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
cont