement."
4.5 Audit. Seller has engaged, or immediately
upon execution of this Agreement shall engage, at Seller's expense,
Arthur Andersen to conduct an examination of the Closing Date
Balance Sheet in accordance with generally accepted auditing
standards and to issue an unqualified report thereon. Arthur
Andersen's judgment as to the audit scope and materiality threshold
for proposed adjusting entries shall not be restricted by any
limitations imposed by Seller or Purchaser. In addition, Arthur
Andersen shall report on the Closing Statement of Net Assets to be
Sold and attest that the Closing Statement of Net Assets to be Sold
was prepared in accordance with Section 4.4. Seller shall agree to
and shall make any adjustments necessary to (i) the Closing Date
Balance Sheet in order to obtain and deliver to Purchaser as soon
as is practicable, but no later than sixty (60) days after the
Closing Date, Arthur Andersen's unqualified report thereon (except
for (a) the going concern statement and (b) the fact that the
Closing Date Balance Sheet contains no accrual for current federal
income taxes and deferred federal and state income taxes) and (ii)
the Closing Statement of Net Assets to be Sold in order to obtain
and deliver to Purchaser as soon as is practicable, but no later
than sixty (60) days after the Closing Date, Arthur Andersen's
report attesting that the Closing Statement of Net Assets to be
Sold was prepared in accordance with this Article IV of this
Agreement (the "Attestation Report").
4.6 Review of Closing Statement of Net Assets to
be Sold.
(a) For a period of thirty (30) days after the
delivery of the last to be delivered of the Closing Date Balance
Sheet and Arthur Andersen's unqualified report thereon or the
Closing Statement of Net Assets to be Sold and Arthur Andersen's
Attestation Report thereon, Purchaser and Purchaser's independent
accountants shall be entitled to review such documents and submit
to Arthur Andersen in writing any suggestions for changes to the
Closing Statement of Net Assets to be Sold that Purchaser believes
are appropriate in order to cause the Closing Statement of Net
Assets to be Sold to be prepared in accordance with the
requirements of this Agreement. Any suggestions submitted to
Arthur Andersen shall be accompanied by a reasonable explanation of
Purchaser's basis for the suggested change and shall concurrently
be submitted to Seller. Purchaser acknowledges that with respect
to the Space Systems Division's accounting for its Atlas Program,
which is included in the audited Closing Statement of Net Assets to
be Sold, Purchaser will not challenge the underlying accounting
practices that are used for the Atlas Program, as long as such
accounting practices are consistent with those practices that were
used in the preparation of the Initial Statement of Net Assets to
be Sold. For a period of fifteen (15) days after the expiration of
such thirty (30) day period, the parties shall consult with each
other and with Arthur Andersen to determine if any such suggested
changes and/or the proposed responses thereto may be resolved to
the mutual satisfaction in writing of each party hereto. If any
such suggested change and/or the proposed responses thereto shall
not have been resolved to the mutual written satisfaction of each
party hereto (the "Unresolved Changes") within such fifteen (15)
day period or such additional period as the parties may mutually
agree upon in writing, an independent auditing firm of recognized
national standing (the "Arbiter") shall be selected by Purchaser
and Seller, which shall not be the regular auditing firm of
Purchaser or Seller, to review the Unresolved Changes. The parties
hereto shall present their differences in writing (each party
simultaneously providing to the other a copy of all documents
submitted) to the Arbiter and shall cause the Arbiter promptly to
review this Agreement and the Unresolved Changes and determine, as
the Arbiter deems necessary or appropriate, to what extent the
Unresolved Changes are appropriate in order to cause the Closing
Statement of Net Assets to be Sold to be prepared (i) in accordance
with GAAP consistently applied, (ii) on a basis consistent with the
Initial Statement of Net Assets to be Sold, and (iii) in accordance
with this Agreement. In reaching such resolution, the Arbiter
shall consider only the Unresolved Changes, it being understood
that the Arbiter shall not be retained to conduct its own
independent audit or review, but rather shall be retained to
resolve specific differences between Purchaser and Seller within
the range of such differences. The resolution by the Arbiter of
the Unresolved Changes shall be reflected in the Closing Statement
of Net Assets to be Sold. Within three (3) days after the
resolution of the Unresolved Changes or, if there were no
Unresolved Changes, within three (3) days after the expiration of
the requisite review period, such Closing Statement of Net Assets
to be Sold (the "Final Closing Statement of Net Assets to be Sold")
shall be delivered concurrently to Purchaser and Seller and shall
be final and binding upon the parties hereto. Purchaser and Seller
shall each pay one-half of the costs of the Arbiter.
(b) For purposes of complying with the terms
set forth in this Article IV, each party shall cooperate with and
make available to the other party and its auditors and
representatives, all information, records, data, auditors' working
papers, and access to its personnel and shall permit access to its
facilities as may be reasonably required in connection with the
preparation and analysis of the Closing Statement of Net Assets to
be Sold, and the resolution of any Unresolved Changes or other
dispute(s) thereunder. Without limiting the generality of the
foregoing, (i) Seller shall permit Purchaser and its independent
accountants and representatives (A) to review all working papers
and computations prepared or used by Seller in preparing such
financial statements and in making any adjustments thereto, (B) to
review and have access to all working papers and computations
prepared or used by Arthur Andersen or any independent accounting
firm retained by Seller to review or assist in the preparation of
such financial statements, (C) to observe and participate in the
taking of the physical count of any of the fixed assets, equipment
and inventories of the Space Systems Division deemed necessary by
Arthur Andersen, and (D) to review all Documents and other relevant
data of the Space Systems Division, and (ii) Purchaser shall permit
Seller and its independent public accountants and representatives
to (A) review all working papers and compilations used by Purchaser
in reviewing the Closing Statement of Net Assets to be Sold and in
suggesting any proposed adjustments thereto, (B) have reasonable
access to the former employees of Seller who became employees of
Purchaser, (C) to review all working papers used by any independent
accounting firm retained by Purchaser to review or assist in the
preparation of any proposed adjustments, and (D) have reasonable
access to the Documents and other relevant data of the Space
Systems Division, in each case, for the purpose of attempting to
resolve the Unresolved Changes. After the Closing, Purchaser's
auditors shall also have access to Arthur Andersen's working papers
for the Final Closing Statement of Net Assets to be Sold as
necessary for the purpose of providing regular auditing services to
the Space Systems Division.
4.7 Adjustment of Purchase Price. If the Final
Closing Net Assets to be Sold are less than the Initial Net Assets
to be Sold, Seller shall pay to Purchaser, as an adjustment to the
Purchaser Price, an amount equal to such difference in the manner
and with interest as provided below. If the Final Closing Net
Assets to be Sold exceed the Initial Net Assets to be Sold,
Purchaser shall pay to Seller, as an adjustment to the Purchaser
Price, an amount equal to such excess in the manner and with
interest as provided below. Any such payment pursuant to this
Section 4.3 shall be made in immediately available funds within ten
(10) business days after receipt of the Final Closing Statement of
the Net Assets to be Sold. The amount of any payment made pursuant
to this Section 4.3 shall bear interest from and including the
Closing Date to, but excluding, the date of payment at the rate per
annum equal to the rate announced by Citibank, N.A. in the City of
New York as its base rate as in effect at the end of the day on the
Closing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
The following representations and warranties are made
by and with respect to Seller. Each such representation and
warranty shall be deemed to have been made by each of GDC, SSC and
CLS in their individual capacities. Accordingly Seller hereby
represents and warrants to Purchaser as follows:
5.1 Organization and Authority of Seller. Seller
is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation
with full power and authority, corporate and otherwise, to own,
lease and operate its properties and to carry on its business as
and where presently conducted, to enter into and to perform its
obligations under this Agreement and each of the Ancillary
Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. Seller is required
by virtue of the nature and characteristics of the assets, business
and operations of the Space Systems Division to be duly qualified
or otherwise authorized to do business as a foreign corporation in
each jurisdiction set forth in Schedule 5.1, and Seller is so
qualified and in good standing in each such jurisdiction.
5.2 Authorization of Agreements. The execution,
delivery and performance of this Agreement and each of the
Ancillary Agreements by Seller have been duly authorized by all
necessary action, corporate or otherwise, of Seller, and this
Agreement has been, and each of the Ancillary Agreements to which
it is a party will be, duly executed and delivered by Seller and
this Agreement constitutes, and each of the Ancillary Agreements to
which it is a party when executed will constitute, the valid and
binding obligation of Seller, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, and other similar laws now
or hereafter in effect affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
5.3 No Conflicts. The execution, delivery and
performance of this Agreement and each of the Ancillary Agreements
to which it is a party by Seller and the consummation of the
transactions contemplated hereby and thereby do not and will not
(with or without the giving of notice or the passage of time or
both) (a) conflict with the certificate of incorporation or by-laws
of Seller or, except as set forth in Schedule 5.3, conflict with,
or result in the breach or termination of, or constitute a default
under, (1) any Authorization or Contracts or (2) any order,
judgment, injunction or decree of any court or governmental
authority, foreign or domestic, to which Seller is a party or by
which it or any of its assets or properties are bound; (b)
constitute a violation of any law, statute or regulation of any
governmental authority, domestic or foreign, applicable to Seller;
or (c) result in the creation of any lien, charge or encumbrance
upon any of the assets or properties of the Space Systems Division.
5.4 Consents. No consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority
or other third party is required on the part of Seller in
connection with Seller's execution, delivery and performance of
this Agreement and the Ancillary Agreements to which it is a party,
except for (a) any required filings with the Federal Trade
Commission and the Department of Justice pursuant to the HSR Act
and due expiration of the waiting period (including any extensions)
thereunder, (b) any novations required in connection with
Government Contracts, (c) any filings required under the Department
of Defense Industrial Security Manual for Safeguarding Classified
Information (the "DoD Manual"), (d) any filings required under
United States Export Control Laws, (e) those consents or approvals
which are listed in Schedules 3.1(b) and 5.4 and (f) consents under
Contracts (other than any Government Contract), which Contracts
individually or in the aggregate are not material to the Business.
5.5 Financial Statements. (a) Seller has delivered to
Purchaser balance sheets and statements of operations for the
Business as at and for the periods ended December 31, 1991,
December 31, 1992 and August 29, 1993 (collectively, the "Financial
Statements"), copies of which are attached to Schedule 5.5(a)
hereto. All such Financial Statements have been prepared based
upon the books and records of the Space Systems Division in
conformity with GAAP consistently applied (except for changes, if
any, required by GAAP and disclosed therein). Such statements of
operations present fairly the results of operations of the Business
for the periods covered, and the balance sheets present fairly the
financial condition of the Business as of their respective dates.
The August 29, 1993 Financial Statements reflect all adjustments
(which consist only of normal recurring adjustments or adjustments
not material in amount and include, but are not limited to,
estimated provisions for year-end adjustments) necessary for a fair
presentation. Seller has made available to Purchaser copies of
each management letter or other letter delivered to Seller by
Arthur Andersen relating to any review by Arthur Andersen of the
other matters of the Business during the five-year period ended
December 31, 1992 or thereafter. Since December 31, 1992, there
has been no change in any of the significant accounting policies,
practices or procedures of Seller as they relate to the Business.
(b) The August Balance Sheet, the Initial Statement
of Net Assets to be Sold and the Initial Reconciling Statement have
been prepared in accordance with the provisions of Article IV of
this Agreement.
(c) Set forth in Schedule 5.5(c) is a complete and
correct list of all Atlas Program and Contract cost reserves (i.e.,
reserves provided for in Seller's estimates at completion),
reserves for warranties, and reserves for defective pricing
maintained by Seller with respect to the Space Systems Division as
of the date of the Initial Statement of Net Assets to be Sold, and
disclosure of any change in such reserves between the date of the
Initial Statement of Net Assets to be Sold and the Closing Date.
5.6 Forecasts. Notwithstanding any disclaimers to
the contrary (whether oral or in writing) made by or on behalf of
Seller, all forward looking statements (including, but not limited
to, forecasts and projections of revenues, cash flow, income or
losses, capital expenditures, or other financial items, management
plans and objectives for future operations, statements of future
economic performance, and statements of the assumptions underlying
or relating to any of the foregoing), contained in the items
identified on Schedule 5.6, were based upon grounds which, to
Seller's Knowledge, were reasonable when made and were disclosed to
Purchaser in good faith.
5.7 Absence of Certain Developments. Since August 29,
1993, there has not been any material adverse change in the
business, condition (financial or otherwise), revenues, earnings,
assets, prospects or results of operations of the Space Systems
Division, other than changes in the prospects of the Space Systems
Division resulting from a General Industry Development.
5.8 Material Contracts. (a) All Contracts of Seller which
relate to the Space Systems Division are in full force and effect
and are valid, binding and enforceable in accordance with their
terms, except to the extent that the failure, individually or in
the aggregate, of any Contract to be valid, binding and enforceable
would not have a Material Adverse Effect on the Space Systems
Division, and subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).
Schedule 5.8(a)(1) sets forth a complete and correct list of all
Contracts which contain an obligation on the part of Seller to pay
more than $1 million, to which Seller is a party relating to the
Space Systems Division, excluding Contracts entered into in the
ordinary course of business relating to products and services
provided or to be provided by Seller to customers of the Space
Systems Division (which Contracts are covered by Section 5.14).
Except as set forth in Schedule 5.8(a)(2), there are no defaults or
threatened defaults by Seller under any Contract or, to the best of
Seller's knowledge, by any other party under a Contract, other than
such default or defaults under a Contract (other than a Government
Contract) which would not, individually or in the aggregate, have
a Material Adverse Effect on the Space Systems Division.
(b) Except as set forth in Schedules 5.8(b)(1)
through (b)(9), Seller neither has participated in, nor is bound by
or subject to: (1) any employment, consulting, sales
representative or similar Contract relating to the Space Systems
Division which is not terminable without penalty or further
obligation on the part of Seller within 30 days or which contains
an obligation to pay more than $98,000 per year; (2) any Contract
which could result in the imposition on any Person of an excise tax
under Section 4999 of the Code; (3) any Contract of guarantee or
indemnification by Seller on behalf of the Space Systems Division
running to any Person which involves, individually or in the
aggregate, an amount of more than $100,000; (4) any indebtedness of
Seller on behalf of the Space Systems Division for borrowed money;
(5) any indebtedness of whatsoever nature (including, without
limitation, open account indebtedness) to any Affiliate of Seller
or any Contract with or to any Affiliate of Seller; (6) any
Contract containing any covenant limiting the freedom of Seller in
respect of the business or operations of the Space Systems Division
to engage in any line of business or compete with any Person or in
any geographic area; (7) any Contract relating to the disposition
or acquisition of the assets of, or any interest in, any business
enterprise which relates to the Space Systems Division; (8) any
Contract relating to capital expenditures in respect of the Space
Systems Division not reflected in the capital spending plan annexed
to Schedule 5.8(b)(8) and involving future payments which, together
with future payments under all other Contracts relating to the same
capital project, exceed $100,000; or (9) except for Contracts
entered into with customers and suppliers of the Space Systems
Division in the ordinary course of business, any other Contract
which relates to the Space Systems Division and which involves
$100,000 or more and which is not cancelable without penalty within
30 days.
(c) Seller has made available or delivered to
Purchaser complete and correct copies of all Contracts of Seller
that relate to the Space Systems Division, together with all
amendments thereto, which involve $98,000 or more.
(d) Schedule 5.8(d) sets forth all bids, proposals
or quotations made by the Space Systems Division and which were
outstanding as of August 29, 1993 (which shall be updated as of the
Closing Date). Schedule 5.8(d) identifies each such bid, proposal
or quotation by number and the party to which such bid, proposal or
quotation was made, the proposed price and Seller's current
assessment of profit or loss at completion for each such bid,
proposal or quotation. Except as set forth on Schedule 5.8(d),
there are no outstanding bids, proposals or quotations made by the
Space Systems Division for which the total costs estimated at the
time of the bid, including allocable overhead and general and
administrative expenses, as estimated in good faith by Seller,
would result in a net loss on the applicable Contract.
5.9 Employee Benefit Plans. (a) Schedule 5.9(a) contains
a complete and correct list of all Employee Benefit Plans and any
other employee benefit arrangements or payroll practices,
including, without limitation, employment agreements, severance
agreements, executive compensation arrangements, incentive programs
or arrangements, sick leave, vacation pay, severance pay policy,
plant closing benefits, salary continuation for disability,
consulting or other compensation arrangements, workers'
compensation, retirement, deferred compensation, bonus, stock
purchase, hospitalization, medical insurance, life insurance,
tuition reimbursement or scholarship programs, any plans providing
benefits or payments in the event of a change of control, change in
ownership, or sale of a substantial portion (including all or
substantially all) of the Assets of the Seller or the Business,
maintained by Seller or to which Seller has contributed or is or
was obligated to make payments, in each case with respect to any
employees (or, if the Seller has any existing liability, former
employees) of Seller who are employed in the Space Systems Division
(hereinafter, the "GD Employee Benefit Plans"). All Employee
Pension Plans maintained by Seller, or to which Seller has
contributed or is obligated to contribute, in each case with
respect to any employees of Seller who are employed in the Space
Systems Division (hereinafter, the "GD Employee Pension Plans") are
separately listed on Schedule 5.9(a). Schedule 5.9(a) clearly
identifies all GD Employee Benefit Plans which are (i)
Multiemployer Plans, (ii) multiple employer plans subject to
Sections 4063 and 4064 of ERISA ("Multiple Employer Plans"), (iii)
plans other than Multiemployer Plans and Multiple Employer Plans
that are subject to Section 412 of the Code, (iv) plans intended to
qualify under Section 401 of the Code, and (v) "welfare benefit
plans" within the meaning of Section 3(1) of ERISA ("GD Welfare
Plans") which provide for continuing benefits or coverage for any
participant or any beneficiary of a participant after such
participant's termination of employment except coverage or benefits
required by Section 4980B of the Code if paid 100% by the
participant. Schedule 5.9(a) describes, and provides copies where
applicable, of each written communication made prior to the date
hereof by any officer of Seller or the Director of Human Resources
of the Space Systems Division or any fiduciary with respect to the
GD Employee Benefit Plans to present employees of the Space Systems
Division regarding any Employee Benefit Plan or other
employee-related practice, policy, or arrangement with respect to
this Agreement.
(b) Except as set forth on Schedule 5.9(b):
(1) the GD Employee Pension Plans which are
defined contribution plans intended to qualify under Section 401 of
the Code (the "GD Savings Plans") are so qualified and the trusts
maintained pursuant thereto are exempt from federal income taxation
under Section 501 of the Code, and nothing has occurred with
respect to the operation of the GD Savings Plans which could cause
the loss of such qualification or exemption or the imposition of
any material liability, penalty, or tax under ERISA or the Code;
(2) to Seller's Knowledge, no GD Employee
Benefit Plans have been amended in any manner which would require
the posting of a security under Section 401(a)(29) of the Code or
Section 307 of ERISA;
(3) there are no Multiemployer Plans or
Multiple Employer Plans in which employees of the Space Systems
Division currently participate or have participated in within the
last five (5) years;
(4) true, correct and complete copies of the
following documents, with respect to each of the GD Employee
Benefit Plans (exclusive of the defined benefit plans covering
employees who are not members of bargaining units identified on
Schedule 5.22) (the "GD Savings and Welfare Plans"), have been made
available or delivered by Seller to Purchaser: (A) all plan
documents, including trust agreements, insurance policies and
service agreements and amendments thereto, (B) the most recent
Forms 5500 and any financial statements attached thereto and those
for the prior two years, (C) the last Internal Revenue Service
determination letter, (D) summary plan descriptions, (E) the most
recent actuarial reports and those for the prior two years, if any,
and (F) written descriptions of all non-written agreements relating
to any such plan;
(5) to Seller's Knowledge, there are no
material pending claims or lawsuits which have been asserted or
instituted against the GD Employee Benefit Plans, the assets of any
of the trusts under such plans or the plan sponsor or the plan
administrator, or against any fiduciary of the GD Employee Benefit
Plans (other than routine benefit claims) nor does Seller have
knowledge of facts which could form the basis for any such claim or
lawsuit;
(6) all amendments and actions required to
bring the GD Savings Plans into conformity in all material respects
with all of the applicable provisions of ERISA, the Code and any
other applicable laws (including the rules and regulations
thereunder) have been made or taken except to the extent that such
amendments or actions are not required by law to be made or taken
until a date after the Closing Date and are disclosed on Schedule
5.9(b)(6);
(7) to Seller's Knowledge, the GD Employee
Benefit Plans have been maintained, in all material respects, in
accordance with their plan documents and with all provisions of the
Code and ERISA (including rules and regulations thereunder) and
other applicable law, and neither Seller nor any "party in
interest" or "disqualified person" with respect to the GD Employee
Benefits Plans has engaged in a "prohibited transaction" within the
meaning of Section 4975 of the Code or Title I, Part 4 or ERISA;
(8) to Seller's Knowledge, Seller has not
incurred any outstanding liability under Section 4062 of ERISA to
the PBGC, to a trust established under Section 4041 or 4042 of
ERISA, or to a trustee appointed under Section 4042 of ERISA; and
(9) none of the GD Employee Benefit Plans
contain any provisions which would prohibit the transactions
contemplated by this Agreement or any Ancillary Agreement or which
would give rise to any severance, termination or other payments as
a result of the transactions contemplated by this Agreement or any
Ancillary Agreement.
(c) Schedule 5.9(c) contains the most recent
quarterly listing of workers' compensation claims and a schedule of
workers' compensation claims of the Space Systems Division for the
last three fiscal years.
(d) Except as disclosed on Schedule 5.9(d), Seller
has not prepaid or prefunded any GD Welfare Plan through a trust,
reserve, premium stabilization or similar account.
5.10 Litigation; Violation of Law. (a) Except as set forth
on Schedule 5.10(a), there are no judicial, arbitral or
administrative actions, proceedings, investigations or audits
(including, but not limited to, the audits and investigations set
forth in Section 5.10(b) hereof) pending or overtly threatened that
question the validity of this Agreement or any of the Ancillary
Agreements to which Seller is a party or any action taken or to be
taken by Seller in connection with this Agreement or any of the
Ancillary Agreements to which it is a party, or which, if adversely
determined, would have a material adverse effect upon Seller's
ability to enter into or perform its obligations under this
Agreement or any of the Ancillary Agreements to which it is a
party.
(b) Except as set forth on Schedules 5.10(b)(1)
through (b)(3): (1) there are no suits, claims, actions, or legal,
administrative, arbitration or other proceedings or governmental
investigations or audits (other than routine audits under
Government Contracts the outcome of which would not have a material
adverse effect on the Business, the Space Systems Division or any
Contract) with respect to the Space Systems Division, including,
without limitation, any thereof related to any Government Contract
or other Contract to which Seller is a party, pending or overtly
threatened; (2) there are no orders, injunctions or decrees
outstanding against Seller related to any Government Contract or
other Contract to which the Space Systems Division (or Seller, in
connection with the Space Systems Division) is a party or pursuant
to which the Space Systems Division is performing services or
supplying goods; and (3) to Seller's Knowledge, there are no
claims, whether asserted or unasserted, or other assertions of
liability against Seller which relate to the Space Systems Division
and in each case, (A) in which relief other than, or in addition
to, money damages from Seller is sought, or (B) in which recovery
of money damages from Seller in an amount (individually or in the
aggregate for all such claims and assertions of liability) in
excess of $250,000 is sought.
(c) Except as set forth in Schedule 5.10(c), Seller
has not received any notice of violation of, and Seller is not in
violation of, any applicable federal, state, local or foreign law,
statute, ordinance, order, rule or regulation, or judgment entered
by any federal, state, local or foreign court or governmental
authority, relating in each case to the operation, conduct or
ownership of the properties or businesses of the Space Systems
Division, including but not limited to, the federal antitrust laws,
the state antitrust laws, the federal securities laws, the state
securities laws (so called "Blue Sky" and similar laws), and all
other federal, state or local laws, regulations or ordinances
pertaining to the Business, except for any such violations, which,
individually or in the aggregate, would not have a Material Adverse
Effect on the Space Systems Division; PROVIDED, HOWEVER, that
nothing contained herein shall modify knowledge qualifications
included within the representations and warranties set forth in
Sections 5.9, 5.14, 5.18 and 5.20.
(d) All Authorizations necessary to the current
operations of the Space Systems Division are set forth on Schedule
5.10(d) and are in full force and effect without any default
hereunder by Seller (other than Authorizations which, if not
currently held by Seller, do not adversely affect in any material
respect Seller's ability to conduct the business of the Space
Systems Division and which can be readily obtained without
significant cost or penalty) or, to Seller's Knowledge, by any
other party thereto, and Seller has not received any notice,
written or oral, of any claim or charge that Seller is currently in
violation of or in default under any Authorization or
Authorizations necessary to any of the current operations of the
Space Systems Division.
5.11 Tax and Other Returns and Reports (a) Except as set
forth in Schedule 5.11(a): (1) all federal Tax Returns, all state
and local income or franchise Tax Returns, and all other Tax
Returns (or extensions relating thereto) required to be filed by
Seller have been filed on a timely basis with the appropriate
governmental agencies in all jurisdictions in which such Tax
Returns are required to be filed and all Taxes shown as due thereon
have been timely paid; (2) all Taxes (other than federal or
deferred state Taxes measured or assessed on the net income of
Seller, including deferred state franchise Taxes) imposed on Seller
(whether or not shown on any Tax Return) in respect of any taxable
period (or portion thereof) ending on or prior to the Closing Date
(A) have been fully and timely paid or (B) are and will be
adequately provided for on the Closing Statement of Net Assets to
be Sold and are not and will not be material, individually or in
the aggregate, to the Space Systems Division; provided, however,
that the representations and warranties set forth in this Section
5.11(a) are made only to the extent that Taxes (i) are or may
become liens on the Purchased Assets or (ii) for which Purchaser is
or may be liable in the capacity of transferee of the Purchased
Assets.
(b) Except as set forth in Schedule 5.11(b), none
of the Assets is (1) "tax-exempt use property" within the meaning
of Section 168(h)(1) of the Code, (2) used predominantly outside
the United States within the meaning of Prop. Reg. Section
1.168-2(g)(5), (3) "tax-exempt bond financed property" within the
meaning of Section 168(g)(5) of the Code, or (4) "limited use
property" as that term is used in Rev. Proc. 76-30. Following the
Closing, none of the Assets will be property that Purchaser or any
of its Affiliates will be required to treat as being owned by any
other Person pursuant to the provisions of Section 168(f)(8) of the
1954 Code.
(c) Seller is not a foreign person within the
meaning of Section 1445 of the Code.
(d) With respect to Leased Assets placed in service
on or before the date hereof, and except as a result of acts,
errors or omissions, including breaches of representations, by the
lessee thereunder, each of the Lease Contracts (excluding property
sold on installment sales contracts) will be treated as a "true
lease" for federal income tax purposes.
(e) The transactions contemplated by this Agreement
are not subject to tax withholding pursuant to the provisions of
Section 3406 or Subchapter A of Chapter 3 of the Code or any other
provision of applicable law.
5.12 Absence of Undisclosed Liabilities. (a) Except as set
forth on Schedule 5.12, Seller does not have, in connection with
the Space Systems Division, any liabilities or obligations, either
accrued, contingent or otherwise, of a type normally reflected on
a balance sheet or disclosed in a footnote thereto prepared in
accordance with GAAP (including all liabilities and accruals
necessary to present the Space Systems Division as a stand alone
entity inclusive of any liabilities which may have previously been
recorded at the corporate office level), (1) which, if existing as
of December 31, 1992, or August 29, 1993, have not been reflected
in the Financial Statements; or (2) which, if incurred since the
date of the August 29, 1993 Financial Statements will not be
reflected in the Final Closing Statement of Net Assets to be Sold,
except for liabilities arising after the date of the August 29,
1993 Financial Statements and discharged prior to the Closing Date.
(b) Except as set forth on Schedule 5.12, since
December 31, 1992, there has not been, occurred or arisen: (1) any
damage or destruction to properties or assets of Seller, whether
covered by insurance or not, which had or may have a Material
Adverse Effect on the Space Systems Division; (2) any increase in
the compensation payable, or to become payable, by Seller to any
officer or employee employed in the Space Systems Division whose
remuneration during 1992 exceeded the rate of $75,000 per year, or
any increase in benefits or benefit plan costs or any material
change in any bonus, insurance, pension, compensation or other
benefit plan made for or with or covering any officer or employee
of Seller employed in the Space Systems Division; or (3) any waiver
by Seller of any rights which, individually or in the aggregate,
would have a Material Adverse Effect on the Space Systems Division.
5.13 Affiliate Agreements. Except as set forth on Schedule
5.13(a), there are no Contracts between Seller and its Affiliates
in connection with the Space Systems Division, including, without
limitation, any such Contracts relating to the provision of any
services by Seller to any such Affiliate, or by any such Affiliate
to Seller, which Contracts are not terminable at will by Seller
without penalty. Schedule 5.13(b) sets forth a list of all
interdivisional Contracts and invoices outstanding as of the date
of this Agreement which relate to (i) the provision of products or
services to the Space Systems Division by any other division, unit,
Subsidiary or other Affiliate of Seller or (ii) the provision of
products or services by the Space Systems Division to any other
division, unit, Subsidiary or other Affiliate of Seller.
5.14 Contracts for the Sale of Products or Services. (a)
Schedule 5.14(a) contains a complete and accurate list of all
Contracts pursuant to which Seller provides, or has
agreed to provide, products or services to customers of the Space
Systems Division, including both commercial Contracts and
Government Contracts, but excluding Contracts which
individuallyinvolve a dollar amount of less than $500,000.
(b) Except as set forth on Schedules 5.14(b)(1)
through (b)(14):
(1) The Space Systems Division has complied in
all material respects with all applicable federal procurement laws
and regulations including, without limitation, the Truth in
Negotiations Act, the Federal Acquisition Regulation, the Defense
Federal Acquisition Regulation Supplement, the National Aeronautics
and Space Administration Federal Acquisition Regulation Supplement,
the Department of Energy Acquisition Regulation and the
Procurement and Integrity Act;
(2) All of the Contracts set forth on
Schedules 5.8 and 5.14(a) and the Leases set forth on Schedule 5.20
are valid and are binding on the parties thereto and the Space
Systems Division is in compliance in all material respects with all
terms and conditions in such Contracts;
(3) The pricing, cost accounting, estimating,
property and resource planning and procurement systems relating to
the Space Systems Division have been disclosed to the extent
required by law or regulation to the United States government and
such disclosures are in compliance in all material respects with
applicable federal procurement law regulations;
(4) Neither Seller, nor any officer, director,
employee, agent, or representative of Seller or the Space Systems
Division has made, with respect to the Business (i) any illegal
political contributions, (ii) payments from corporate funds not
recorded on the books and records of Seller or the Space Systems
Division, as the case may be, (iii) payments from corporate funds
that were falsely recorded on the books and records of Seller or
the Space Systems Division, as the case may be, (iv) any payments
from corporate funds, promises to pay, or authorization of payment,
or offer, gift or promise to give, to any government officials or
any foreign political party, official thereof or candidate for
foreign political office, or to any person while knowing that all
or a portion of such funds will be offered directly or indirectly
to any foreign official or any foreign political party, party
official, or candidate for foreign political office for the purpose
of influencing the action of such official, party official, or
candidate for political office or the action of the government, or
foreign political party, in order to obtain, retain or direct
business to or obtain, retain or direct licenses or other special
treatment for the Space Systems Division;
(5) Seller, with respect to the Space Systems
Division, has never been debarred or suspended from participation
in the award of Contracts or subcontracts or from otherwise
conducting business with the United States government or any agency
thereof, nor are there any facts or circumstances which may form
the basis of a debarment or suspension proceeding;
(6) To Seller's Knowledge there are no actual,
asserted or threatened performance or administrative deficiencies
under any Contract, and Seller has not received any notice of a
performance or administrative deficiency, any stop work orders,
terminations, cure notices or notices of default under any of the
Contracts;
(7) The Space Systems Division holds such
security clearances as are required to perform its respective
Contracts or subcontracts. There are no facts or circumstances
currently existing or which have occurred that could result in the
suspension or termination of such clearances, or that could render
the Space Systems Division ineligible for such security clearances
in the future. All security measures required by the Department of
Defense Industrial Security Manual have been implemented in all
material respects;
(8) There are no Contracts for the sale of
products or services by the Space Systems Division for which the
most recent estimated costs at completion, including allocable
overhead and general and administrative expenses, as estimated in
good faith by Seller, exceed the contract price;
(9) There is no unexercised option for the
sale of products or services by the Space Systems Division for
which the most recent estimated total costs of completing the
unexercised option, including allocable overhead and general and
administrative expenses, as estimated in good faith by Seller,
would result in a net loss on the applicable Contract;
(10) There are no Contracts for the sale of
products or services by the Space Systems Division for which, at
the time of the most recent scheduled contract milestone, the work
schedule was over 60 days late or, in the absence of scheduled
contract milestones, is currently estimated to be over 60 days late
and, in each case, where such delinquency could reasonably be
expected to have a material adverse effect on the ability of the
Space Systems Division to perform the Contract without default or
penalty;
(11) There are no Contracts for the sale of
products or services by the Space Systems Division which include
provisions for a reduction in price or a liquidated damages clause
for late delivery;
(12) There are no Contracts for the sale of
products or services by the Space Systems Division which require
Seller to be an account party to a letter of credit or bank
guarantee which allows the beneficiary to draw funds without the
specific consent of the account party, in the absence of an
arbitration or judicial ruling in favor of the beneficiary;
(13) There is no outstanding bid for the sale
of products or services where performance has begun or will begin
prior to Contract award, nor are there any existing Contracts that
are being performed without contractual funding; and
(14) There are no claims or requests for
equitable adjustment outstanding or, to the Seller's Knowledge,
threatened under any Contracts in process.
5.15 Export Control and Related Matters. (a) Seller and
the Space Systems Division are in compliance with all United States
Export Control Laws, and are in compliance in all material respects
with all Foreign Export Control Laws.
(b) The Space Systems Division has all necessary
authority under the Export Control Laws to conduct operations
including, but not limited to, (1) all necessary licenses for any
pending export transactions, (2) all necessary licenses and
clearances for the disclosure of information to foreign persons and
(3) all necessary registrations with government agencies with
authority to implement the Export Control Laws.
(c) Neither Seller nor the Space Systems Division
has participated directly or indirectly in any boycotts or other
similar practices in violation of the regulations of the United
States Department of Commerce or Section 999 of the Code.
5.16 Cooperative Business Agreements. Schedule 5.16
contains a complete and correct list of all of the teaming
arrangements, MOUs and MOAs to which Seller is a party and which
relate to the Space Systems Division. Seller does not own any
Joint Venture Interests which relate to the Space Systems Division.
Each such agreement is the valid, binding, and enforceable
obligation of Seller and, to Seller's knowledge, the other party or
parties thereto, and is in full force and effect, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, and other similar laws now or hereafter
in effect affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law
or in equity). Neither Seller nor, to Seller's knowledge, the
other party or parties thereto, is in breach of any material terms
of any such agreement.
5.17 Personal Property. (a) Except as set forth on Schedule
5.17(a), Seller now has, and on the Closing Date will have, good
and valid title to all such tangible personal Property owned by it
as of the date of this Agreement and utilized in the operations of
the Space Systems Division and the Business, free and clear of all
liens, security interests, mortgages, claims, levies, charges,
pledges, hypothecations, conditional sale or retention contracts
and encumbrances of any nature whatsoever (collectively, "Liens"),
except for Liens of the type referred to in Section 5.20(a)(v)
hereof. Except as set forth on Schedule 5.4 and Schedule 5.17 and
assuming Purchaser has or obtains all the Authorizations set forth
on Schedule 5.10(d), upon consummation of the transactions
contemplated by this Agreement Purchaser will be entitled to
continue to use all tangible personal Property owned or used by the
Space Systems Division on the date hereof. All such tangible
personal Property of whatsoever nature owned or leased by Seller
which is material to the business, condition (financial or
otherwise), revenues, earnings, assets, prospects or results of
operations of the Space Systems Division, are "Assets" as defined
in this Agreement, and are in good operating condition and repair,
ordinary wear and tear excepted, and are suitable for the purposes
for which they are currently being used.
(b) Schedule 5.17(b) contains a complete and
correct list of all government-owned Property, including, without
limitation, tooling and test equipment, provided under, necessary
to perform the obligation under, or for which Purchaser could be
held accountable under, the Government Contracts transferred to
Purchaser pursuant to this Agreement and such government-owned
Property is maintained by Seller in accordance with a government
approved property management system.
5.18 Environmental Matters. Except as disclosed in Schedule
5.18, (i) the operations of the Space Systems Division comply in
all respects with all applicable Environmental Laws, except where
noncompliance would not, in the aggregate, result in any damage,
loss, liability or expense in excess of $100,000, (ii) the Space
Systems Division has all appropriate Permits necessary for its
operations, all such Permits are in full force and effect and the
Space Systems Division is in compliance with all terms and
conditions of such Permits; (iii) none of the operations of the
Space Systems Division is subject to any judicial or administrative
civil or criminal proceeding alleging the violation of any
applicable Environmental Laws nor, to Seller's Knowledge, has any
such proceeding been threatened; (iv) to Seller's Knowledge, none
of the operations of the Space Systems Division is the subject of
any federal, state or local investigation evaluating whether any
Remedial Action is needed to respond to a Release of any
Contaminant into the environment; (v) neither Seller nor any of its
Subsidiaries or, to Seller's Knowledge, any predecessor of Seller
or any Subsidiary has filed any notice under federal or state law
indicating past or present treatment, storage, or disposal of a
hazardous waste (as defined under 40 C.F.R. Parts 260-270 or
similar state hazardous waste management program in effect as of
the date of this Agreement) or Contaminant or any state equivalent,
or reporting a spill or Release of a Contaminant into the
environment; (vi) the Space Systems Division has no known liability
in connection with any Release of any Contaminant into the
environment; (vii) the Space Systems Division has not released any
Contaminant into the environment (including air, surface water,
groundwater, and subsurface strata) or in the vicinity of any
premises owned, leased or operated by the Space Systems Division,
and, to Seller's Knowledge, neither has any lessee, prior owner, or
other person; (viii) no asbestos, PCBs, radioactive material
(including radon gas other than that which is naturally occurring),
UFI, underground storage tanks or surface impoundments are on the
Facilities; (ix) no lien in favor of any governmental authority for
(A) any liability under Environmental Laws, or (B) damages arising
from or costs incurred by such governmental authority in response
to a Release of a Contaminant into the environment has been filed
or attached to the Facilities; (x) there are no conditions or set
of facts which exist that, if known, would give rise to any matters
referred to in clause (iii), (iv), (vi) or (ix) above; (xi) there
are no judgments, decrees, administrative orders or settlement
agreements outstanding against Seller which, in the aggregate,
require or could require Seller or any Subsidiary to expend over
$100,000 to maintain or achieve compliance therewith or which, in
the aggregate, require or could require the payment of a fine,
penalty, damages or any other payment in excess of $100,000; (xii)
there are no requirements under any of the Permits which, in the
aggregate, require or would require the Seller or any Subsidiary
(y) to expend over $100,000 in capital expenditures to maintain
compliance therewith, or (z) to make non-capital expenditures
which, in the aggregate, exceed the amounts specifically provided
for with respect to such expenditures included in the estimates at
completion; (xiii) none of the Facilities are listed on or have
been proposed for listing on the National Priorities List, the
CERCLIS or any similar list of sites of suspected or known
environmental contamination or of the Release of a Contaminant
maintained by any governmental agency, nor, to Seller's Knowledge,
are any properties owned by any other party and located within a
radius of five miles from the Facilities on or have any such
properties been proposed for listing on any such lists; (xiv)
neither Seller nor any Subsidiary or, to Seller's Knowledge, any
predecessor of Seller or any Subsidiary owns or operates or has
owned or operated a facility at or from which there is or has been
a Release of a Contaminant into the environment, has transported to
a facility a Contaminant for treatment, storage, disposal or other
management or handling, or has disposed or arranged for disposal of
a Contaminant at a facility. Neither Seller nor any Subsidiary or,
to Seller's Knowledge, any predecessor of Seller or any Subsidiary
has been named as a "potentially responsible party" with respect
to, or received any request or demand from any party concerning,
its potential involvement in or at any site at which conditions
exist which may give rise to remedial action under any applicable
Environmental Laws; and there is no condition at any of the
Facilities which could give rise to Remedial Action.
5.19 Inventory and Receivables. The inventories of the
Space Systems Division are in all material respects in good and
merchantable condition and usable or saleable in the ordinary
course of business for the purpose for which they are intended.
The value of all inventory items recorded on the Financial
Statements, the Initial Statement of Net Assets to be Sold and the
Closing Statement of Net Assets to be Sold, including finished
goods, work-in-progress and raw materials, and any reserves
therefor have been and will be determined in accordance with
Seller's historical practices and with GAAP. Assuming the
appropriateness of the estimates at completion assumptions set
forth on Schedule 4.2 hereof and the accounting practices used for
the Atlas Program in the preparation of the Initial Statement of
Net Assets to be Sold, such inventories consist and will consist
only of items of quality and quantity usable and salable in the
ordinary course of the Business, except for any items of obsolete
material or material below standard quality, all of which have been
and will be written down to net realizable value, or for which
adequate reserves have been or will be provided, and the present
quantities of all inventories are reasonable in the present
circumstances of the Business. To Seller's Knowledge, all
inventoried costs relating to contracts and programs that are shown
on the Financial Statements and the Initial Statement of Net Assets
to be Sold and that will be shown on the Closing Statement of Net
Assets to be Sold are and will be recoverable in accordance with
the terms of the applicable orders or Contracts. All receivables
(including unbilled receivables) of the Space Systems Division
which are or will be reflected on the Financial Statements, the
Initial Statement of Net Assets to be Sold and the Closing
Statement of Net Assets to be Sold have arisen or will arise in the
ordinary course of business out of bona fide sales and deliveries
of goods, performances of services or other business transactions.
Allowances in accordance with GAAP have been or will be reflected
in the Financial Statements, the Initial Statement of Net Assets to
be Sold and the Closing Statement of Net Assets to be Sold with
respect to the receivables shown thereon. The reserves for
receivables on the Closing Statement of Net Assets to be Sold will
be fully adequate to cover all uncollectible receivables. Based
upon Seller's current contract estimates at completion, (i) all
unbilled amounts included in accounts receivable reflected or to be
reflected in the Financial Statements, the Initial Statement of Net
Assets to be Sold and the Closing Statement of Net Assets to be
Sold will, in the ordinary course of the Business as currently
conducted, mature into and become billed accounts receivable in the
same or greater amounts, and (ii) such receivables, when billed,
will be fully collectible in the ordinary course of the Business as
currently conducted without cost to Purchaser in collection efforts
therefor except to the extent of any applicable reserves provided
for in the Closing Statement of Net Assets to be Sold.
5.20 Real Property. (a) Schedule 5.20(a)(i) sets forth a
complete list of all real property and interests in real property
owned in fee by Seller and used in, held for use by or related to
the business of the Space Systems Division, including, without
limitation, the Kearny Mesa Facility and the Sycamore Canyon
Facility (individually, an "Owned Property"), including the address
and description of the improvements thereon. Schedule 5.20(a)(ii)
sets forth a complete list of all real property and interests in
real property leased by Seller and used in, held for use by or
related to the Space Systems Division (individually, a "Leased
Property"), as lessee, including the name of the lessee and lessor
and a description of the premises and the lease (the "Leases") and
identifying any consents required for the transfer of Seller's
interest as lessee to Purchaser. Schedule 5.20(a)(iii) sets forth
a complete list of all government owned, contractor operated
Facilities that are used in, held for use by or related to the
Space Systems Division. Schedule 5.20(a)(iv) sets forth a complete
list of all Persons with a legal right to occupy any portion of the
Owned Property or Leased Property (the "Occupants"). True,
complete and correct copies of (i) the deeds for the Owned
Properties and (ii) the Leases, other than the Leases on Schedule
1(B) hereto, as the same have been amended, modified or
supplemented, have been delivered to Purchaser by Seller. Seller
or an Affiliate of Seller has (x) good, marketable and insurable
fee simple title to all Owned Properties and (y) good, marketable,
insurable (where recorded) and valid leasehold estates in all
Leased Properties (Owned Property and Leased Property are sometimes
referred to as a "Seller Property" and collectively as "Seller
Properties"). Each of the Seller Properties is free and clear of
all Liens and encumbrances of any nature except (A) Liens and
encumbrances set forth on Schedule 5.20(a)(v), (B) Liens for taxes,
special assessments or governmental charges or levies if the same
shall not at the time be delinquent or thereafter can be paid
without penalty, or are being contested in good faith by
appropriate proceedings, (C) such Liens and encumbrances, if any,
not listed on Schedule 5.20(a)(v), as do not interfere with such
property's present or, to the extent known to Seller, proposed use,
and (D) in the case of Leased Properties, Liens and encumbrances
affecting the fee interest underlying such Leased Property as do
not interfere with such property's present or, to the extent known
to Seller, proposed use. As of the Closing Date, Seller will have,
and will have the ability to convey to Purchaser, exclusive and
undisturbed possession of the Seller Properties, with the exception
only of the Occupants.
(b) Neither Seller nor, to Seller's knowledge, any
other party is in material default under any of the Leases and to
Seller's knowledge no event has occurred which, with notice, lapse
of time or both, would constitute a material default thereunder.
For purposes of this Section 5.20(b), a "material" default means
any (x) monetary default or (y) non-monetary default that cannot be
cured by expenditure of $50,000 or less. No previous or current
party to any such Lease has furnished notice to Seller of or made
a claim against Seller with respect to any breach or default
thereunder which, if not cured, would prevent or materially
interfere with the ability of Purchaser to continue to use such
Leased Properties in the manner currently used.
(c) With respect to those Leases that were
transferred to Seller or any of Seller's Affiliates by a third
party, all necessary consents to such transfers have been obtained
and are in full force and effect and neither Seller nor any
Affiliates of Seller has received any notice that any such third
party's acts or omissions have given rise to any breach of the
underlying lease or sublease to which it is a party.
(d) Except for environmental matters (with respect
to which Seller has made representations and warranties in Section
5.18), and except to the extent otherwise disclosed by Seller
elsewhere in this Agreement or on Schedule 5.20(d), each Owned
Property and each Leased Property complies in all material
respects, with all applicable Laws (including, without limitation,
zoning laws), and no notice of violation of Law has been received
by Seller or any Affiliate of Seller or, to Seller's Knowledge, has
been issued by any public or governmental authority with respect
to any Seller Property, which noncompliance or violation, if not
remedied, would prevent, hinder or impair the ability of Purchaser
to use such Seller Property consistent with its present or, if
known to Seller, proposed use.
(e) All of the Owned Properties, and all components
of all improvements included within the Owned Properties,
including, without limitation, the roofs and structural elements
thereof and the sprinkler and fire protection, heating,
ventilation, air conditioning, plumbing, electrical, mechanical,
sewer, waste water, storm water, paving and parking equipment,
systems and facilities included therein, are in sufficient
condition, working order and repair and do not require material
repair or replacement in order to serve their intended purpose,
including use and operation consistent with their present use and
operation, except for scheduled maintenance, repairs and
replacements conducted or required in the ordinary course of the
operation of the Owned Properties. All water, gas, electrical,
steam, compressed air, telecommunication, sanitary and storm sewage
lines and systems and other similar systems serving the Owned
Properties are installed and operating and are sufficient to enable
the Owned Properties to continue to be used and operated in the
manner currently being used and operated. As of the Closing Date,
Seller shall have made all repairs and replacements required under
the Leases necessary to restore the Leased Properties to their
condition on the commencement dates of the applicable Leases
(except for items that can only be accomplished upon the
termination of the applicable Leases) which are to be made by
Seller or its Affiliates.
(f) To the extent that any of the Owned Properties
is dependent for its access, operation or utility on any land,
building or other improvement not part of the Seller Property but
a part of the property retained by Seller, Seller will permit and
facilitate such dependency post-Closing, including, without
limitation, the granting without consideration of any required
appurtenant easements. To Seller's knowledge, all utility systems
required in connection with use, occupancy and operation of each
Seller's Property are sufficient for their present purpose, and are
fully operational and in working order.
(g) Except as set forth on Schedule 5.20(g), other
than options, rights of first refusal or other similar arrangements
in favor of the Seller or any Affiliate of Seller under the Leases
which have not been exercised as of the date hereof, neither Seller
nor any Affiliate of Seller has entered into any contract,
arrangement or understanding with respect to the future ownership,
development, use, occupancy or operation of any of the Facilities
that would constitute an Asset.
(h) No termination rights have been exercised or,
to Seller's Knowledge or any Affiliate of Seller, threatened by any
party with respect to the Leases.
(i) All material certificates of occupancy and
Authorizations of any governmental entity necessary for the current
and continued use and operation of each Seller Property have been
issued. Such Authorizations have been validly issued by the
appropriate governmental bodies in compliance with all applicable
Laws, and Seller has complied with all conditions thereof in all
material respects. No default or violation, or event that with the
lapse of time or giving of notice or both would become a default or
violation, has occurred in the due observance of any Authorization.
All such Authorizations are in full force and effect and do not
require further consent or approval of any Person. Seller has not
received any notice from any governmental entity and has no
knowledge to the effect that there is lacking any Authorization
required in connection with the current or continued use or
operation of any Owned Property or Leased Property.
(j) Except as set forth on Schedule 5.20(j), there
does not exist any actual or, to Seller's Knowledge, threatened or
contemplated condemnation or eminent domain proceedings that affect
any Owned Property or Leased Property or any part thereof, and none
of Seller or its Affiliates has received any notice, oral or
written, of the intention of any governmental entity or other
Person to make or use all or any part thereof.
(k) There is no actual or pending imposition of any
assessments for public improvements with respect to any Seller
Property, except for customary annual assessments under state and
local law, and, to Seller's Knowledge no such improvements have
been constructed or planned that would be paid for by means of
assessments upon any Seller Property.
(l) No labor has been performed or material
furnished for any portion of any Owned Property or Leased Property
to or for the benefit of Seller or, to Seller's knowledge, any
other Person for which any Lien, the validity of which is not
currently in dispute, having a value in excess of $50,000 in the
aggregate can be claimed.
(m) No improvements constituting a part of any
Owned Property or Leased Property encroach on real property not a
part of the Assets, the removal of which would materially interfere
with the current use, occupancy and operation of such improvements.
(n) No Seller Property or portion thereof has
suffered any material damage by fire or other casualty that has not
been completely restored to a condition comparable to that existing
prior to the casualty.
(o) Seller has not received any written notice from
any insurance company that has issued a policy to Seller with
respect to any Seller Property requiring performance of any
structural or other repairs or alterations to such Seller Property.
(p) The transactions contemplated hereby will not
constitute a default under, or result in any change in the terms
of, any Lease, provided that all necessary consents required by
such Lease are obtained prior to the Closing.
(q) The Seller has, and the Purchaser will have,
the right to use all easements and rights of way relating to the
Owned Property and the Leased Property, including, but not limited
to, easements for power lines, water lines, sewers, railways and
roadways and other means of ingress and egress, which are necessary
to conduct the business.
5.21 Intellectual Property. (a) Unless otherwise indicated
in Schedule 5.21(a) or herein, the Purchased Intellectual Property
and the rights licensed pursuant to the License Agreement
constitute all of the Intellectual Property (i) owned, developed or
acquired by or on behalf of the Space Systems Division or (ii) used
by Seller in the business and operations of the Space Systems
Division, including, without limitation, future results,
developments and products of the Space Systems Division which are
the subject of current research and development activities. Unless
otherwise indicated in Schedule 5.21(a), Seller owns the entire
right, title and interest in and to the Purchased Intellectual
Property (including, without limitation, with respect to owned
Intellectual Property, the exclusive right to use and license the
same). Schedule 5.21(a) sets forth complete and correct lists of:
(1) all patents, trademark registrations,
copyright registrations, mask work registrations and applications
for any of them which are part of the Purchased Intellectual
Property;
(2) all license agreements granting Seller
license in Intellectual Property which licenses are included in the
Assets.
(3) all Intellectual Property which is the
subject of the obligations of Seller described in Section 3.1(c)
hereof;
(4) all computer software applications
programs owned or used or currently planned for use by Seller,
including such programs which are material, in the business or
operations of the Space Systems Division (the "Software"); and
(5) all licenses granted by Seller under any
of the Purchased Intellectual Property or Software.
(b) Seller owns, leases, licenses or has the right
to use all the Software. The Software and the Purchased
Intellectual Property are sufficient to conduct the business and
operations of the Space Systems Division as presently conducted in
all material respects. Notwithstanding any other provision of this
Agreement, except as indicated in Schedule 5.21(b), upon
consummation of the transactions contemplated by this Agreement,
Purchaser will be entitled to continue to use all of the Purchased
Intellectual Property, the rights licensed pursuant to the License
Agreement and the Software to the same extent and under the same
conditions that it has heretofore been used in the Space Systems
Division, without financial obligations to any other Person.
Except as indicated in Schedule 5.21(b), the Purchased Intellectual
Property, the rights licensed pursuant to the License Agreement,
and Software comprise all Intellectual Property and computer
software applications programs necessary to permit the operation of
the Business as now being conducted.
(c) Schedule 5.21(c) sets forth a list of all
notices or claims received by and suits or proceedings pending
against Seller or, to Seller's knowledge, received by or pending
against any customer of Seller, which notices, claims, suits or
proceedings assert infringement of any Intellectual Property of a
third party as a result of the business or operations of the Space
Systems Division or activities of any such customer with regard to
any product or service supplied by the Space Systems Division and
Seller has no knowledge of any basis for any additional claims,
suits or proceedings against it or any customer for any such
infringement. Except as set forth in Schedule 5.21(c), there are
no interferences, reexaminations, oppositions or protests pending
or threatened involving any patents, or patent applications which
constitute "Assets," and Seller knows of no basis for any such
interference, nor are there any disputes pending or threatened with
former or present employees of Seller involving rights to any of
the Purchased Intellectual Property.
(d) to Seller's Knowledge, except as indicated in
Schedule 5.21(d), no Person is infringing upon or has
misappropriated any of the Purchased Intellectual Property. No
Purchased Intellectual Property or Software is owned or controlled
by any officer, director or employee of Seller or any of its
Affiliates, except as indicated in Schedule 5.21(d).
5.22 Employees and Employee Relations.(a) Seller has
provided Purchaser with access to a list of all employees of the
Space Systems Division and the salary for each.
(b) There is no strike, work stoppage, slowdown,
picketing or lockout pending or overtly threatened against or
involving the Space Systems Division with respect to employees of
the Space Systems Division. Except as set forth on Schedule 5.22,
there has been no such strike, work stoppage, slowdown, picketing
or lockout at any time in the past five years.
(c) There is no pending or, to Seller's knowledge,
threatened strike, work stoppage, slowdown, picketing or lockout or
other union activity with respect to the employees of any of the
suppliers or customers of the Space Systems Division that could
have a Material Adverse Effect on the Space Systems Division.
(d) Except as set forth on Schedule 5.22, the Space
Systems Division is not a party to, nor has any obligations under,
any collective bargaining agreement, nor are any employees of the
Space Systems Division covered by any collective bargaining
agreements.
(e) There is no organizing activity involving the
Space Systems Division pending or threatened by any labor union or
group of employees. There are no representation proceedings
pending or threatened with the National Labor Relations Board, and
no labor organizations or group of employees of the Space Systems
Division has made a demand for recognition.
(f) Except as set forth on Schedule 5.10, there are
no unfair labor practice charges or complaints pending or
threatened by or on behalf of any employee or group of employees of
the Space Systems Division.
(g) Except as set forth on Schedule 5.10, there are
no complaints or charges pending or threatened to be filed with any
federal, state or local court, governmental agency or arbitrator
based on, arising out of, in connection with, or otherwise relating
to employment at the Space Systems Division.
(h) Except as set forth on Schedule 5.10, Seller is
in compliance with all Laws, and all orders of any court,
governmental agency or arbitrator, relating to access to facilities
and employment, including all such laws relating to wages, hours,
collective bargaining, discrimination, civil rights, affirmative
action and the payment of withholding and/or Social Security and
similar taxes.
(i) Except as set forth on Schedule 5.22, there are
no collective bargaining agreements to which the Seller is a party
containing a provision which, if enforceable, would require the
Purchaser to assume the obligations of the Seller thereunder, or
otherwise impose "successor" obligations on Purchaser, as a result
of the transactions contemplated by this Agreement or any Ancillary
Agreement.
5.23 Insurance. Schedule 5.23 contains an accurate and
complete list of all policies of insurance owned by Seller during
the past three fiscal years under which Seller, in respect of the
Space Systems Division, or any properties or assets of Seller or
its Affiliates which are used in the Space Systems Division, is
insured, including, without limitation, any insurance providing
coverage with respect to product launches, launch services or
product warranties or guarantees provided by Seller (collectively,
"Product Warranty Insurance"). All such policies (i) are in full
force and effect, and (ii) are sufficient for compliance by Seller
with all applicable requirements of Law and all agreements to which
Seller is a party or subject, in each case with respect to the
Space Systems Division. Seller is not in default under any of the
insurance policies listed on Schedule 5.23, and, except as set
forth on Schedule 5.23, Seller has not received any notice or other
indication from any insurer or agent of any intent to cancel or not
renew any of the insurance policies listed on Schedule 5.23.
Schedule 5.23 also contains a summary of the Seller's claims
histories under its insurance policies and programs for the past
three fiscal years. Except as set forth on Schedule 5.23, after
the Closing, the Purchaser shall be entitled to the benefit of all
insurance policies held by Seller with respect to the Space Systems
Division or the Assets, including all Product Warranty Insurance.
5.24 Backlog. (a) Schedule 5.24(a) sets forth the backlog
of Seller as it relates to the Space Systems Division as of August
29, 1993 (which shall be updated as of the Closing Date), for
products and services to be provided by Seller. Schedule 5.24(a)
includes the name of each customer, the dollar amount of backlog,
any dollar amounts included which are unfunded by the United States
Congress or any customer in respect of undelivered orders, a brief
description of the products and services to be provided, the
proposed delivery dates therefor and any unexercised valid and
subsisting options in the backlog giving a brief description of the
options and the contracts to which they relate.
(b) Except as set forth on Schedule 5.24(b), all of the
Contracts constituting the backlog of Seller as it relates to the
Space Systems Division (i) have been entered into in the ordinary
course of Seller's business, and (ii) would be capable of
performance by Seller, if it retained the Assets to be transferred
and Assumed Liabilities to be assumed hereunder, and made the
planned capital expenditures therefor, in accordance with the terms
and conditions of each such contract.
5.25 Brokers' and Finders' Fees. Except for Goldman, Sachs
& Co., no Person acting on behalf of Seller or any of its
Affiliates or under the authority of any of the foregoing is or
will be entitled to any brokers' or finders' fee or any other
commission or similar fee, directly or indirectly, from any of the
parties hereto in connection with any of the transactions
contemplated hereby.
5.26 Full Disclosure. All Documents and other papers
delivered by or on behalf of Seller in connection with this
Agreement and the Ancillary Agreements are true, complete, correct
and authentic in all material respects. No statement,
representation or warranty made by Seller in this Agreement, any of
the Ancillary Agreements or any Contract or any exhibit or schedule
delivered hereunder or thereunder, or in any certificate or
document delivered pursuant to this Agreement, any Ancillary
Agreement or any Contract, and no written statement made by or on
behalf (except for the offering memoranda relating to the sale of
the Space Systems Division prepared by Goldman, Sachs & Co.) of
Seller to Purchaser or any of its Affiliates pursuant or with
respect to this Agreement, any of the Ancillary Agreements or any
Contract, contains an untrue statement of a material fact or omits
to state a material fact necessary to make the statements contained
herein or therein not misleading. There is no fact which Seller
has not disclosed to Purchaser in writing which Seller presently
believes has or will have (i) a Material Adverse Effect on the
Space Systems Division, or (ii) a material adverse effect on the
ability of Seller to perform this Agreement, the Ancillary
Agreements or any Contract to which Seller is a party.
5.27. Unimpaired Operation. Assuming the receipt of all
consents and approvals required for the transfer of the Assets,
upon consummation of the transactions contemplated under this
Agreement, Seller will have sold, assigned, transferred and
conveyed to Purchaser all of the Assets and Properties used in,
held for use by or related to the business of the Space Systems
Division; and, assuming Purchaser holds the Permits and
Authorizations set forth on Schedule 5.10(d), the transfer of the
Assets to Purchaser pursuant to this Agreement will enable
Purchaser to operate the Space Systems Division in the same manner
operated by Seller immediately prior to the Closing.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
6.1 Organization and Authority of Purchaser. Purchaser is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Maryland with full power and
authority, corporate and otherwise, to enter into and to perform
its obligations under this Agreement and each of the Ancillary
Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby.
6.2 Authorization of Agreements. Subject to the
satisfaction of the condition set forth in Section 8.1(l) of this
Agreement, the execution, delivery and performance by Purchaser of
this Agreement and each of the Ancillary Agreements to which it is
a party has been duly authorized by all necessary action, corporate
or otherwise, of Purchaser, and this Agreement has been, and each
of the Ancillary Agreements to which it is a party will be, duly
executed and delivered by Purchaser and this Agreement constitutes,
and each of the Ancillary Agreements to which it is a party when
executed will constitute, the valid and binding obligation of
Purchaser, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws now or hereafter in
effect affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law
or in equity).
6.3 No Conflicts. The execution, delivery and performance
by Purchaser of this Agreement and each of the Ancillary Agreements
to which it is a party and the consummation of the transactions
contemplated hereby and thereby do not and will not (with or
without the giving of notice) (a) conflict with the articles of
incorporation or by-laws of Purchaser or conflict with, or result
in the breach or termination of, or constitute a default under any
order, judgment, injunction or decree of any court or governmental
entity, foreign or domestic, to which Purchaser is a party or by
which it or any of its assets and properties are bound or (b)
constitute a violation of any law, statute or regulation of any
governmental authority, domestic or foreign, applicable to
Purchaser.
6.4 Consents. No consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority
or other third party is required on the part of Purchaser in
connection with Purchaser's execution, delivery and performance of
this Agreement and the Ancillary Agreements to which it is a party,
except for (a) any required filings with the Federal Trade
Commission and the Department of Justice pursuant to the HSR Act
and due expiration of the waiting period (including any extensions)
thereunder, (b) any novations required in connection with the
Government Contracts, (c) any filings required under the DoD Manual
and (d) any required filings under United States Export
Control Laws.
6.5 Litigation. There are no judicial or administrative
actions, proceedings or investigations pending or, to Purchaser's
knowledge, threatened that question the validity of this Agreement
or any action taken or to be taken by Purchaser in connection with
this Agreement or that, if adversely determined, would have a
material adverse effect upon Purchaser's ability to enter into or
perform its obligations under this Agreement or any of the
Ancillary Agreements to which it is a party.
6.6 Brokers' and Finders' Fees. Except for Lehman
Brothers, Inc., no Person acting on behalf of Purchaser or any of
its Affiliates or under the authority of any of the foregoing is or
will be entitled to any brokers' or finders' fee or any other
commission or similar fee, directly or indirectly, from any of the
parties hereto in connection with any of the transactions
contemplated hereby.
ARTICLE VII
COVENANTS
7.1 Investigations by Purchaser. (a) Through the Closing
Date, Seller will give or cause to be given to Purchaser and its
representatives and agents full access to all the premises,
Documents and key employees of Seller, to the extent pertaining to
the Space Systems Division, and will cause its officers and
employees to furnish to Purchaser such financial and operating data
and other information with respect to the Assets and the conduct of
the Business, in each case as Purchaser shall from time to time
reasonably request; provided, however, that, to the extent
reasonably possible, any such investigation shall be conducted
during normal business hours and in such manner as not to
unreasonably interfere with the operation of the business of Seller
or the Space Systems Division. Notwithstanding any provision to
the contrary contained in this Section 7.1 or elsewhere in this
Agreement, Seller will not be obligated to make any disclosure
pursuant to this Agreement in violation of applicable laws or
regulations pertaining to classified information with respect to
Government Contracts.
(b) Purchaser will treat, and will cause its
employees, representatives, consultants and advisors to treat, such
Documents and information concerning Seller or the Space Systems
Division furnished to Purchaser and its representatives and agents
in connection with this Agreement confidentially in accordance with
the terms and provisions of that certain Confidentiality Agreement
dated July 6, 1993 (the "Confidentiality Agreement"), between
Purchaser and GDC. If the transactions contemplated by this
Agreement are not consummated, Purchaser shall return, and shall
cause its representatives, agents, auditors, attorneys, financial
advisors and other consultants and advisors to return all
confidential documents, work papers and other materials obtained
from Seller or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby, and shall
destroy, or cause to be destroyed, any and all materials developed
by Purchaser or any of its officers, directors, representatives,
agents, auditors, attorneys, financial advisors and other
consultants and advisors which incorporate any such confidential
information concerning Seller, its Subsidiaries or the Space
Systems Division.
(c) Seller will treat, and will cause its
employees, representatives, consultants and advisors to treat, such
Documents and information concerning Purchaser furnished to Seller
or its representatives and agents in connection with this Agreement
confidentially as if Seller were the party bound by the
Confidentiality Agreement. At Purchaser's request, Seller shall
return, and shall cause its representatives, agents, auditors,
attorneys, financial advisors and other consultants and advisors to
return, all confidential documents, work papers and other materials
obtained from Purchaser in connection with this Agreement or the
transactions contemplated hereby, and shall destroy, or cause to be
destroyed, any and all materials developed by Seller, its
Affiliates, or any of their respective officers, directors,
representatives, agents, auditors, attorneys, financial advisors
and other consultants and advisors which incorporate any such
confidential information concerning Purchaser.
7.2 Satisfaction of Conditions. Each of the parties hereto
shall use reasonable efforts to cause the conditions to the Closing
to be satisfied as promptly as practicable, except (i) as otherwise
provided with respect to assignments and novations in Section 7.6
hereof, and (ii) that neither Seller nor Purchaser or any of its
Subsidiaries shall be obligated to pay any consideration to any
third party in order to obtain any approval, consent or waiver.
Purchaser and Seller agree to use all commercially reasonable
efforts (taking into account the effect on the Space Systems
Division of the failure to obtain any required consents or
approvals), and to cooperate and to work together, to obtain all
necessary consents and approvals to transfer all software licenses
to Purchaser, and Purchaser and Seller shall each pay half of all
amounts paid to the software vendors in obtaining such consents and
approvals.
7.3 Conduct of Seller. Seller hereby covenants with
Purchaser that, during the period from the date hereof to the
Closing Date:
(a) Operations in the Ordinary Course of Business;
Notice of Any Inconsistency. Subject to the terms of this
Agreement, Seller will operate the Business and the Space Systems
Division only in the ordinary and usual course and will use its
best efforts (consistent with the terms of this Agreement) to
preserve intact the business organization of the Business and the
Space Systems Division, keep available the services of its officers
and employees who are employed in the Space Systems Division,
maintain satisfactory relationships with other parties to its
Contracts and with all suppliers, clients, customers and others
having business relationships with it (to the extent relating to
the Business and the Space Systems Division) and diligently and
prudently pursue new business opportunities including, but not
limited to, Contracts for intermediate expendable launch vehicles.
Seller will also promptly notify Purchaser of the occurrence of any
event or state of facts which is inconsistent with any of the
representations, warranties and covenants of Seller contained
herein.
(b) Forbearances. Seller agrees, except as
provided by or as contemplated in this Agreement, that it will not,
in connection with the operation of the Business and the Space
Systems Division, without the prior written consent of Purchaser:
(1) incur any debt, liability or obligation,
direct or indirect, whether accrued, absolute, contingent or
otherwise, on behalf of or with respect to the Space Systems
Division, other than unsecured current liabilities (not including
indebtedness for borrowed money) incurred in the ordinary and usual
course of business, or permit any increase in or expansion of
Assumed Liabilities other than as expressly contemplated by
existing Contracts to be assumed by Purchaser at Closing;
(2) assume, guarantee, endorse or otherwise
become responsible for the obligations of, or make any advances to
(in each case on behalf of or with respect to the Space Systems
Division), any other Person, except in the ordinary and usual
course of business in an amount not to exceed $10,000 for any
individual item or event or $250,000 for all such items or events;
(3) mortgage, pledge or otherwise encumber any
of its properties or assets which are used in the Space Systems
Division or would otherwise comprise Assets;
(4) sell, license, lease, transfer or dispose
of any of its properties or assets which are used in the Space
Systems Division or would otherwise comprise Assets, or waive or
release any rights which relate to the Space Systems Division, or
compromise, release or assign any indebtedness owed to it or any
claims held by it which relate to the Space Systems Division, in
each case other than in the ordinary and usual course of business;
(5) make any investment of a capital nature on
behalf of or which relates to the Space Systems Division whether by
contributions to capital, property transfers or otherwise, or by
the purchase of any property or assets of any other Person, other
than as described in the capital spending plan annexed to Schedule
5.8;
(6) propose, enter into, terminate or
substantially amend or supplement any Contract which relates to the
Space Systems Division unless the same involves a dollar amount of
less than $1,000,000 and is done in the ordinary and usual course
of business consistent with the past practices of the Space Systems
Division;
(7) enter into, terminate, modify or
supplement any collective bargaining agreement;
(8) except for currently scheduled base salary
increases and increases pursuant to the collective bargaining
agreements identified on Schedule 5.22, and except for reductions
in force and other lay-offs consistent with the current business
plan of the Space Systems Division as communicated to Purchaser,
change in any manner the compensation or fringe benefits of any of
its officers, directors or employees employed in the Space Systems
Division or commit itself to any employment agreement with or for
the benefit of such officer, director, employee or other person
which calls for annual payments in excess of $50,000 per employee
or establish or create any, or modify as to benefits any existing,
GD Employee Benefit Plan or other compensation plan, program or
arrangement which relates to any officer, director or employee
employed in the Space Systems Division;
(9) take any action which is inconsistent with
any of Seller's representations, warranties or covenants contained
in this Agreement;
(10) waive or commit to waive any rights of
material value to the properties, assets, business, operations or
financial condition of the Space Systems Division; or
(11) enter into a Contract (other than this
Agreement) to do any of the things described in clauses (1) through
(10) above.
(c) Insurance. Seller will cause all insurance
policies currently in effect with respect to Seller's properties,
assets, operations or employees (to the extent relating to the
business or operations of the Space Systems Division) to be
maintained in full force and effect, or replaced with substantially
comparable coverages to be maintained in full force and effect
until the Closing Date. Seller shall transfer to Purchaser at
Closing all Product Warranty Insurance and such other insurance
policies designated by Purchaser (including, without limitation,
those insurance policies listed on Schedule 3.1(b)) which relate to
the business or operations of the Space Systems Division or the
Assets and which by their terms can be transferred.
7.4 HSR Act Compliance. Each party hereto hereby agrees
with each other party hereto that, with respect to each reportable
transaction to which it is a party, each will, as soon as
reasonably practicable, take all action (to the extent not
previously taken) necessary in order to file with the Federal Trade
Commission and the Department of Justice all filings, reports and
other information required under the HSR Act in order to commence
the running of the waiting period thereunder, to continue the
running of said waiting period (including any extensions) and
prevent or minimize any tolling thereof, to cause such waiting
period to expire without enforcement action, and to provide to each
other such cooperation as may be reasonably necessary in order to
cause such filings and reports to be prepared and duly filed and
all waiting periods to expire. Nothing in this Agreement, however,
shall require Purchaser to divest or hold separate any of its
Properties or any of the Assets, or to accept any conditions,
limitations or restrictions on the business or operations of
Purchaser or its Subsidiaries or Affiliates or the Business
acquired pursuant to this Agreement, which Purchaser determines, in
its sole discretion, to be unacceptable.
7.5 Pending or Threatened Litigation. Between the date
hereof and the Closing Date, each party hereto shall inform the
other parties hereto promptly upon obtaining knowledge of any
pending or threatened litigation or other fact or event which may
reasonably be anticipated to (i) prevent, delay or adversely affect
the consummation of the transactions contemplated hereby or (ii)
cause any of its representations and warranties contained herein to
be inaccurate.
7.6 Assignments; Novations. (a) Seller will cooperate
fully in effecting, if necessary, the transfer or assignment of all
licenses, registrations or other documents pertaining to the Space
Systems Division which were issued by government agencies under the
authority of the Export Control Laws.
(b) The parties acknowledge that, in accordance
with Federal Acquisition Regulation ("FAR") sec. 42.1204, Seller
and Purchaser are required to enter into a novation agreement or
agreements with the U.S. Government. Seller and Purchaser will
cooperate fully with each other and will use all reasonable efforts
to obtain the assignment or the novation of all Government
Contracts, and Seller hereby agrees expeditiously to take all steps
necessary to file and to use its best efforts to obtain approvals
of all required novations or assignments, including the provision
of the guarantee of performance required for novation of contracts
pursuant to FAR sec. 42.1201, 42.1204(d)(3), and 42.1204(e).
Nothing in this Agreement, however, shall require (i) Seller or
Purchaser to pay any consideration for any such assignment or
novation, or (ii) Purchaser to accept any conditions, requirements,
amendments or limitations (other than those contained in the
underlying contract) which Purchaser determines, in its sole
discretion, to be unacceptable.
(c) With respect to any Government Contracts that
cannot be assigned to Purchaser or novated on the Closing Date, the
performance obligations of Seller thereunder shall, unless not
permitted by such Government Contract, be deemed to be
subcontracted or delegated to Purchaser until such Government
Contract has been assigned or novated. Purchaser or any of its
Subsidiaries, as a subcontractor or delegate, shall perform such
Government Contracts and Seller shall, as soon as practicable, pay
over to Purchaser in full any amounts received by Seller as a
result of performance by Purchaser of such Government Contracts.
Prior to the assignment or novation of such Government Contracts to
Purchaser, Seller, as the contracting party, shall take such timely
action as is reasonably necessary to allow Purchaser or any of its
Subsidiaries to perform such Government Contracts and to protect
any rights that may exist or accrue under such Government Contracts
until they are assigned or novated. In connection therewith,
Purchaser or its Subsidiaries is authorized to act as agent on
behalf of Seller for purposes of performing and administering
Contracts and subcontracts during the period after the Closing
until such Contracts and subcontracts are novated or assigned to
Purchaser; provided, however, such authority to act as agent shall
not authorize Purchaser to settle or compromise claims under such
Contracts or subcontracts where such claims are not Assumed
Liabilities. Purchaser shall indemnify and hold Seller and its
directors, officers, employees, affiliates, agents and assigns
harmless from any loss which directly results from any action
Purchaser takes pursuant to the grant of authority to act as agent
provided in the preceding sentence.
(d) Effective upon the assignment or novation of a
Government Contract to Purchaser, the Government Contract shall be
assumed by Purchaser provided that Seller shall reimburse Purchaser
for any monetary benefit received by Seller (net of any actual
out-of-pocket costs of Seller in connection with such Government
Contract) that would have accrued to Purchaser had the Government
Contract been assigned or novated as of the Closing Date. Any
subcontract or other delegation which Seller and Purchaser have
theretofore entered into or agreed upon in respect of such
Government Contract shall be terminated as of the effective date of
such assignment or novation.
(e) Seller and Purchaser shall cooperate with each
other to preserve all bids, quotations and proposals made in the
ordinary course of business by the Space Systems Division and to
facilitate the award thereof consistent with applicable legal
requirements. Any contracts awarded to Seller pursuant to such
bids, quotations and proposals shall be deemed to be assumed and,
in the case of Contracts with the U.S. Government, shall be deemed
to be "Government Contracts" for purposes of this Agreement and
shall be governed by this Section 7.6.
7.7 [Intentionally Omitted]
7.8 Noncompete.
(a) For a period of five years after the Closing Date,
Seller shall not and shall cause its Affiliates not to: (i) cause,
induce or encourage any employees of the Space Systems Division who
are or become employees of Purchaser or its Affiliates to leave
such employment; (ii) cause, induce or encourage any material
actual or prospective customer, supplier, manufacturer or licensor
of the Space Systems Division, or any other Person who has a
business relationship with Seller which is material to the Space
Systems Division, to terminate or change any such actual or
prospective relationship in a manner which would be adverse to the
Space Systems Division; or (iii) conduct, participate or engage,
directly or indirectly, in any business involving the design,
development, production, processing, sale and launching of
expendable launch vehicles and upper stage rockets, other advanced
space programs or energy and magnetics programs (excluding,
however, energy and magnetic programs as they relate to the
principal business of the Seller's Electric Boat and Land Systems
divisions), or support of any product or any business that is
competitive with the Space Systems Division, as conducted on the
Closing Date, anywhere in the world (a "Restricted Business");
provided, that the restrictions contained in this Section 7.8 shall
not restrict the acquisition by Seller, directly or indirectly, of
less than 5% of the capital stock of any Person engaged in a
Restricted Business nor shall they restrict the business conducted
by an entity with or into which Seller may merge or be consolidated
or which acquires all or substantially all of Seller's assets,
provided such activity was conducted by such entity on or prior to
the date of such merger, consolidation or acquisition.
(b) The covenants and undertakings contained in
this Section 7.8 relate to matters which are of a special, unique
and extraordinary character and a violation of any of the terms of
this Section 7.8 will cause irreparable injury to Purchaser, the
amount of which will be impossible to estimate or determine and
which cannot be adequately compensated. Therefore, Purchaser will
be entitled to an injunction, restraining order or other equitable
relief from any court of competent jurisdiction in the event of any
breach of this Section 7.8. The rights and remedies provided by
this Section 7.8 are cumulative and in addition to any other rights
and remedies which Purchaser may have hereunder or at law or in
equity. In the event that Purchaser were to seek damages for any
breach of this Section 7.8, the portion of the consideration
delivered to Seller hereunder which is attributed by the parties to
the foregoing covenant shall not be considered a measure of or
limit on such damages.
(c) The parties hereto agree that, if any court of
competent jurisdiction in a final nonappealable judgment determines
that a specified time period, a specified geographical area,
specified business limitation or any other relevant feature of this
Section 7.8 is unreasonable, arbitrary or against public policy,
then a lesser time period, geographical area, business limitation
or other relevant feature which is determined to be reasonable, not
arbitrary and not against public policy may be enforced against the
applicable party.
7.9 Non-Solicitation. If this Agreement shall be
terminated pursuant to Section 9.2 hereof (other than by virtue of
a default or failure to perform by Seller), for a period of one
year after the date of such termination, Purchaser shall not, and
shall cause its Subsidiaries not to induce or encourage any
employees of the Business to leave such employment (provided,
however, that the foregoing shall not apply to responses to or
follow-up hiring in respect of general solicitations or
advertisements for job positions not specifically directed to
employees of the Space Systems Division or the Business).
7.10 Certain Payments to Employees. Seller shall make
whatever payments may become due, and satisfy any and all claims or
liabilities that may exist, now or in the future, in connection
with or arising out of any agreements of Seller or its Affiliates
with any of their current or former employees concerning
compensation for inventions, such as, without limitation, that
provided in paragraph 2(f) of the General Dynamics Proprietary
Information and Invention Agreement, form 86 221 R1 (GDP Form
3-243).
7.11 Use of Stationery, etc. To the extent that any
stationery, checks or other printed materials acquired by Purchaser
pursuant hereto shall contain the name "General Dynamics,"
"Convair" or the name of any Affiliate of Seller, Purchaser may
continue to use such materials until the earlier to occur of (i)
the date that is six months after the Closing Date and (ii) the
date on which the existing supply thereof shall be exhausted, and
neither Seller nor any Affiliate of Seller shall prohibit or bring
any action to enjoin the use of such materials by Purchaser. In
addition, Purchaser may retain for six months after the Closing
Date and then shall remove, all exterior signs bearing the name
"General Dynamics" or "Convair" on any of the real Property or
buildings which constitute Assets.
7.12 Administration of Accounts. (a) All payments and
reimbursements made in the ordinary course by any third party in
the name of or to Seller in connection with or arising out of the
Assets and Assumed Liabilities after the Closing Date shall be held
by Seller in trust to the benefit of Purchaser and, immediately
upon receipt by Seller of any such payment or reimbursement, Seller
shall pay over to Purchaser the amount of such payment or
reimbursement without right of set off.
(b) All payments and reimbursements made in the
ordinary course by any third party in the name of or to Purchaser
in connection with or arising out of the Excluded Assets and
Excluded Liabilities after the Closing Date shall be held by
Purchaser in trust to the benefit of Seller and, immediately upon
receipt by Purchaser of payment or reimbursement, Purchaser shall
pay over to Seller the amount of such payment or reimbursement
without right of set off.
7.13 1993 Financial Statements. Seller will deliver
to Purchaser as soon as practicable after the end of the period a
balance sheet and statement of operations for the Business as at
and for the period ended December 31, 1993. Such 1993 financial
statements shall be subject to the representations and warranties
relating to the Financial Statements contained in Section 5.5
hereof. Seller will also deliver to Purchaser, with the
cooperation of the Purchaser, as soon as practicable after the
Closing Date but in no event later than sixty (60) days after the
Closing Date, the Closing Date Balance Sheet, the Initial Statement
of Net Assets to be Sold and the Closing Reconciling Statement,
which have been prepared in accordance with the provisions of
Article IV of this Agreement.
7.14 Audited Financial Statements. Seller
acknowledges that Purchaser must include audited financial
statements for the Space Systems Division (the "Audited Financial
Statements") in Purchaser's filings under the Securities Act of
1933, as amended (the "1993 Act") and the Securities Exchange Act
of 1934, as amended (the "1934 Act"), including, but not limited
to, in a filing on Form 8-K required to be made in connection with
the consummation of the transactions contemplated by this
Agreement. In connection with the requirement that Purchaser file
a Form 8-K under the 1934 Act disclosing the transactions
consummated under this Agreement, Seller, with the cooperation of
the Purchaser, shall promptly, and in any event within sixty (60)
days after the Closing, cause to be delivered to the Purchaser
financial statements audited by Arthur Andersen which Audited
Financial Statements (i) will be prepared in accordance with GAAP
and Regulation S-X, (ii) will comply in all material respects with
the requirements of the 1933 Act and the 1934 Act and (iii) will
not include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the information contained therein not misleading. Seller
agrees, from time to time upon the request of the Purchaser, to
take such actions and provide to Arthur Andersen and Purchaser such
certificates, documents and other information as may be necessary
or appropriate to obtain the consent of Arthur Andersen to include
the Audited Financial Statements and the opinion of Arthur Andersen
in respect thereof in the Purchaser's filings under the 1933 Act
and the 1934 Act, including any filings on Form 8-K.
ARTICLE VIII
CONDITIONS TO THE CLOSING
8.1 Conditions to Purchaser's Obligation to Effect the
Closing. The obligation of Purchaser to consummate the
transactions contemplated by this Agreement to occur at the Closing
is subject to the satisfaction, at or prior to the Closing, of each
of the following conditions (any of which may be waived by
Purchaser):
(a) Representations and Warranties of Seller. All
representations and warranties of Seller contained in this
Agreement and in all certificates, schedules and other documents
delivered by Seller to Purchaser or its representatives pursuant to
this Agreement and/or in connection with the transactions
contemplated hereby shall be true, complete and accurate in all
material respects as of the date when made and as of the Closing
Date with the same force and effect as though such representations
and warranties had been made on and as of the Closing Date, except
for changes expressly permitted by this Agreement, and Purchaser
shall have been furnished a certificate of an authorized officer of
Seller, dated the Closing Date, to such effect.
(b) Compliance. Seller shall have performed and
complied in all material respects with all obligations and
agreements required in this Agreement to be performed or complied
with by Seller prior to the Closing Date, and Purchaser shall have
been furnished a certificate of an authorized officer of Seller,
dated the Closing Date, to such effect and copies of such corporate
resolutions and other documents evidencing the performance thereof
as Purchaser may reasonably request.
(c) No Material Adverse Change. During the period
from the date hereof to the Closing Date, Seller shall not have
sustained any loss or damage to the Assets, whether or not insured,
which affects in any material respect its ability to conduct the
business of the Space Systems Division, nor shall there have been
any material adverse change in the business, condition (financial
or otherwise), revenues, prospects or results of operations of the
Space Systems Division other than changes in the prospects of the
Space Systems Division resulting from a General Industry
Development. Without limiting the generality of the foregoing,
Seller expressly acknowledges that the failure or partial failure
of any of Seller's Atlas launches or the failure or partial failure
of any of Seller's Centaur rockets (as opposed to a failure or
partial failure of one of Purchaser's Titan rockets that adversely
effects one of Seller's Centaur rockets) after the date of this
Agreement and prior to the Closing shall be deemed a material
adverse change in accordance with the foregoing.
(d) Completion and Review of Disclosure Schedules.
Seller shall have the right, for a period of fifteen (15) days
after the date of this Agreement, to update and supplement the
Schedules delivered pursuant to Article V of this Agreement;
PROVIDED, HOWEVER, that if any such updated Schedules reveal any
facts or circumstances which, in the reasonable opinion of
Purchaser, reflect in a material adverse way on the Assets or the
Assumed Liabilities, or the results of operations or the financial
condition of the Space Systems Division, or the Space Systems
Division's business, prospects, assets, liabilities (absolute,
contingent or otherwise) or reserves, or Purchaser's ability to
conduct the business and operations of the Space Systems Division
as such is presently conducted, Purchaser may, by written notice to
Seller within twenty five (25) days after the date of this
Agreement, terminate this Agreement.
(e) No Injunctions or Litigation, etc.;
Compliance. (1) No injunction restraining consummation of any of
the transactions contemplated by this Agreement or any of the
Ancillary Agreements shall be in effect, and all statutory
requirements, if any, for the valid consummation by Purchaser and
Seller of the transactions contemplated by this Agreement or any of
the Ancillary Agreements shall have been fulfilled and all
authorizations, consents and approvals of all federal, state, local
and foreign governmental agencies and authorities (including all
approvals and waiting period expirations required under the HSR
Act) required to be obtained in order (A) to permit the
consummation by Purchaser and Seller of the transactions
contemplated hereby or thereby and (B) to permit the business
presently carried on by the Space Systems Division to continue
unimpaired immediately following the Closing Date shall have been
obtained.
(2) No action or proceeding shall have been
instituted and, at what would otherwise have been the Closing Date,
remain pending before a court or other governmental body or
arbitrator to (i) enjoin, restrain or prohibit the transactions
contemplated by this Agreement or any of the Ancillary Agreements,
(ii) place any material limitation on the ability of Purchaser to
conduct the business presently carried on by the Space Systems
Division after Closing or (iii) seek to compel Purchaser to divest
or hold separate any of its properties or any of the Assets, or to
accept any conditions, limitations or restrictions on the business
or operations of Purchaser or its Subsidiaries or Affiliates or the
Business acquired pursuant to this Agreement.
(f) Consents. All licenses, consents and approvals
listed on Schedule 3.1(b) shall have been obtained and delivered to
Purchaser.
(g) Bill of Sale. Seller will have delivered to
Purchaser the duly executed Bill of Sale.
(h) Kearny Mesa Lease. Seller will have delivered
to Purchaser executed counterparts of the Kearny Mesa Lease.
(i) Sycamore Canyon Lease. Seller will have
delivered to Purchaser executed counterparts of the Sycamore Canyon
Lease.
(j) License Agreement. Seller will have delivered
to Purchaser an executed counterpart of the License Agreement.
(k) Services Agreement. Seller will have
delivered to Purchaser executed counterparts of the Services
Agreement.
(l) Government Cooperation. Purchaser shall have
determined, in Purchaser's sole and absolute discretion, that
certain financial, regulatory, policy and other matters will be
resolved with the U.S. Government such that Purchaser will be able
to realize the benefits that Purchaser anticipates will occur as a
result of the consummation of the transactions contemplated under
this Agreement and the Ancillary Agreements; PROVIDED, HOWEVER,
that this condition shall be considered not satisfied and this
Agreement shall automatically terminate pursuant to this subsection
8.1(l) unless, within sixty (60) days after the date of this
Agreement, Purchaser (i) waives this condition or (ii) gives Seller
notice to the effect that it believes in good faith that progress
is being made toward receipt of the assurances necessary for
Purchaser to waive this condition and, within two (2) Business Days
after receipt of Purchaser's notice, Seller gives Purchaser notice
that it consents (which consent shall not be unreasonably withheld)
to the extension of the sixty (60) day period provided for in this
subsection for an additional thirty (30) days; and, PROVIDED
FURTHER, that if Seller properly withholds its consent, Seller will
provide written notice of such decision within two (2) Business
Days after receipt of Purchaser's notice and Purchaser may waive
this condition by providing notice of such waiver to Seller within
two (2) Business Days after its receipt of Seller's notice denying
the extension. In the event that the initial sixty (60) day time
period is extended to ninety (90) days as provided above, this
Agreement shall terminate automatically at 11:59 p.m., E.S.T., on
the ninetieth (90th) day after the date of this Agreement unless,
prior to such time, Purchaser shall have notified Seller that this
condition has been satisfied or waived.
(m) Mission Risks Guarantee Coverage. Seller shall
have obtained, or obtained a binding commitment for, mission risk
guarantee coverage, which shall be transferable to Purchaser
without further consent, for the Atlas launch services for the
Orion space launch program as described in Article VII of the
agreement between British Aerospace Space Systems Limited and CLS
and the Atlas launch services for the AMSC MSAT satellite program
as described in Article VIII of the agreement between AMSC
Subsidiary Corporation and CLS, in each case in an amount
sufficient to satisfy Seller's mission risks/ refund obligations in
full with respect to such launch service programs for a premium
amount not in excess of $52,000,000 for each launch service
program, which premium amount Purchaser agrees is for the account
of the Space Systems Division and will be the responsibility of
Purchaser after the Closing. If the risk guarantee coverage
premiums are in excess of $52,000,000 per launch service program,
Seller may satisfy this condition, at its option, by providing
adequate evidence or assurances to Purchaser that Seller has paid
or will pay all risks guarantee coverage premium amounts in excess
of $52,000,000 per launch service program.
(n) AMSC Letter Agreement. Seller will have
delivered to Purchaser executed counterparts of the AMSC Letter
Agreement.
8.2 Conditions to Seller's Obligations to Effect the
Closing. The obligations of Seller to consummate the transactions
contemplated by this Agreement to occur at the Closing are subject
to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Seller):
(a) Representations and Warranties of Purchaser. All
representations and warranties of Purchaser contained in this
Agreement and in all certificates, schedules and other documents
delivered by Purchaser to Seller or its representatives pursuant to
this Agreement and/or in connection with the transactions
contemplated hereby shall be true, complete and accurate in all
material respects as of the date when made and as of the Closing
Date with the same force and effect as though such representations
and warranties had been made on and as of the Closing Date, except
for changes expressly permitted by this Agreement, and Seller shall
have been furnished a certificate of an authorized officer of
Purchaser, dated the Closing Date, to such effect.
(b) Compliance. Purchaser shall have performed and
complied in all material respects with all obligations and
agreements required in this Agreement to be performed or complied
with by it prior to the Closing Date, and Seller shall have been
furnished a certificate of an authorized officer of Purchaser,
dated the Closing Date, to such effect and copies of such corporate
resolutions and other documents evidencing the performance thereof
as Seller may reasonably request.
(c) No Injunctions, etc.; Compliance. (1) No
injunction restraining consummation of any of the transactions
contemplated by this Agreement or any of the Ancillary Agreements
shall be in effect, and all statutory requirements, if any, for the
valid consummation by Purchaser and Seller of the transactions
contemplated by this Agreement or any of the Ancillary Agreements
shall have been fulfilled and all authorizations, consents and
approvals of all federal, state, local and foreign governmental
agencies and authorities (including all approvals and waiting
period expirations required under the HSR Act) required to be
obtained in order to permit the consummation by Purchaser and
Seller of the transactions contemplated hereby and thereby shall
have been obtained.
(2) No action or proceeding shall have been instituted
and, at what would otherwise have been the Closing Date, remain
pending before a court or other governmental body or arbitrator to
enjoin, restrain or prohibit the transactions contemplated by this
Agreement or any of the Ancillary Agreements.
(d) Assumption Agreement. Purchaser will have
delivered to Seller the duly executed Assumption Agreement.
(e) Kearny Mesa Lease. Purchaser will have
delivered to Seller executed counterparts of the Kearny Mesa Lease.
(f) Sycamore Canyon Lease. Purchaser will have
delivered to Seller executed counterparts of the Sycamore Canyon
Lease.
(g) Services Agreement. Purchaser will have
delivered to Seller executed counterparts of the Services
Agreement.
(h) License Agreement. Purchaser will have
delivered to Seller an executed counterpart of the License
Agreement.
(i) AMSC Letter Agreement. Purchaser will have
delivered to Seller an executed counterpart of the AMSC Letter
Agreement.
ARTICLE IX
THE CLOSING; TERMINATION OF AGREEMENT
9.1 The Closing. The Closing shall be held within five
Business Days after the expiration or early termination of all
waiting periods in respect of the transaction herein contemplated
under the HSR Act, and each of the conditions precedent set forth
in Sections 8.1 and 8.2 have been satisfied or waived. The Closing
shall be held at the offices of Piper & Marbury, 1200 Nineteenth
Street, N.W., Washington, D.C. 20036. At the Closing, all of the
transactions provided for in Article II hereof shall be consummated
on a substantially concurrent basis.
9.2 Termination. Anything in this Agreement to the
contrary notwithstanding, this Agreement and the transactions
contemplated hereby may be terminated in any of the following ways
at any time before the Closing and in no other manner:
(a) By mutual written consent of Purchaser and
Seller.
(b) By Purchaser upon 10 days written notice to
Seller if Purchaser reasonably concludes that one or more of the
conditions specified in Sections 8.1(c), 8.1(f) or 8.1(m) of this
Agreement is not capable of satisfaction at or prior to Closing.
(c) By Purchaser as provided in Section 8.1(d);
(d) Pursuant to the provisions of Section 8.1(l);
and
(e) By Purchaser or Seller (if such terminating
party is not then in default of any obligation hereunder), if the
Closing has not occurred on or before April 30, 1994 (the
"Termination Date").
In the event this Agreement is terminated pursuant to this
Section 9.2, all further obligations of the parties hereunder shall
terminate, except that (i) the obligations set forth in Sections
7.1(b) and (c), 7.9, 12.3 and 13.8 shall survive and continue, (ii)
nothing in this Section 9.2 shall relieve any party hereto of any
liability for breach of this Agreement, and (iii) if the
termination is pursuant to Section 8.1(l), the Purchaser shall pay
the Seller a termination fee in the amount of $10,000,000 within
three (3) Business Days after such termination.
ARTICLE X
DELIVERIES AT THE CLOSING
10.1 Deliveries by Seller at the Closing. At the Closing,
Seller shall deliver, or cause to be delivered, to Purchaser, the
following items:
(a) The officer's certificates referred to in
Sections 8.1(a) and 8.1(b).
(b) The consents referred to in Section 8.1(f).
(c) The duly executed Bill of Sale and such other
executed deeds, assignments, bills of sale or certificates of
title, each dated the Closing Date and in form and substance
satisfactory to counsel to Purchaser, as are reasonably necessary
to transfer to Purchaser all of Seller's right, title and interest
in, to and under the Assets.
(d) A counterpart of the Services Agreement, duly
executed by a duly authorized officer of Seller.
(e) A counterpart of the Kearny Mesa Lease, duly
executed by a duly authorized officer of Seller.
(f) A counterpart of the Sycamore Canyon Lease,
duly executed by a duly authorized officer of Seller.
(g) A counterpart of the License Agreement, duly
executed by a duly authorized officer of Seller.
(h) A certificate that Seller is not a foreign
person within the meaning of Section 1445 of the Code, which
certificate shall set forth all information required by, and
otherwise be executed in accordance with, Treasury Regulation
Section 1.1445-2(b).
(i) Duly executed assignments, in a form suitable for
recording in the various appropriate national or regional patent,
trademark or copyright offices, for all patents and trademark, mask
work and copyright registrations and applications for any of them
included in the Assets.
(j) Landlord estoppel certificates, from each landlord
under the real estate leases indicating that such leases are in
full force and effect, that there are no defaults or events, which,
with the passage of time or the giving of notice or both, would
become defaults under such leases, and as to such other matters as
Purchaser may reasonably request all to the extent the same may be
obtained through the best efforts of Seller.
(k) Certificates of the Secretary or an Assistant
Secretary of Seller, dated the Closing Date, (A) as to the
incumbency and signatures of the officers or representatives of
Seller executing this Agreement and each of the Ancillary
Agreements and any other certificate or other document to be
delivered pursuant hereto or thereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary, and (B)
certifying attached resolutions of the Board of Directors of
Seller, which authorize and approve the execution and delivery of
this Agreement and each of the Ancillary Agreements to which Seller
is a party and the consummation of the transactions contemplated
hereby and thereby.
(l) An opinion of Jenner & Block, as counsel to the
Seller, in customary form covering the due incorporation and good
standing of Seller and the due authorization, execution and
delivery of this Agreement and the Ancillary Agreements being
executed by Seller in connection herewith.
(m) A counterpart of the AMSC Letter Agreement,
duly executed by a duly authorized officer of Seller.
10.2 Deliveries by Purchaser at the Closing. At the
Closing, Purchaser shall deliver, or cause to be delivered, to
Seller, the following items:
(a) The officer's certificates referred to in
Sections 8.2(a) and 8.2(b).
(b) The duly executed Assumption Agreement and such
other executed documents, assignments, bills of sale or
certificates of title, each dated the Closing Date and in form and
substance satisfactory to counsel to Seller, as are reasonably
necessary to evidence the assumption by Purchaser of the Assumed
Liabilities.
(c) A counterpart of the Services Agreement, duly
executed by a duly authorized officer of Purchaser.
(d) A counterpart of the Kearny Mesa Lease, duly
executed by a duly authorized officer of Purchaser.
(e) A counterpart of the Sycamore Canyon Lease,
duly executed by a duly authorized officer of Purchaser.
(f) A counterpart of the License Agreement, duly
executed by a duly authorized officer of Purchaser.
(g) Certificates of the Secretary or an Assistant
Secretary of Purchaser, dated the Closing Date, (A) as to the
incumbency and signatures of the officers or representatives of
Purchaser executing this Agreement and each of the Ancillary
Agreements and any other certificate or other document to be
delivered pursuant hereto or thereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary, and (B)
certifying attached resolutions of the Board of Directors of
Purchaser, which authorize and approve the execution and delivery
of this Agreement and each of the Ancillary Agreements to which
Purchaser is a party and the consummation of the transactions
contemplated hereby and thereby.
(h) An opinion of Piper & Marbury, as counsel to
the Purchaser, in customary form covering the due incorporation and
good standing of Purchaser and the due authorization, execution and
delivery of this Agreement and the Ancillary Agreements being
executed by Purchaser in connection herewith.
(i) A counterpart of the AMSC Letter Agreement,
duly executed by a duly authorized officer of Purchaser.
ARTICLE XI
EMPLOYEES AND EMPLOYEE BENEFITS
11.1 Employment. (a) All employees of the Business as of
the Closing Date shall become employees of Purchaser as of the
Closing Date, including, but not limited to, employees on sick
leave, personal leave, jury duty, vacation, military duty, leave
recognized under the Family and Medical Leave Act, or any other
approved leave of absence, as well as employees or former employees
receiving or eligible to receive short-term or long-term disability
benefits (such employees being hereafter referred to as the
"Employees"); PROVIDED, HOWEVER, that any employee who retires, is
laid-off or is terminated from Seller prior to the Closing shall
not be considered an Employee unless such person is receiving or is
eligible to receive long-term disability benefits immediately prior
to the Closing Date under the GD Employee Benefit Plans. Seller
shall deliver to Purchaser, at least thirty (30) days prior to the
Closing Date, a schedule designating all Employees. To the extent
required pursuant to any collective bargaining agreement assumed
pursuant to Section 11.2 or any applicable Law, Purchaser shall
honor any pre-existing recall rights, reinstatement rights or
rights to reemployment of any inactive or former employee of the
Seller's Business existing at the time of Closing, provided that
any such inactive or former employee reinstated or reemployed by
the Purchaser shall be treated as an Employee only upon the
effective date of such recall, reinstatement or reemployment.
(b) The Employees who are covered by collective
bargaining agreements shall be referred to herein as "Transferred
Union Employees". The Employees who are not covered by collective
bargaining agreements shall be referred to herein as "Transferred
Non-Union Employees". Collectively, the Transferred Union
Employees and the Transferred Non-Union Employees shall be referred
to herein as the "Transferred Employees".
(c) Except as expressly provided otherwise in this
Article XI, the terms and conditions of the Transferred Employees'
employment shall be upon such terms and conditions as Purchaser, in
its sole discretion shall determine. Upon request of Purchaser,
Seller shall provide Purchaser reasonable access to data before and
after the Closing (including computer data and personnel records)
regarding the ages, dates of hire, benefits, compensation and job
description of Employees. Seller will provide Purchaser with
reasonable opportunities to enter into discussions with and to
advise any of the Employees concerning the terms of any future
employment of such individuals by Purchaser and will permit
Purchaser reasonable access to Employees for such purpose. Seller
shall not discourage any Employees from accepting an offer of
employment, if any, made by Purchaser to such Employee. Purchaser
and Seller shall cooperate in preparing and disbursing materials
concerning the transaction contemplated by this Agreement or the
effect of the transaction upon the Employees' employment or the
terms or conditions of the Employees' employment. Seller and
Purchaser will provide each other with reasonable opportunity to
review any written materials and to attend any scheduled meetings
concerning the foregoing.
(d) Except with respect to the Assumed
Liabilities, Seller and Purchaser agree that matters arising out of
or relating to the terms and conditions of the employment of
employees or former employees of the Space Systems Division while
employed by the Seller prior to the Closing Date (including but not
limited to claims arising out of any GD Employee Benefit Plans
prior to the Closing Date) are the exclusive responsibility of
Seller and that matters arising out of or relating to the terms and
conditions of the employment of Transferred Employees while
employed by Purchaser on or after the Closing Date (including but
not limited to benefits under plans maintained by Purchaser on or
after the Closing Date) are the exclusive responsibility of
Purchaser. For the purposes of this Agreement, those liabilities
of the Space Systems Division constituting Assumed Liabilities by
virtue of clause (vi) of Schedule 1(A) are limited to: (i) accrued
vacation and sick leave with respect to Transferred Employees; (ii)
1993 incentive compensation payments to be paid in 1994 in cash to
Transferred Employees; (iii) the CLS Bonus Plan; (iv) accrued (as
of the Closing Date) salary and wages and related payroll taxes;
(v) to the extent provided in Section 11.3, the obligation to
provide post retirement medical benefits to the individuals
described in Section 11.3; (vi) to the extent set forth in Section
11.2, the collective bargaining agreements listed on Schedule 5.22;
(vii) workers compensation liabilities as described in Schedule
1(A); (viii) long-term disability benefits and associated medical
benefits payable under the GD Employee Benefit Plans to employees
or former employees of the Space Systems Division as described in
Schedule 1(A); and (ix) any incurred but not reported expenses of
Employees arising from GD Employee Benefit Plans that are reserved
for on the Closing Statement of Net Assets to be Sold and not
otherwise described in this Section 11.1(d); PROVIDED, HOWEVER,
that in the case of items (i), (ii), (iii), (iv), (v), (vii),
(viii) and (ix), the Assumed Liabilities in each case shall not
exceed the reserve for such item on the Closing Statement of Net
Assets to be Sold.
11.2 Collective Bargaining Agreements. At Closing,
Purchaser shall assume until their scheduled expiration dates, the
collective bargaining agreements listed on Schedule 5.22, except to
the extent it would be impracticable for Purchaser to assume or
duplicate Seller's benefit plans under such agreements, in which
event Purchaser shall establish and provide subject to the
agreement of affected labor organizations, comparable substitute
benefits, PROVIDED, HOWEVER, that Purchaser explicitly reserves the
right to renegotiate such collective bargaining agreements prior to
or upon the expiration thereof. To the extent pension benefits
have accrued prior to the Closing Date in accordance with the
collective bargaining agreements and the plans as of the Closing
Date, such benefits will be provided by the Seller in the GD
Employee Pension Plans. To the extent pension benefits accrue
subsequent to the Closing Date in accordance with the collective
bargaining agreements, such benefits will be provided by the
Purchaser in its designated plans. Seller shall cooperate with
Purchaser prior to the Closing Date in Purchaser's efforts to reach
agreement with affected labor organizations with respect to
providing comparable substitute benefits. Except with respect to
the Assumed Liabilities, Seller (and not Purchaser) shall be solely
liable and shall indemnify Purchaser from any Damages as a result
of any claims incurred prior to the Closing Date by any employee of
the Business or retiree arising under the collective bargaining
agreements listed on Schedule 5.22, as well as any claims arising
under any predecessor collective bargaining agreements covering the
bargaining units that include the Transferred Union Employees.
11.3 Retiree Medical and Life Insurance Benefits.
(a) Effective as of the Closing Date, Purchaser
will make available to Transferred Employees who were at least 55
years of age with five years of service or who were 50 years of age
or older with at least 70 age plus "service" points on July 1,
1993, in the case of Transferred Non-Union Employees, and on
January 1, 1994, in the case of Transferred Union Employees, a
post-retirement medical plan (or plans) which provides medical
benefits to Transferred Employees (and their dependents) who retire
on or after the Closing Date until such retired Transferred
Employees reach age 65 (the "Pre-Medicare Plan"). Subject to the
terms of any collective bargaining agreement listed on Schedule
5.22, participants in such Pre-Medicare Plan will be required to
contribute towards the cost of such plan. The Pre-Medicare Plan
will be subject to the right of the Purchaser to modify or
terminate benefits under such plan at any time. Other than with
respect to Transferred Employees eligible for the Pre-Medicare Plan
(and their dependents), Purchaser shall have no obligation to
provide any post-retirement or post-employment medical insurance
benefits to any Employee. Purchaser shall have no obligation to
provide post-retirement or post-employment life insurance benefits.
Seller shall be solely liable and shall indemnify Purchaser for any
Damages as a result of any claims made by any employee or former
employee of the Business or any beneficiary thereof for
post-employment or post-retirement medical or life insurance
benefits arising under or relating to the plans maintained by
Seller as of the Closing Date or prior to the Closing Date.
(b) In the event that an individual not covered by
a collective bargaining agreement (i) retires from Seller on or
after the date of this Agreement and prior to the Closing Date, and
(ii) subsequently commences employment with Purchaser, such
individual will permanently cease receiving post-retirement medical
benefits from Seller. Seller will advise such individuals of this
condition before any such employee elects to retire.
(c) Seller shall provide complete and adequate
notice to the Employees regarding the effect of their becoming
Transferred Employees on the benefits provided or promised to them
by Seller or under any of the GD Employee Benefit Plans including
the ability of eligible employees to retire from Seller and receive
post-retirement medical benefits prior to the Closing Date. Seller
and Purchaser shall cooperate in coordinating communications to the
Employees.
11.4 Health and Welfare Benefits for Active Employees.
(a) For each of the employee medical, life insurance
or disability plans included on Schedule 5.9 (other than
post-retirement and post-employment medical and life insurance
which shall be governed by Section 11.3), the Purchaser shall
adopt, subject to any applicable collective bargaining agreement
listed on Schedule 5.22, as of the Closing Date comparable employee
medical, life insurance and disability plans, and to the extent
required by any collective bargaining agreements assumed pursuant
to Section 11.2, other welfare plans. Seller shall provide
Purchaser all reasonable assistance which Purchaser may request in
establishing such plans, including assistance in duplicating or
transferring contracts applicable to such benefits. If any such
contracts cannot be duplicated or transferred to Purchaser by the
Closing Date, Seller shall assist Purchaser until the end of 1994
in administering the plans and obtaining the duplicate or
transferrable contracts. Seller shall provide Purchaser with
administrative and payroll services through its financial services
company in accordance with the terms of the Services Agreement for
a period not to last beyond the earlier to occur of (i) the
expiration of the respective Facility Leases, or (ii) Purchaser no
longer has employees at the Kearny Mesa Facility. Seller shall be
entitled to reasonable compensation from Purchaser with respect to
the rendition of such assistance. Any benefits adopted by
Purchaser shall be subject to the right of the Purchaser to modify
or terminate such benefits at any time. With respect to medical,
life insurance and disability benefits offered by Purchaser to
Transferred Employees, Purchaser shall credit the Transferred
Employees with service with Seller for purposes of eligibility for
such health and welfare benefits and with expenses incurred in 1994
for purposes of meeting annual deductible and out of pocket expense
limitations in 1994 under Purchaser's plans; provided, however,
that such plans may contain, in the discretion of Purchaser,
exclusions for pre-existing conditions as were applicable under the
plans provided to such Transferred Employees by Seller before the
Closing Date. Any benefits provided pursuant to this Section 11.4
by Purchaser to Transferred Employees will apply only to claims
incurred by Transferred Employees on or after the Closing Date,
and, except with respect to the Assumed Liabilities, Purchaser
shall have no liability for costs and expenses related to those
claims incurred prior to the Closing Date.
(b) The parties agree that for purposes of providing
welfare benefit continuation coverage pursuant to the provisions of
the Consolidated Omnibus Budget Reconciliation Act of 1985, welfare
benefit plan coverage under Purchaser's plans will be considered to
have commenced on the Closing Date and all eligible individuals
will not be considered to have lost coverage under Seller's plans
on the Closing Date.
(c) To the extent assets have been accumulated in
connection with any GD Employee Benefit Plans as of the Closing
Date, Seller shall transfer or cause to be transferred to the
Purchaser the allocable portion of the balance existing as of the
Closing Date in any trust, voluntary employee beneficiary
association, reserve, premium stabilization account or other
similar account or arrangement established by Seller or any other
Person and which is attributable to the Assumed Liabilities. The
transfer shall take place as soon as practicable but in no event
later than December 31, 1994. Seller shall permit Purchaser to
review the process by which it determines, based on the balance
existing as of the Closing Date, the allocable share attributable
to the Assumed Liabilities and shall provide Purchaser with access
to all documentation requested by Purchaser to verify that the
allocable share has been properly determined. In the event
Purchaser and Seller do not agree on the allocable share, Purchaser
and Seller shall jointly engage an independent enrolled actuary to
make a determination within sixty (60) days of the engagement as to
the proper allocable share. The conclusion of the independent
enrolled actuary shall be binding on Purchaser and Seller.
Purchaser and Seller shall share equally the cost of the actuary.
11.5 Pension Benefits.
(a) As of the Closing Date, the Seller shall cause
each Employee to become 100% vested in his accrued benefits in each
pension plan (as defined in Section 3(2) of ERISA) maintained by
Seller (and where applicable each collective bargaining agreement
assumed by the Purchaser in accordance with Section 11.2) with
respect to each Employee. Seller shall amend its plans to credit
each Employee's service on or after the Closing Date with the
Purchaser and age attained after the Closing Date for purposes of
eligibility for early retirement benefits. Following notification
to Purchaser, Seller shall seek the consent of the representative
of each collective bargaining unit identified in Schedule 5.22 of
its intent to vest employee pension benefits in accordance with
Section 11.5. Seller shall retain all liabilities attributable to
accrued benefits under its pension plans (whether qualified or
nonqualified), and within six months after the Closing Date, shall
provide Purchaser a listing of the service credited and the vested
benefits payable to each Employee under the terms of such plans
(including the portion attributable to retiree medical benefits).
At the same time, Seller also shall provide each Transferred
Employee with a statement of his vested accrued benefits.
Purchaser shall have no liability of any kind with respect to
pension benefits accrued under Seller's Plans.
(b) As of the Closing Date, Purchaser shall
establish a pension plan (or plans), or designate an existing
pension plan (or plans), intended to be qualified under Section
401(a) of the Code to cover Transferred Employees (the "Purchaser's
Plans"). Purchaser's Plans will contain such terms as Purchaser
may determine in its sole discretion (subject to the terms of
applicable collective bargaining agreements) and will provide for
benefits based on service with Purchaser on or after the Closing
Date, except that the Purchaser's Plans shall recognize service by
Transferred Employees with the Seller prior to the Closing Date for
purposes of vesting and participation.
11.6 Savings Plans.
(a) As of the Closing Date, the Seller shall cause each
Employee to become 100% vested in his account balance in each
savings, thrift or 401(k) plan maintained by Seller with respect to
each Employee. Following notification to Purchaser, Seller shall
seek the consent of the representative of each collective
bargaining unit identified in Schedule 5.22 of its intent to vest
employees in their account balances in accordance with this Section
11.6.
(b) As of the Closing Date, Purchaser shall
establish or designate an existing individual account plan (or
plans) intended to be qualified under Section 401(a) of the Code to
cover each Transferred Employee. Purchaser's plans shall permit
Transferred Employees who receive a distribution (as defined in
Section 402(f)(2)(A) of the Code) from Seller's Plans to make a
direct rollover in accordance with Section 401(a)(31) of the Code
of the cash portion of such distribution to a plan designated or
established pursuant to this Section 11.6(b).
11.7 Procedural Matters.
(a) Commencing with the date hereof, the Seller
shall make reasonably available to Purchaser and its agents,
employees, accountants and other representatives, such actuarial,
financial, personnel and other benefit-related information as may
be requested by Purchaser, including but not limited to benefit
records, employment histories, policies, interpretations,
insurance, service contracts and other related records needed for
the administration of Purchaser's plans.
(b) Purchaser and Seller agree that the flexible
spending accounts on behalf of Transferred Employees will be
maintained throughout 1994 in a manner that ensures that each
Transferred Employee receives no more and no less than he would
have received had the transactions contemplated by this Agreement
not occurred.
11.8 Incentive Closing Agreements. Seller shall be solely
responsible for the liabilities under any incentive closing
agreements entered into between Seller and employees of the Space
Systems Division. Seller has delivered to Purchaser a letter dated
December 21, 1993 (which letter is hereby incorporated by reference
herein) which sets forth a complete and accurate list of all such
incentive closing agreements.
11.9 Indemnification.
(a) Seller shall indemnify and hold Purchaser
harmless from any Damages it may incur with respect to any claims
of, or liabilities or obligations to, Transferred Employees or
employees (including former employees) of Seller arising out of or
relating to the terms and conditions of their employment during
their employment with Seller prior to the Closing Date whether such
claim is made before or after the Closing Date, including, but not
limited to, claims arising out of any GD Employee Benefit Plans),
except to the extent the Damages arise from (i) Purchaser's failure
to perform its obligations under this Article XI (including Damages
relating to the Assumed Liabilities), applicable Law, or collective
bargaining agreements assumed by Purchaser pursuant to 11.2 or (ii)
Purchaser's Plans explicitly provide for benefits based on service
prior to the Closing Date; provided however, that nothing in
Section 11.9 shall modify or expand the indemnification contained
in Sections 11.2 or 11.3.
(b) Purchaser shall indemnify and hold Seller
harmless from any Damages it may incur with respect to any claims
of, or liabilities or obligations to, Transferred Employees arising
out of or related to the terms and conditions of their employment
during their employment with Purchaser after the Closing Date,
including, but not limited to, claims arising out of any employee
benefit plan maintained by Purchaser unless the Damages result from
(i) Seller failing to perform its obligations under the incentive
closing agreements referred to in Section 11.8 or (ii) incorrect
data provided to Purchaser by Seller under Section 11.7.
11.10 Intellectual Property. Seller shall cooperate with
Purchaser in communicating terms and conditions of employment for
Employees being hired by Purchaser, including advising the
Employees that their current agreements with Seller or its
Affiliates concerning proprietary information and inventions (such
as the General Dynamics Proprietary Information and Invention
Agreements, Form 86-221 R1 (GDP Form 3-243)) shall not apply to
their employment relationship with Purchaser, and that all
Employees, whether or not they signed such agreements with Seller,
upon becoming Transferred Employees, shall be required to sign a
new agreement containing provisions concerning inventions, patents
and other intellectual property.
ARTICLE XII
CLOSING AND POST-CLOSING
COVENANTS; INDEMNIFICATION
12.1 Survival of Representations and Warranties. The
representations and warranties of the parties contained in Articles
V and VI of this Agreement shall survive the Closing through and
including the second anniversary of the Closing Date; PROVIDED,
HOWEVER, that (i) the representations and warranties of Seller made
in connection with or arising out of Sections 5.9, 5.10, 5.11, and
5.14(b)(1) through (b)(5), shall survive Closing and remain in full
force and effect until expiration of any rights of Purchaser or any
third party under law or equity with respect thereto and (ii) the
representations and warranties of Seller made in connection with or
arising out of Section 5.18 shall survive Closing and remain in
full force and effect until the tenth anniversary of the Closing
Date. All representations and warranties contained in this
Agreement and in the disclosure schedules or in any certificates or
other documents delivered pursuant hereto shall not be deemed to be
waived or otherwise affected by any prior knowledge of, or any
investigation made by or on behalf of, any party hereto.
12.2 Indemnification.
(a) Purchaser shall indemnify and hold harmless Seller
and its Affiliates and Subsidiaries, and their respective
directors, officers, employees and agents, from and against any and
all Damages arising out of, based upon or with respect to: (1) the
failure of any representation or warranty made by Purchaser herein
to have been true and correct in all respects when made or deemed
to have been made, (2) the breach by Purchaser of any of the
covenants and agreements on its part to be performed under this
Agreement, (3) the Assumed Liabilities, and (4) the ownership or
occupancy of the Assets or the operation of the Business
(including, without limitation, the design, manufacture and
assembly of products or the provision of services, the leasing of
property (real and personal), the incurrence of commitments and
obligations, the employment of persons, the provision of services
and the giving of warranties and warnings) by Purchaser after the
Closing Date, except for the Excluded Liabilities. Purchaser shall
also fully and promptly pay, perform, discharge, defend, indemnify
and hold harmless Seller, and its respective directors and
officers, from and against any and all Loss or Damages arising out
of, based upon or attributable to any Environmental Claim or
Remedial Action which is attributable to (but only to the extent
attributable to) the operations of the Facilities or the act or
omission of Purchaser following the Closing, including without
limitation, any investigation, remediation or removal of any
Contaminant; PROVIDED, HOWEVER, that the indemnity provided in this
sentence shall not be assignable by Seller.
(b) Seller shall indemnify and hold harmless
Purchaser and its Affiliates and Subsidiaries and their respective
directors, officers, employees and agents, from and against any and
all Damages arising out of, based upon or with respect to: (1) the
failure of any representation or warranty made by Seller herein to
have been true and correct in all respects when made or deemed to
have been made (including, without limitation, all statements made
on any Schedule hereto or in any Exhibit hereto but excluding any
such failure with respect to the representations and warranties
made by it in (A) Section 5.9 to the extent indemnification
therefor is available under Section 11.9, (B) Section 5.18 to the
extent indemnification therefor is available under Section 12.2(d),
(C) Section 5.11 to the extent indemnification therefor is
available under Section 12.4, and (D) Sections 5.1 through 5.4,
5.10 and 5.26); (2) the failure of any representation or warranty
made by Seller in any of Sections 5.1 through 5.4, 5.10 and 5.26
hereof (including, without limitation, all statements made on any
Schedule hereto or in any Exhibit hereto) to have been true and
correct in all respects when made or deemed to have been made, and
(3) the breach by Seller of any of the covenants and agreements on
its part to be performed under this Agreement.
(c) Seller shall indemnify and hold harmless
Purchaser and its Affiliates and Subsidiaries and their respective
directors, officers, employees and agents with respect to (A) any
and all Damages arising out of or resulting from the ownership or
occupancy of the Assets (including, without limitation, the Kearny
Mesa Facility, Plant 19 and the Sycamore Canyon Facility) or the
Excluded Assets or the operation of the Business (including,
without limitation, the design, manufacture and assembly of
products or the provision of services, regardless of whether sold
before, at or after the Closing Date, the leasing of property (real
and personal), the incurrence of commitments and obligations, the
employment of persons, the provision of services and the giving of
warranties) by GDC, SSC or CLS on or before the Closing Date,
whether asserted before or after the Closing Date, except for the
Assumed Liabilities and (B) without duplication, any and all
Excluded Liabilities. To the extent that a given claim for
indemnification in favor of Purchaser could be deemed to arise
under both Section 12.2(b) and this Section 12.2(c), then such
claims shall be deemed to only have arisen under this Section
12.2(c).
(d) Seller shall fully and promptly pay, perform,
discharge, defend, indemnify and hold harmless Purchaser and its
Affiliates and Subsidiaries, and their respective directors,
officers, employees, agents and customers, past, present or future,
from and against any and all Loss or Damages arising out of, based
upon or attributable to (i) any Environmental Claim or Remedial
Action or (ii) the breach of any representation or warranty under
Section 5.18 (including any statement in Schedule 5.18), in each
case to the extent arising out of or based upon anything relating
to the Facilities or their operation by the Seller or other Persons
or the act or omission of Seller or any Subsidiary or any
predecessor thereof prior to the Closing, including, without
limitation, any investigation, remediation or removal of any
Contaminant (whether such Contaminant is now located at the
Facilities or elsewhere) and any Environmental Claim or Remedial
Action required in respect of any matter disclosed in or pursuant
to Schedule 5.18. Without limiting the rights or obligations of
Purchaser and Seller set forth above, Purchaser agrees to (x) on a
basis consistent with Seller's past practices, continue to seek
payment or reimbursement from the U.S. Government with respect to
Environmental Claims and Remedial Actions relating to Plant 19,
Cape Canaveral Air Force Station and Vandenberg Air Force Base
Facilities and (y) otherwise reasonably cooperate with Seller in
its efforts to assert good faith claims for recovery against third
parties in connection with Environmental Claims or Remedial
Actions; PROVIDED, HOWEVER, that, except as set forth in clause (x)
above, (i) the Purchaser shall not be required to pursue claims
against third parties before having a right to make claims against
the Seller, (ii) Purchaser shall have no obligation to continue to
pursue the U.S. Government as required by clause (x) in respect of
any Environmental Claim or Remedial Action as to which no payment
has been received within ninety (90) days after the original demand
by Purchaser, and then shall be entitled to immediate
indemnification from Seller as provided herein and (iii) Purchaser
shall not in any event be required to increase its overhead rates
in order to facilitate a recovery by Seller. Seller shall
reimburse Purchaser for all costs incurred by Purchaser in making
third party claims or assisting Seller in connection with the
foregoing.
(e) Notwithstanding any contrary provisions herein
contained, including any indemnification provisions, neither Seller
or any of its Affiliates, on the one hand, nor Purchaser or any of
its Affiliates, on the other hand, shall have any liability or
obligation to indemnify or hold harmless any Person by reason of
the fact that the consummation of the transactions provided for by
this Agreement is found, held, determined or alleged to have
violated the antitrust laws of the United States or any foreign
jurisdiction; PROVIDED, HOWEVER, that this Section 12.2(e) shall
not, at or subsequent to the consummation of such transactions, be
deemed to relieve any Person from liability with respect to a
knowing and willful misrepresentation as to the propriety of such
transactions under any such laws.
(f) Seller shall indemnify and hold harmless
Purchaser, and its Affiliates and Subsidiaries and their respective
directors, officers, employees, agents and customers from and
against any and all Damages based upon the infringement, or
inducing or contributory infringement, of any patent, copyright,
mask work right, or right in trade secret, by reason of the
manufacture, lease, sale or use after the Closing Date of any
apparatus manufactured or sold, or process practiced, by the Space
Systems Division at any time during the six years prior to the
Closing Date; PROVIDED, HOWEVER, that the obligations under this
Section 12.2(f) shall not apply to any Damages for any such
infringement, other than contributory or inducing infringement,
based solely on the combination or use of any such product or
process with any other apparatus or process not manufactured, sold
or practiced by Seller during the six years prior to the Closing
Date; and provided, further that the obligations of Seller under
this Section 12.2(f) shall not apply to infringements which occur
as a result of any modification to any apparatus or process from
the form in which it was made, used or sold by the Space Systems
Division on or before the Closing Date. Seller's obligations under
this Section 12.2(f) with regard to acts of contributory or
inducing infringement after the Closing Date shall apply only if
the same acts which give rise to such inducing or contributory
infringement were also performed by the Space Systems Division on
or before the Closing Date.
(g) For the purposes of administering the
indemnification provisions of this Agreement, the following
procedures shall apply from and after the Closing Date:
(1) Each indemnified party shall notify the
Indemnitor of any Indemnification Event in writing within 30 days
following the receipt of notice of the commencement of any action
or proceeding or within 60 days of (A) the assertion of any claim
against such indemnified party or (B) the discovery by such
indemnified party of any loss, giving rise to indemnity pursuant to
this Agreement (any 30 or 60 day notification requirement shall
begin to run, in the case of a claim which is amended so as to
give rise to an Indemnification Event, from the first day such
claim is amended to include any claim which is an Indemnification
Event hereunder) and shall indicate in such notification whether
such indemnified party is requesting indemnification with respect
to such Indemnification Event. The failure to give notice as
required by this Section 12.2(g)(1) in a timely fashion shall not
result in a waiver of any right to indemnification hereunder except
to the extent that the Indemnitor's ability to defend against the
event with respect to which indemnification is sought is materially
adversely affected by the failure of the indemnified party to give
notice in a timely fashion as required by this Section.
(2) After notification is given as aforesaid,
the Indemnitor shall be entitled (but not obligated, except with
respect to Assumed Liabilities, as to which Purchaser shall be so
obligated) to assume the defense or settlement of any such action
or proceeding, or to participate in any negotiations or proceedings
to settle or otherwise eliminate any claim; PROVIDED, HOWEVER, that
in the event the Indemnitor assumes any such defense or settlement
or any such negotiations, it shall actively pursue such defense,
settlement or negotiations in good faith. If the Indemnitor fails
to elect in writing within 10 Business Days after the notification
referred to above to assume the defense, the indemnified party may
engage counsel to defend, settle or otherwise dispose of such
action or proceeding.
(3) In cases where the Indemnitor has assumed
the defense or settlement with respect to an Indemnification Event,
the Indemnitor shall be entitled to assume the defense or
settlement thereof with counsel of its own choosing, which counsel
shall be reasonably satisfactory to the indemnified party, provided
that the Indemnitor shall not be entitled to settle, compromise,
decline to appeal, or otherwise dispose of any such action,
proceeding or claim without the consent or agreement of the
indemnified party (which consent will not be unreasonably withheld
or delayed) provided, that if the terms of the settlement provide
only for payment of monies and do not provide for any agreement to
act or refrain from acting in any manner and such consent is
withheld, then the Indemnitor's liability shall be limited to the
amount for which the Indemnitor agreed with the claimant to settle
together with Indemnitor's cost and attorneys' fees to the date
such settlement was rejected by the indemnified party.
(4) In any case in which the Indemnitor
assumes the defense or settlement thereof, the indemnified party
shall be entitled to participate at its own cost in any such action
or proceeding or in any negotiations or proceedings to settle or
otherwise eliminate any claim for which indemnification is being
sought and shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (A) the employment of
such counsel shall have been authorized in writing by the
Indemnitor in connection with the defense of such suit, action,
claim or proceeding, (B) the Indemnitor shall not have employed
counsel (reasonably satisfactory to the indemnified party) to take
charge of the defense of such action, suit, claim or proceeding
within 10 Business Days after notice of commencement of the action,
suit, claim or proceeding, or (C) such indemnified party shall have
reasonably concluded that there may be defenses available to it
which are different from or additional to those available to the
Indemnitor which, if the Indemnitor and the indemnified party were
to be represented by the same counsel, could result in a conflict
of interest for such counsel or materially prejudice the
prosecution of the defenses available to such indemnified party.
If any of the events specified in clauses (B) or (C) of the
preceding sentence shall have occurred or shall otherwise be
applicable, then the reasonable fees and expenses of one counsel or
firm of counsel selected by the indemnified party shall be borne by
the Indemnitor and, in the event of clause (C), such counsel shall
be reasonable acceptable to the Indemnitor. In no event shall an
Indemnitor be liable to any indemnified party for the cost of
employing or using in-house legal counsel regardless of whether
such Indemnitor has, or has not, assumed the defense or settlement
of such action, proceeding or claim.
(5) In the event indemnification is requested,
the relevant Indemnitor, its representatives and agents shall have
access to the premises, books and records of the indemnified party
or parties seeking such indemnification to the extent reasonably
necessary to assist it in defending or settling any action,
proceeding or claim; PROVIDED, HOWEVER, that such access shall be
conducted in such manner as not to interfere unreasonably with the
operation of the business of the indemnified party or parties and
shall only take place in the presence of a representative of the
indemnified party or parties unless otherwise so agreed and the
indemnified party shall not be required to disclose any information
with respect to itself or any of its Affiliates or former
Affiliates (other than any such Affiliate or former Affiliate which
is a party to this Agreement), and shall not be required to
participate in the defense of any claim to be indemnified hereunder
(except as otherwise expressly set forth herein), unless such
disclosure or participation is otherwise required or reasonably
necessary in the defense of any claim to be indemnified hereunder.
(6) Any amount which is required to be paid by
an Indemnitor to any party, including any reimbursement to which
the indemnified party is entitled, shall be paid by such Indemnitor
promptly.
(h) From the date hereof until the sixth
anniversary of the Closing Date, each party to this Agreement
agrees to retain all Documents with respect to all matters as to
which indemnity may be sought under this Agreement (except to the
extent that such Documents in the possession of a party may be
transferred to the possession of another party at the Closing
pursuant to or as contemplated by this Agreement). Before
disposing of or otherwise destroying any such Documents, the
possessor thereof shall give reasonable notice to such effect and
deliver to any Indemnitor, at such Indemnitor's expense and upon
its request, a copy of any such Documents. In addition, each party
to this Agreement agrees to use its reasonable efforts to cause its
employees to cooperate with and assist the appropriate Indemnitor
and indemnified party in connection with any claim, action or
proceeding for which indemnity is sought hereunder or with respect
to which an Indemnitor has elected to participate in the defense.
(i) Seller shall not be liable to any Person under
Section 12.2(b)(1) and 12.2(f) unless and until the aggregate
amount for which indemnity would otherwise be due from Seller under
Section 12.2(b)(1) and 12.2(f), together with any Basket Limited
Liabilities (as defined in Schedule 1(A)), exceeds $2,500,000 (it
being understood that Seller shall be liable only for all amounts
in excess thereof) and, provided further, that Seller shall not be
liable under Sections 12.2(b)(1) and 12.2(f) to make payments in
excess of an aggregate of $50,000,000. The foregoing limitations
shall not be applicable in respect of any other obligations of
Seller hereunder nor in respect of obligations of Seller under
Section 12.2(f) hereof for products manufactured by the Space
Systems Division on or prior to the Closing Date, whether sold
before, on or after the Closing Date.
(j) The indemnities provided for in Sections
12.2(a)(1), 12.2(b)(1) and (2) shall survive until the second
anniversary of the Closing Date or, if applicable, such longer
period of time as may be specified in Section 12.1 for survival of
the representation or warranty giving rise to such indemnity claim
(except with respect of any Indemnification Event as to which the
indemnified party shall have given the Indemnitor notice prior to
the applicable survival date, which shall survive until the payment
in full by the Indemnitor of any Damages following final settlement
or non-appealable judgment with respect to such Indemnification
Event). The remaining indemnities provided for under this
Agreement shall remain in effect in perpetuity notwithstanding any
other provisions of this Agreement.
(k) The indemnities provided for in Sections
12.2(a)(1) and 12.2(b)(1) and (2) shall be the exclusive remedies
under this Agreement with respect to the failure of any
representation or warranty covered thereby to have been true and
correct when made or deemed made, except in the case of intentional
misrepresentation or fraud.
(l) Notwithstanding any facilitating undertakings
by Purchaser of Seller's liability to third parties to effectuate
or facilitate the Closing and the transactions contemplated herein,
(such as under leases, contracts, assignments, novations or
permits), this Agreement shall be the sole governing document in
determining the rights and liabilities as between the Purchaser and
Seller and no inference shall be formed that an undertaking
contained in any other agreement is an Assumed Liability with
respect to a pre-Closing act, event, omission or condition. In the
absence of an express written provision to the contrary in this
Agreement setting forth a specific third party undertaking as an
Assumed Liability under this Agreement, any undertaking of this
type shall not be deemed an Assumed Liability for purposes of
Section 12.2(a) or 12.2(c) of this Agreement nor in any event so as
to operate to lessen or obviate the indemnity protection afforded
to Purchaser under Section 12.2(d) of this Agreement.
12.3 Payment of Brokers' or Finders' Fees. Seller shall pay
any and all brokers' or finders' fees, or any other commission or
similar fee, payable to any person acting on behalf of Seller or
any of its Affiliates or under the authority of any of them, in
connection with any of the transactions contemplated herein, and
Purchaser shall pay any and all brokers' or finders' fees, or any
other commission or similar fee, payable to any person acting on
behalf of Purchaser or any of its Affiliates or under the authority
of any of them, in connection with any of the transactions
contemplated herein, in each case regardless of whether any claim
for payment is asserted before or after the Closing of the
transactions contemplated hereby, or before or after any
termination of this Agreement.
12.4 Tax Matters
(a) Seller and Purchaser shall cooperate fully with
each other and make available or cause to be made available to each
other in a timely fashion such tax data, prior tax returns and
filings and other information as may be reasonably required for the
preparation by Purchaser or Seller of any tax returns, elections,
consents or certificates required to be prepared and filed by
Purchaser or Seller and any audit or other examination by any
taxing authority, or judicial or administrative proceeding relating
to liability for Taxes. Purchaser and Seller will each retain and
provide to the other party all records and other information which
may be relevant to any such Tax Return, audit or examination,
proceeding or determination, and will each provide the other party
with any final determination of any such audit or examination,
proceeding or determination that affects any amount required to be
shown on any Tax Return of the other party for any period. Without
limiting the generality of the foregoing but subject to Section
12.2(h), each of Purchaser and Seller will retain copies of all Tax
Returns, supporting work schedules and other records relating to
tax periods or portions thereof ending prior to or on the Closing
Date. Purchaser will cause appropriate personnel to prepare usual
and customary tax return packages for (i) the tax period ending
December 31, 1993 (the "1993 Packages") and (ii) the tax period
beginning January 1, 1994, and ending as of the Closing Date (the
"Short Period Packages"). Except as otherwise provided below, the
1993 Packages will be delivered to Seller not later than April 30,
1994 and the Short Period Packages will be delivered to Seller not
later than 120 days after the Closing Date. If the Purchaser
determines that it is impractical to deliver the Packages on or
before the prescribed times, it shall deliver the Packages to
Seller as soon after the initially prescribed times as is
reasonably practicable but in no event shall the 1993 Packages be
delivered later than July 31, 1994, nor shall the Short Period
Packages be delivered later than 210 days after the Closing Date,
Purchaser having no obligation to incur additional out-of-pocket
expenses to accelerate the delivery. Purchaser will provide Seller
with any necessary payroll records attributable to the period prior
to the Closing Date.
(b) Any sales, transfer, use or other similar taxes
imposed as a result of the sale of the Assets to Purchaser pursuant
to this Agreement shall be shared equally by Seller and Purchaser.
At the Closing, Purchaser shall remit to Seller such properly
completed resale exemption certificates and other similar
certificates or instruments as are necessary to claim available
exemptions from the payment of sales, transfer, use or other
similar taxes under applicable law. All recording, transfer and
other similar taxes and fees payable as a result of the public
recordation of the instruments of conveyance or transfer of the
Assets executed and delivered to Purchaser pursuant to this
Agreement shall be allocated between the Purchaser and the Seller
in accordance with the customary practice prevailing in the place
where any such Assets are located.
(c) Seller shall be responsible for, and shall
indemnify and hold harmless, Purchaser and its Subsidiaries and
Affiliates in respect of any Damages attributable to all Taxes with
respect to the ownership, use or leasing of the Assets on or prior
to the Closing Date and Purchaser or its Affiliates shall be
responsible for, and shall indemnify and hold harmless Seller, its
Subsidiaries and Affiliates in respect of any Damages attributable
to all Taxes with respect to the ownership, use or leasing of the
Assets after the Closing Date. Seller's share of all real and
personal property Taxes, state and local ad valorem Taxes and
assessments applicable to the Assets for any period commencing on
or prior to the Closing Date and ending after the Closing Date
shall be determined on a pro rata basis based on the length of such
period and when the Closing Date occurs therein.
(d) Seller and Purchaser agree that the transaction
contemplated by this Agreement constitutes a sale of a trade or
business within the meaning of Section 41(f)(3) of the Code.
Seller agrees to provide Purchaser upon request with all
information necessary to permit Purchaser to timely apply the
provisions of Section 41(f)(3)(A) of the Code with respect to the
Assets. Seller agrees to furnish Purchaser upon request clearance
certificates or similar documents that may be required by any
state, local or other taxing authority to relieve Purchaser of any
obligations to withhold any portion of the purchase consideration
to be transferred pursuant to Article II hereof.
(e) The Purchase Price and the liabilities assumed
by Purchaser shall be allocated among the Purchased Assets as
provided in Section 1060 of the Code and Treasury Regulations
thereunder. Such allocation shall initially be based on an
appraisal by one of the "Big 6" national certified public
accounting firms to be selected by Purchaser, other than the
regular auditing firm of Purchaser. Seller shall have 30 days from
the later of (i) receipt of such initial allocation or (ii) receipt
of the appraisal and supporting work papers, to review and approve
the allocation or make suggested modifications thereto. The final
allocation shall be such allocation as is agreed upon by Purchaser
and Seller. Purchaser and Seller agree to provide reasonable
access by their respective employees and representatives
(including, without limitation, the appraiser) to those assets and
records of Seller prior to the Closing necessary for the purpose of
making such appraisal and allocation. Upon agreement as to the
final allocation, Purchaser and Seller shall not take any position
on their respective Tax Returns that is inconsistent with such
allocation of the purchase price, and Purchaser and Seller shall
duly prepare and timely file such reports and information returns
as may be required to report the allocation of the purchase price
pursuant to this Section 12.4(h). The parties acknowledge that the
purchase price subject to allocation will be different amounts for
each of Purchaser and Seller (e.g., due to inclusion of differing
amounts of transaction costs). If, after 60 days, Purchaser and
Seller are unable to agree upon the final allocation, any disputed
matters shall be finally and conclusively determined by an
independent auditing firm of recognized national standing (the
"Allocation Arbiter") selected by Purchaser and Seller, which shall
not be the regular auditing firm of Purchaser or Seller or the firm
which made the initial allocation. The Allocation Arbiter's
determination shall constitute the final allocation of the purchase
price for purposes hereof. Seller shall pay a portion of the fees
incurred in connection with the initial appraisal equal to the
lesser of (i) $100,000 or (ii) 50% of the total amount of such
fees. Purchaser shall pay the remainder of the fees incurred in
connection with the initial appraisal. The Allocation Arbiter's
fees shall be paid 50% by Purchaser and 50% by Seller.
(f) Prior to or as of the Closing, Seller will
effectively terminate all safe harbor lease agreements and
arrangements under Section 168(f)(8) of the 1954 Code relating to
the Assets such that, following the Closing, none of the Assets
will be property that Purchaser or any of its Affiliates will be
required to treat as being owned by any other Person pursuant to
the provisions of Section 168(f)(8) of the 1954 Code. Seller will
indemnify and hold Purchaser and its Affiliates harmless against
(i) any and all Damages arising pursuant to or in connection with,
and all obligations to any other party to, any and all safe harbor
lease agreements or arrangements to which any of the Assets were
subject prior to the Closing and (ii) any and all damages arising
in connection with or pursuant to the termination thereof.
(g) In the event any taxing authority mistakenly
delivers to or otherwise credits Purchaser with a refund of Tax
relating to Taxes paid or arising in periods prior to the Closing
Date, Purchaser will promptly negotiate such refund to Seller or
pay an amount equal to such credit to Seller, as the case may be.
12.5 [Intentionally Omitted]
12.6 Liquidating Events.
(a) For a period of five (5) years after the Closing Date,
GDC shall not distribute all or substantially all of its assets to
its shareholders or a liquidating trust or similar entity, dissolve
or sell all or substantially all of its assets for less than fair
value (as determined in good faith by the board of
directors of GDC) unless:
(1) at least thirty (30) days prior thereto
Seller shall have notified Purchaser in writing of the proposed
action; and
(2) Seller shall have, together with such
notice, offered to Purchaser such security as Seller deems
sufficient to provide compensation to Purchaser, within any
applicable limits of this Agreement, for all matured, pending,
contingent, conditional or unmatured indemnification or other
claims against, or liabilities or obligations of, Seller under this
Agreement, assuming such claims, liabilities or obligations are to
mature at the maximum potential amount thereof; and
(3) Purchaser shall either (a) have notified
Seller in writing that Purchaser accepts such offered security or
(b) within 10 days after receipt of Seller's notice under Section
12.6(a)(2), have notified Seller in writing that Purchaser rejects
such offered security; and
(4) If Purchaser has rejected Seller's offered
security pursuant to Section 12.6(a)(3), Seller has complied with
the requirements of Section 12.6(b) and the security required to be
provided to Purchaser has been determined, as provided therein, and
offered to Purchaser.
(b) If Purchaser rejects any offered security as
permitted by Section 12.6(a)(3), Purchaser and Seller shall
determine the required amount of any security for claims to be
provided to Purchaser as follows:
(1) Within fifteen (15) days after Purchaser
rejects any security offered by Seller as permitted by Section
12.6(a)(3), Purchaser and Seller shall petition an arbitrator, as
provided in this Section 12.6(b), to determine the amount and form
of security which would be reasonably likely to be sufficient to
provide compensation to Purchaser for all contingent, conditional
or unmatured claims of Purchaser against Seller under this
Agreement, if such claims mature.
(2) The arbitration required under Section
12.6(b)(1) shall be resolved by arbitration conducted in accordance
with the Commercial Arbitration Rules or then-existing rules for
commercial arbitration of the American Arbitration Association;
provided, however, that the parties shall select an arbitrator and
agree upon a schedule of arbitration such that the commencement of
the arbitrator's hearing shall commence no later than ninety (90)
days after the Purchaser has rejected the Seller's offer of
security. The arbitration shall be final and binding upon the
parties to the maximum extent permitted by Law.
(3) Each party shall pay the fees of its own
attorneys, expenses of witnesses and all other expenses connected
with the presentation of such party's case. One-half the cost of
any arbitration pursuant to this Section 12.6, including the cost
of the record or transcripts thereof, if any, administrative fees,
and all other fees involved, shall be paid by Purchaser, and the
balance shall be paid by Seller, except as the arbitrator may
otherwise direct.
(4) Proceedings under and the provisions of
this Section 12.6(b) shall be subject to Section 13.3.
(5) Any arbitration proceedings hereunder
shall be held in the State of Maryland.
ARTICLE XIII
GENERAL
13.1 Amendments. This Agreement may be amended, modified,
superseded or cancelled and any of the terms, covenants,
representations, warranties or conditions hereof may be waived only
by an instrument in writing signed by each of the parties hereto
or, in the case of a waiver, by or on behalf of the party waiving
compliance.
13.2 Integrated Contract. This Agreement, including the
Schedules and Exhibits hereto, any written amendments to the
foregoing satisfying the requirements of Section 13.1 hereof, the
Ancillary Agreements and the Confidentiality Agreements referred to
in Section 7.1(b) and (c) hereof, constitute the entire agreement
among the parties with respect to the subject matter hereof and
thereof, and supersede any previous agreements and understandings
between the parties with respect to such matters.
13.3 Governing Law. This Agreement and the legal relations
between the parties shall be governed by and construed in
accordance with the laws of the State of Maryland without regard to
the principles regarding the choice of law.
13.4 Notices. Any notice or other communications required
or permitted hereunder shall be in writing and shall be deemed to
have been duly given when delivered personally or transmitted by
telex or telecopier, receipt acknowledged, or in the case of
documented overnight delivery service or registered or certified
mail, return receipt requested, postage prepaid, on the date shown
on the receipt therefor,
(a) if to Purchaser, to:
Martin Marietta Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Frank H. Menaker, Jr., Esq.
Telecopy: (301) 897-6333
with a copy to:
Piper & Marbury
36 South Charles Street
Baltimore, Maryland 21201
Attention: R. W. Smith, Jr., Esq.
Telecopy: (410) 576-1700
(b) if to Seller, to:
General Dynamics Corporation
3150 Fairview Park Drive
Falls Church, Virginia 22042-4523
Attention: Nicholas D. Chabraja, Esq.
Telecopy: (703) 876-3125
with a copy to:
Jenner & Block
One IBM Plaza
Chicago, Illinois 60611
Attention: David A. Savner, Esq.
Telecopy: (312) 527-0484
or to such other address(es) as shall be furnished in writing by
any such party to each of the other parties hereto in accordance
with the provisions of this Section 13.4.
13.5 Assignment. Neither this Agreement nor any of the
rights and obligations of the parties hereunder may be assigned by
any of the parties hereto without the prior consent of each other
party hereto, except that Purchaser may assign any or all of its
rights and/or obligations hereunder to any of its direct or
indirect Subsidiaries and any such Subsidiary may assign such
rights and/or obligations to another direct or indirect Subsidiary
of Purchaser. Notwithstanding the foregoing, Purchaser shall
remain liable for all of its obligations under this Agreement.
Subject to the first sentence of this Section 13.5, this Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns and no other
person shall have any right, obligation or benefit hereunder.
13.6 Headings. The descriptive headings of the several
Articles, Sections and Schedules of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
13.7 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the
same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties hereto and
delivered, in person or by telecopier, receipt acknowledged, to the
other party hereto.
13.8 Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, except as otherwise expressly
provided herein each of the parties hereto shall be responsible for
the payment of its own respective costs and expenses incurred in
connection with the negotiations leading up to and the performance
of its respective obligations pursuant to this Agreement, including
the fees of any brokers or advisors employed or retained by or on
behalf of such party.
13.9 Further Assurances. From time to time after the
Closing, each party to this Agreement shall, at its expense except
as otherwise expressly provided herein, do, execute, acknowledge
and deliver any and all such other and further acts, assignments,
transfers and any instruments of further assurance, approvals and
consents as are necessary or proper in order to complete, ensure
and perfect the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements.
13.10 Public Announcements. No party to this Agreement shall
issue any press release or public announcement of any kind
concerning the transactions contemplated by this Agreement without
prior consultation with the other party hereto.
13.11 Bulk Sales Compliance. Each of the parties hereto
hereby waives compliance by each of the other parties hereto with
the provisions of any Bulk Sales Law of any State.
13.12 No Third Party Beneficiaries. Except for the rights
and remedies granted to Purchaser and Seller under this Agreement
and the Ancillary Agreements, nothing contained in this Agreement,
express or implied, shall confer upon any labor organization,
Employee, Transferred Employee, employee of Purchaser, employee of
Seller or any other Person any rights or remedies including,
without limitation, any right to any benefit, compensation,
payment, employment or continued employment for any specified
period, of any nature or kind whatsoever under or by reason of this
Agreement.
13.13 Agreement Regarding EAC's. Purchaser and Seller
acknowledge that the Purchaser has expressed concern that the
estimates at completion included in the balance sheets of the Space
Systems Division prepared pursuant to this Agreement can be
presented as an all-inclusive category of liabilities and
obligations which could be used to subvert the understanding
reached in this Agreement that Purchaser is not assuming any
liabilities or obligations of Seller other than the Assumed
Liabilities. Seller agrees that it will apply the principles of
this Agreement in good faith and will not use the estimates at
completion as a general basket category of liabilities and
obligations not specifically related to the original estimates at
completion made by Seller and accepted by Purchaser under this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf by its officers or
representatives thereunto duly authorized, all as of the date first
written above.
MARTIN MARIETTA CORPORATION
By: Marcus Bennett
GENERAL DYNAMICS CORPORATION
By: Nicholas D. Chabraja
GENERAL DYNAMICS SPACE SERVICES COMPANY
By: D. S. Hapke, Jr.
GENERAL DYNAMICS COMMERCIAL
LAUNCH SERVICES, INC.
By: Michael Wash
Asset Purchase Agreement - Martin Marietta Corp., General Dynamics Corp., General Dynamics Space Systems Co. and General Dynamics Commercial Launch Services Inc.
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