ASSET PURCHASE AGREEMENT
between
MOTOROLA, INC.,
a Delaware corporation,
and
GENERAL DYNAMICS CORPORATION,
a Delaware corporation.
Dated as of August 6, 2001
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ASSET PURCHASE AGREEMENT.....................................................................1
ASSUMPTION OF LIABILITIES....................................................................1
1.1 Acquired Assets...............................................................1
1.2 Excluded Assets...............................................................3
1.3 Assumed Liabilities...........................................................5
1.4 Excluded Liabilities..........................................................6
PURCHASE PRICE...............................................................................6
2.1 Purchase Price................................................................6
2.2 Allocation....................................................................7
2.3 Transaction Taxes.............................................................7
REPRESENTATIONS AND WARRANTIES OF SELLER.....................................................7
3.1 Organization, Qualification...................................................7
3.2 Due Execution.................................................................8
3.3 No Violations.................................................................8
3.4 Taxes.........................................................................9
3.5 Litigation....................................................................9
3.6 Acquired Assets..............................................................10
3.7 Real Property................................................................10
3.8 Compliance with Laws.........................................................11
3.9 Material Contracts...........................................................11
3.10 Government Contracts.........................................................13
3.11 Permits......................................................................14
3.12 Clearances...................................................................14
3.13 Financial Statements.........................................................14
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3.14 Absence of Undisclosed Liabilities...........................................14
3.15 Absence of Certain Changes or Events.........................................15
3.16 Brokers......................................................................15
3.17 Warranty Disclaimer..........................................................15
REPRESENTATIONS AND WARRANTIES OF BUYER.....................................................16
4.1 Organization; Qualification..................................................16
4.2 Due Execution................................................................16
4.3 No Violations................................................................16
4.4 Litigation...................................................................17
4.5 Financing....................................................................17
4.6 Eligibility..................................................................17
4.7 Foreign Ownership............................................................17
4.8 Brokers......................................................................17
CLOSING.....................................................................................17
5.1 Closing......................................................................17
5.2 Deliveries by Seller.........................................................18
5.3 Deliveries by Buyer..........................................................18
5.4 Consummation of Transactions.................................................19
CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE................................................19
6.1 Conditions Precedent to Buyer's Obligations..................................19
6.2 Conditions Precedent to Seller's Obligations.................................20
INDEMNIFICATION.............................................................................21
7.1 Indemnification by Seller....................................................21
7.2 Indemnification by Buyer.....................................................21
7.3 Limitation on Indemnification Obligation.....................................21
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7.4 Survival.....................................................................22
7.5 Procedures for Indemnification...............................................22
7.6 Ancillary Agreements.........................................................23
COVENANTS...................................................................................23
8.1 Operation of the Business....................................................23
8.2 Access.......................................................................25
8.3 Cooperation; Records and Documents...........................................25
8.4 Novation of Government Contracts.............................................27
8.5 Assignment of Contracts......................................................28
8.6 Confidentiality..............................................................29
8.7 Filings and Authorizations...................................................30
8.8 Notification of Breach.......................................................30
8.9 Post-Closing Refunds.........................................................31
8.10 Noncompetition Agreement.....................................................31
8.11 Real Property Matters........................................................33
8.12 Settlement of Indirect Expense Rates.........................................34
8.13 Additional Discounts.........................................................35
TERMINATION.................................................................................35
9.1 Termination of Agreement.....................................................35
9.2 Effect of Termination........................................................35
GENERAL PROVISIONS..........................................................................35
10.1 Expenses.....................................................................35
10.2 Risk of Loss.................................................................36
10.3 Notices......................................................................36
10.4 Nondisclosure................................................................37
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10.5 Dispute Resolution...........................................................37
10.6 Limitation of Liability......................................................37
10.7 Bulk Sales Laws..............................................................37
10.8 Provisions in Ancillary Agreements to Govern.................................38
10.9 Miscellaneous................................................................38
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), made as of August 6,
2001, between Motorola, Inc. ("Seller"), a Delaware corporation, and General
Dynamics Corporation ("Buyer"), a Delaware corporation.
WITNESSETH:
WHEREAS, Seller, designs, develops, manufactures, produces, provides,
integrates and sells secure communication and information products, systems and
services, including integrated command, control, communication, computer,
intelligence, surveillance, and reconnaissance systems; software-defined radio
systems; high-assurance security and encryption products and services;
integrated communications systems; and specialized restricted space payloads,
for government and military enterprises in domestic and international markets
through its Integrated Information Systems Group (the "Group"); and
WHEREAS, Buyer desires to acquire substantially all of the assets,
business and operations of the Group and is willing to assume certain specified
liabilities of the Group, and Seller is willing to convey and assign the same
all on the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth below, the
parties agree with legal and binding effect as follows:
DEFINITIONS
As used in this Agreement, capitalized terms shall have the meanings set
forth or referenced in Exhibit A or elsewhere herein.
ARTICLE I
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
1.1 Acquired Assets. Upon the terms and subject to the conditions of
this Agreement, Seller hereby agrees to sell, assign (but only to the extent
assignable), transfer, convey and deliver (or, where applicable, will cause its
Affiliates to sell, assign (but only to the extent assignable), transfer, convey
and deliver) to Buyer, and Buyer hereby agrees to purchase, acquire and accept
from Seller or Seller's Affiliates on the Closing Date the assets, properties,
rights, contracts and claims of Seller or its Affiliates used or held for use
exclusively in the business and operation of the Group or otherwise listed or
described in clauses (a) through (o) below (but not the Excluded Assets), free
and clear of all Liens, except for Permitted Liens (collectively, the "Acquired
Assets"):
(a) Contracts. Except as set forth on Schedule 1.2(n), all
contracts, subcontracts, bailment and teaming agreements or arrangements, joint
venture agreements, basic ordering agreements, multiple award schedule
contracts, pricing agreements, letter contracts,
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purchase or delivery orders, change orders, non-disclosure agreements, other
contractual agreements, "other transactions" with the United States Government,
and all other contracts, agreements, commitments, leases and licenses to which
Seller or any of its Affiliates is a party entered into by or through the Group
or any of its divisions or which is listed in the Group's contracts database,
the Group's Eclipse database for radio and secure products or the Group's Oracle
database for test equipment (collectively, the "Contracts"), including without
limitation (i) the Government Contracts and (ii) the Material Contracts;
(b) Personal Property Leases and Software Licenses. Except as
set forth on Schedule 1.2(n), (i) all leases with respect to Tangible Personal
Property to which Seller or any of its Affiliates is a party entered into by or
through the Group or any of its divisions or which is listed in the Group's
contracts database, the Group's Eclipse database for radio and secure products
or the Group's Oracle database for test equipment (the "Personal Property
Leases") and (ii) the third party software licenses and programs listed on
Schedule 1.1(b) (the "Software Licenses");
(c) Tangible Personal Property. All tangible personal property
(including machinery, equipment, computers, laboratory and test equipment and
apparatus, furniture, furnishings, tools, dies and vehicles) owned by Seller or
any of Seller's Affiliates and set forth in the fixed asset ledger maintained by
the Group (as the same will be adjusted as indicated on Schedule 1.1(c)), in the
case of capital assets, or otherwise used or held for use primarily in relation
to the business or operation of the Group with respect to non-capital assets,
including without limitation those items listed on Schedule 1.1(c) (the
"Tangible Personal Property"), including any purchases and less any retirements
or dispositions of Tangible Personal Property made between the Balance Sheet
Date and the Closing Date in the ordinary course of business, consistent with
past practices of Seller;
(d) Inventory. All inventory, wherever located, including raw
and recycled materials, work-in-progress and finished goods inventories,
supplies and spare parts and used or held for use primarily in relation to the
Acquired Assets or the business or operation of the Group ("Inventory"), except
any sales, retirements or dispositions of Inventory made between the Balance
Sheet Date and the Closing Date in the ordinary course of business, consistent
with past practices of Seller;
(e) Real Property. (i) All real property and interests in real
property owned by Seller in Scottsdale, Arizona, used primarily in connection
with the business or operation of the Group and listed or described on Schedule
1.1(e), including all buildings, fixtures, structures and other improvements of
any kind or nature situated thereon, together with all easements, appurtenances,
leases, tenancies, options, rights-of-way and other real property rights and
interests relating thereto (the "Owned Premises"), (ii) the real property leases
listed or described on Schedule 1.1(e) (the "Assumed Real Property Leases") and
(iii) the Motorola Credit Union Ground Lease and Seller's residual interest, if
any, in the building, fixtures, structures and other improvements on the land
relating thereto;
(f) Receivables. All accounts and notes receivable and
unbilled revenues to the extent arising from the sale of goods or materials and
the rendering of services in connection
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with the business or operation of the Group, including related deposits,
security and collateral therefor and including any of the same that are payable
by other groups, sectors or Affiliates of Seller (the "Accounts Receivable"),
together with all unpaid interest accrued thereon, if any, as the same exist on
the Closing Date;
(g) Business Records. All books and records of Seller or
Seller's Affiliates to the extent relating to the Acquired Assets or the
business or operation of the Group including, without limitation, all manuals,
data, sales and advertising materials, customer and supplier lists and reports,
sales, distribution and purchase correspondence, engineering drawings, notebooks
and logbooks, and all original and duplicate copies of the foregoing (the "Books
and Records");
(h) Intellectual Property. The rights of Seller and Seller's
Affiliates transferred to Buyer pursuant to the Intellectual Property Agreement;
(i) Permits. To the extent assignable to Buyer and not
required for the ownership or operation of a business or assets to be retained
by Seller or Seller's Affiliates, the Permits;
(j) Prepaid Charges. All deferred and prepaid charges,
recoverable deposits, advances, expenses, sums and fees of Seller and Seller's
Affiliates to the extent related to the Group or the Assumed Liabilities arising
from payments made prior to the Closing Date for goods or services where such
goods or services have not been received as of the Closing Date;
(k) Claims. Except for those claims of Seller relating to the
sale of bomb fuzes to the United States Government under FMU-140, all rights,
claims or causes of action of Seller or any of Seller's Affiliates against Third
Parties to the extent arising out of the business or operation of the Group, the
Acquired Assets or the Assumed Liabilities;
(l) Employee Benefits. Those assets under the employee
benefit plans of Seller to be transferred to Buyer pursuant to the Employee
Matters Agreement;
(m) Telephone Numbers. All of Seller's interests in the
telephone numbers listed on Schedule 1.1(m); and
(n) Goodwill. The goodwill of the Group.
1.2 Excluded Assets. Notwithstanding the foregoing, Seller does not
hereby sell, assign, transfer or convey, and Buyer does not hereby accept or
purchase any of the assets, properties, rights, contracts and claims of Seller
or its Affiliates except for the Acquired Assets, and, without limiting the
generality of the foregoing, the following assets, properties, rights, contracts
and claims of Seller or its Affiliates shall not be sold, assigned, transferred
or conveyed to Buyer.
(a) Cash. Cash and cash equivalents (including any marketable
securities or certificates of deposit);
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(b) Affiliate Transactions. Except for Accounts Receivable as
set forth in Section 1.1(f), any agreements, transactions, accounts, contracts,
commitments or arrangements with other groups, sectors, or Affiliates of Seller;
(c) Claims. Any rights, claims or causes of action of Seller
and Seller's Affiliates against Third Parties to the extent arising in
connection with the Excluded Assets or the Excluded Liabilities including,
without limitation, those claims of Seller relating to the sale of bomb fuzes to
the United States Government under FMU-140;
(d) Employee Benefits. The assets and rights under the
employee benefit plans of Seller other than the assets to be transferred to
Buyer pursuant to the Employee Matters Agreement;
(e) Insurance. Policies of insurance and any proceeds or
return of premiums thereunder;
(f) Tax Refunds. All claims, rights and interests of Seller
and Seller's Affiliates in and to any refunds for Taxes relating to the Group,
the Owned Premises, the Assumed Real Property Leases or the other Acquired
Assets for periods ending on or prior to the Closing Date;
(g) Corporate Documents. Seller's corporate charter, seal,
minute books, stock record books, and other similar documents relating to the
organization, maintenance and existence of Seller or any of Seller's Affiliates;
(h) Transaction Records. Any records prepared in connection
with the transfer of the Acquired Assets, including bids received from others
and analyses relating to the Group and the Acquired Assets prepared in
connection with the transfer of the Acquired Assets;
(i) Company Name. Any trade name, trademark, service mark or
logo using or incorporating the name "Motorola" or any derivations thereof;
(j) Agreement Rights. Any rights of Seller under or pursuant
to this Agreement, the Ancillary Agreements and any other instrument between
Seller and Buyer or their respective Affiliates entered into pursuant to this
Agreement or the transactions contemplated hereby;
(k) Records and Documents. All records and documents to the
extent relating to the Excluded Assets or the Excluded Liabilities, including
without limitation any Books and Records (including Books and Records relating
to the Iridium Claims), to the extent such Books and Records relate to Excluded
Assets or Excluded Liabilities and are covered by the attorney-client privilege,
the work product doctrine, or any other judicially recognized privilege,
protection or immunity from disclosure (collectively, "Protected Materials"), it
being expressly understood and agreed (i) that Seller does not intend to waive
any such privilege, protection or immunity but rather intends to preserve all
such privileges, protections and/or immunities and (ii) that Buyer shall
promptly notify Seller in the event that, after the Closing Date, Buyer
discovers
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any Books and Records which Buyer reasonably believes constitute
Protected Materials which have been inadvertently transferred from Seller to
Buyer;
(l) Ownership Interests. The Certicom Investment;
(m) Scheduled Excluded Assets. Any of the assets listed on
Schedule 1.2(m); and
(n) Scheduled Excluded Contracts. Any of the contracts listed
on Schedule 1.2(n).
1.3 Assumed Liabilities. Upon the terms and subject to the conditions
of this Agreement, Buyer hereby agrees to assume, perform, pay and discharge, in
accordance with the respective terms and subject to the respective conditions
thereof, the following liabilities and obligations of Seller relating to or
arising out of the business or operation of the Group or the Acquired Assets,
excluding the Excluded Liabilities (the "Assumed Liabilities"):
(a) Liabilities. All liabilities, debts, obligations,
judgments, fines, penalties, claims and Proceedings relating to the business or
operation of the Group or the Acquired Assets, whether accrued, liquidated,
contingent, matured or unmatured, arising out of events occurring after the
Closing Date;
(b) Accounts Payable. All accounts payable and accrued payment
obligations of Seller to the extent relating to or arising out of the business
or operation of the Group, including any of the same that are payable to other
groups, sectors or Affiliates of Seller (the "Accounts Payable"), existing as of
the Closing Date (whether arising prior to or on the Closing Date);
(c) Contracts. All liabilities, obligations and Proceedings
arising under the Contracts, including without limitation the Government
Contracts, the Material Contracts, the Personal Property Leases, the Software
Licenses and the Assumed Real Property Leases, whether incurred or arising prior
to, on or after the Closing Date, but excluding (i) any liability or obligation
relating to or involving the sale by the Group of bomb fuzes to the United
States Government under FMU-140 or (ii) any other liability or obligation
arising out of criminal conduct or civil fraud occurring on or prior to the
Closing Date;
(d) Warranty Claims. Any and all claims and Proceedings
relating to warranty obligations or services or claims of manufacturing or
design defects with respect to any product or service sold or provided by the
Group whether prior to, on, or after the Closing Date, whether or not such
claims or Proceedings were accrued, liquidated, contingent, or known or unknown
to Seller at or prior to the Closing Date;
(e) Employment. Any liability or obligation to the extent
provided in the Employee Matters Agreement with respect to the subject matters
covered thereby;
(f) Environmental. Any liability or obligation to the extent
provided in the Environmental Matters Agreement with respect to the subject
matters covered thereby; and
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(g) Intellectual Property. Any liability or obligation to the
extent provided in the Intellectual Property Agreement with respect to the
subject matters covered thereby.
1.4 Excluded Liabilities. Notwithstanding anything to the contrary in
this Agreement or the Ancillary Agreements, Buyer shall not assume or be
obligated to pay, perform or otherwise assume or discharge any liabilities or
obligations of Seller or any of its Affiliates, whether direct or indirect,
known or unknown, or absolute or contingent, except for the Assumed Liabilities
(all of such liabilities and obligations not so assumed being referred to herein
as the "Excluded Liabilities"), and, without limiting the generality of the
foregoing, the following obligations and liabilities relating to the Group or
the Acquired Assets shall not be assumed by Buyer and shall be retained by
Seller:
(a) Certain Claims. Any liability or obligation in respect of
the Proceedings described on Schedule 1.4(a);
(b) Taxes. Any Taxes relating to the Group, the Owned
Premises, the Assumed Real Property Leases or the other Acquired Assets owed for
periods ending on or prior to the Closing Date;
(c) Indebtedness. Any liability or obligation of Seller in
respect of indebtedness for borrowed money;
(d) Excluded Assets. Any liability or obligation relating to
the Excluded Assets;
(e) Employees. Any liability or obligation not expressly
assumed by Buyer pursuant to the Employee Matters Agreement with respect to the
subject matters covered thereby;
(f) Environmental. Any liability or obligation not expressly
assumed by Buyer pursuant to the Environmental Matters Agreement with respect to
the subject matters covered thereby;
(g) Intellectual Property. Any liability or obligation not
expressly assumed by Buyer pursuant to the Intellectual Property Agreement with
respect to the subject matters covered thereby; and
(h) Scheduled Excluded Liabilities. All of the liabilities
and obligations set forth on Schedule 1.4(h).
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. At the Closing, in consideration of the sale,
transfer, assignment, conveyance and delivery by Seller of the Acquired Assets
to Buyer, Buyer shall assume the Assumed Liabilities and cause to be delivered
the sum of $825,000,000 (the "Purchase Price") to
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Seller by bank wire transfer in immediately available funds to an account which
shall be designated in writing by Seller at least two Business Days prior to the
Closing Date.
2.2 Allocation
(a) Within 120 days after the Closing, Buyer will deliver to
Seller a statement (the "Allocation Statement") prepared in accordance with
Section 2.2(b), setting forth its calculation of the amount of the total
consideration allocable to the Acquired Assets acquired at the Closing. Seller
will review the Allocation Statement and, to the extent Seller disagrees in good
faith with the content of the Allocation Statement, Seller will inform Buyer of
such disagreement within 30 days after receipt of the Allocation Statement.
Seller and Buyer will attempt to resolve any such disagreement. If Seller and
Buyer are unable to reach a good faith agreement on the content of the
Allocation Statement within 180 days of the Closing Date, Seller and Buyer shall
each use its own allocation statement.
(b) The Allocation Statement will be prepared in accordance
with Section 1060 of the Code and the rules and regulations promulgated
thereunder.
(c) If Buyer and Seller agree on the Allocation Statement,
Buyer and Seller shall report the allocation of the total consideration among
the Acquired Assets in a manner consistent with the Allocation Statement and
shall act in accordance with the Allocation Statement in the preparation and
filing of all Tax returns (including filing Form 8594 with their respective
Federal income tax returns for the taxable year that includes the Closing Date
and any other forms or statements required by the Code, Treasury regulations,
the Internal Revenue Service or any applicable state or local taxing authority).
(d) Buyer and Seller will promptly inform one another of any
challenge by any taxing authority to any allocation made pursuant to this
Section 2.2 and agree to consult with and keep one another informed with respect
to the status of, and any discussion, proposal or submission with respect to,
such challenge.
2.3 Transaction Taxes. All sales, use, transfer, recording, value
added, and any other transaction taxes and charges, if any, arising out of the
transfer of the Acquired Assets to Buyer will be shared equally by Buyer and
Seller. Buyer and Seller agree to cooperate in obtaining any sales or transfer
tax exemptions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer, as of the date hereof,
and as of the Closing Date, as follows:
3.1 Organization, Qualification. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Seller has the requisite corporate power to own its properties and
carry on the business and operations of the Group as now conducted by Seller.
Seller is duly licensed or qualified to do business and is in good
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standing in each jurisdiction in which it is required to be licensed or
qualified to do business and in which the failure to be so licensed or qualified
or in good standing would have a Material Adverse Effect or a material adverse
effect on the ability of Seller to perform its obligations under this Agreement
and the Ancillary Agreements. Neither Seller nor any of its Affiliates owns or
holds the right to acquire any shares of stock or any other investment or equity
interest in any other corporation, partnership, joint venture or other entity to
which Buyer would become the successor as a result of the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements.
3.2 Due Execution. All corporate acts required to be taken by Seller
to authorize the execution and delivery of this Agreement, the Ancillary
Agreements and all instruments and transactions contemplated hereby have been
duly and properly taken. This Agreement has been, and the Ancillary Agreements,
documents and instruments to be delivered by Seller at Closing will be, duly and
validly executed and delivered by Seller and constitute the valid and legally
binding obligations of Seller enforceable against it in accordance with their
respective terms, except in each case as such enforceability may be limited by
bankruptcy, moratorium, insolvency, reorganization or other similar laws
affecting or limiting the enforcement of creditors rights generally and except
as such enforceability is subject to general principles of equity.
3.3 No Violations.
(a) The execution, delivery and performance of this Agreement
and the Ancillary Agreements by Seller and the consummation of the transactions
contemplated hereby and thereby do not and will not: (i) conflict with or result
in a breach or violation of any provision of Seller's certificate of
incorporation or by-laws or of any statute, rule, regulation or ordinance
applicable to Seller, (ii) conflict with or violate or result in a breach of or
constitute a default (or an event that is reasonably expected, upon the passage
of time or the giving of notice, or both, to constitute a default) under any
provision of, result in the acceleration or cancellation of any obligation
under, or give rise to a right by any party to terminate or amend its
obligations under, any mortgage, deed of trust, note, loan, indenture, lien,
lease, agreement, instrument, order, judgment, decree or other arrangement or
commitment to which Seller is a party or by which it or its assets or properties
are bound, or (iii) conflict with or violate any order, judgment, decree, rule
or regulation of any court or any Governmental Authority having jurisdiction
over Seller or any of the Acquired Assets, except in each case for (A) such
conflicts, breaches, violations or defaults as are not reasonably expected to
result in a Material Adverse Effect; or (B) the need to obtain the consents,
approvals and filings set forth on Schedule 3.3.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Person is required by Seller in
connection with the execution and delivery of this Agreement and the Ancillary
Agreements or the consummation of the transactions contemplated hereby or
thereby, except for (i) any of the same the failure of which to obtain or make
is not reasonably expected to result in a Material Adverse Effect, (ii) any
filings required to be made under the HSR Act, and (iii) consents, approvals or
other actions of Third Parties identified on Schedule 3.3 which are required to
transfer or assign to Buyer any Acquired Assets or assign the benefits of or
delegate performance with regard thereto.
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3.4 Taxes.
(a) Except as set forth on Schedule 3.4, with respect to the
business or operation of the Group and the Acquired Assets: (i) Seller has filed
or will file all federal, state, local and foreign tax returns when and as
Seller has been or is required by law to file for periods ending on or before
the Closing Date; (ii) Seller has paid, and will pay for all periods ending on
or before the Closing Date, all taxes (whether or not shown on any such tax
return) when and as the same shall be due and payable by Seller, including
without limitation all foreign or domestic income, excise, unemployment, social
security, occupation, franchise, real and personal property, ad valorem, sales
and use taxes and all penalties and interest in respect thereof ("Taxes") and
all Taxes not yet due and payable are and shall be properly accrued for in the
financial records of the Group; and (iii) Seller has withheld and paid over, and
will withhold and pay over for all periods ending on or before the Closing Date,
all federal, state, local and foreign withholdings in respect of Taxes required
by law.
(b) Except as disclosed on Schedule 3.4, none of the Acquired
Assets: (i) secures any debt the interest on which is tax-exempt under Code
Section 103(a); (ii) is "tax exempt use property" within the meaning of Code
Section 168(h); (iii) is used predominantly outside of the United States within
the meaning of U.S. Proposed Treasury Regulation Section 1.168-2(g)(5); (iv) is
"tax exempt bond financed property" within the meaning of Code Section
168(g)(5); (v) is "limited use property" within the meaning of Revenue Procedure
76-30 as modified by Revenue Procedure 81-71; or (vi) will be treated as owned
by another Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect prior to the enactment
of the Tax Equity and Fiscal Responsibility Act of 1982.
(c) The transactions contemplated by this Agreement are not
subject to Tax withholding pursuant to the provisions of Code Section 3406 or
Subchapter A of Chapter 3 of the Code. Seller is a United States Person within
the meaning of the Code. Seller has never been a United States real property
holding corporation within the meaning of Code Section 897(c)(2).
(d) There is no contract, agreement, plan or arrangement
covering any employee of the Group that, individually or collectively, provides
for the payment prior to or in connection with this transaction by Buyer of any
amount: (i) that is not deductible under Section 162(a)(1) or 404 of the Code;
or (ii) that is an "excess parachute payment" under Code Section 280G.
(e) There are no Liens for Taxes of any kind on any of the
Acquired Assets, except for Taxes not yet due and payable.
3.5 Litigation. Except as set forth on Schedule 3.5, there are no
Proceedings that (i) contain a claim for money damages of $500,000 or more, (ii)
seek injunctive or other equitable relief which if granted would be reasonably
expected to result in a Material Adverse Effect or (iii) relate to this
Agreement or the transactions contemplated hereby, in each case pending or, to
Seller's Knowledge, threatened against Seller relating to the business or
operation of the Group, the Acquired Assets, the Assumed Liabilities or Seller's
ability or authority to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements.
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3.6 Acquired Assets.
(a) Seller, or its Affiliates, as applicable, has good and
marketable title to, or a valid license to or leasehold interest in, all
Acquired Assets free and clear of any Lien, except for Permitted Liens. The
items of personal property included in the Acquired Assets and currently used in
the business or operation of the Group are in normal operating condition,
subject to normal wear and tear, and are suitable for the purposes for which
they are currently being used.
(b) Except as set forth on Schedule 3.6(b), all assets,
properties and rights owned or used by Seller and its Affiliates in connection
with the current operation or business of the Group shall be owned or available
for use by Buyer on substantially similar terms and conditions immediately after
giving effect to the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, except for the failure of such of the
foregoing as is not reasonably expected to have a Material Adverse Effect.
3.7 Real Property.
(a) Schedule 3.7 contains a complete and accurate list and
legal description of all Owned Premises (including addresses) and a complete and
accurate list of all Leased Premises (including addresses, the name of each
landlord and the date of each lease). Except as set forth on Schedule 3.7, the
Premises constitute all of the real property and interests in real property
owned, leased, used or held for use by Seller or its Affiliates in relation to
the business or operation of the Group. Seller has good and marketable fee
simple title to the Owned Premises designated as the "Fee Simple Owned Property"
on Schedule 1.1(e), free and clear of all mortgages, liens, security interests,
easements, covenants, restrictions, rights-of-way and other liens, claims and
similar encumbrances and restrictions of any nature whatsoever, except for the
Permitted Liens. Except as described or provided in the Environmental Matters
Agreement, the Permitted Liens do not, individually or in the aggregate,
materially and adversely affect the use, value or operation of the Premises or
any parcel or component thereof.
(b) Except as set forth on Schedule 3.7 and for any of the
following the failure of which to be true and correct is not reasonably expected
to result in a Material Adverse Effect, (i) to Seller's Knowledge, all
improvements located on each parcel of the Premises are in good operating
condition and in a good state of maintenance and repair (normal wear and tear
excepted), have been regularly and appropriately maintained, are adequate for
their current use in the business or operation of the Group and are free from
structural defect, except for scheduled maintenance, repairs and replacements to
be performed in the ordinary course of the operation of the Premises, (ii) to
Seller's Knowledge, there is not now pending any condemnation or eminent domain
proceeding affecting any of the Premises or any portion thereof or any lawsuits
or administrative actions relating to any of the Premises that is reasonably
expected to have a material adverse effect on the current use, occupancy or
value of such Premises, nor is any such proceeding threatened by any
Governmental Authority or other party, (iii) all Permits necessary for the
operation and current use of the Premises have been issued and are in full force
and effect, (iv) each of the Premises is served by all necessary water, sewer,
gas, electric, telephone, drainage facilities and other utilities or services
necessary for the current operation thereof (collectively, "Utilities") and, to
Seller's Knowledge, no fact or condition exists that is
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reasonably expected to result in the discontinuation of any of the Utilities,
(v) to Seller's Knowledge, each of the Premises has been operated and maintained
in compliance with all applicable Laws, including, without limitation, all
applicable building codes, zoning, subdivision and land use laws, (vi) Seller
has not received written notice that the use or occupancy of any of the Premises
violates any covenants, conditions or restrictions that encumber the Premises,
and (vii) there are no leases, subleases, licenses, concessions or other
agreements, written or oral, granting to any other person or entity the right of
use or occupancy of any portion of any of the Premises, except for the Permitted
Liens, the Motorola Credit Union Ground Lease and any third party antenna
agreements.
(c) Seller has heretofore delivered to Buyer a true, correct
and complete copy of each Real Property Lease together with all amendments,
modifications, alterations and other changes thereto. All of the Assumed Real
Property Leases are valid, binding and enforceable against Seller and, to
Seller's Knowledge, against the other parties thereto, and there exists no
breach or default, or state of facts which, with the passage of time, notice, or
both, is reasonably expected to result in a breach or default on the part of
Seller or, to Seller's Knowledge, the other party or parties to any Real
Property Lease. None of the leasehold estates in the Leased Premises subject to
the Assumed Real Property Leases is subject to any mortgage, lien, security
interest or other Lien created or caused by Seller that would survive the
Closing and the assignment of the Assumed Real Property Leases. The Real
Property Lease with respect to each of the Leased Premises constitutes the
entire agreement to which Seller is a party with respect to the Leased Premises
leased thereunder.
3.8 Compliance with Laws. Except as set forth on Schedule 3.8, Seller
has complied with all Laws applicable to the business and operation of the
Group, except where the failure to so comply is not reasonably expected to have
a Material Adverse Effect.
3.9 Material Contracts. Schedule 3.9 contains a list of each of the
following Contracts (each of which shall be deemed a "Material Contract") to
which Seller or any of its Affiliates is a party with respect to the business or
operation of the Group or the Acquired Assets:
(a) any Contract that obligates Seller or any of its
Affiliates to pay an amount in excess of $5,000,000 after the date hereof;
(b) any Contract for the sale of products or systems or the
provision of services that involves the anticipated accrual or receipt of
revenues of more than $5,000,000 after the date hereof;
(c) any Contract, lease or similar agreement relating to the
purchase, sale or use of real property;
(d) any material agreement or arrangement that relates to the
provision of goods or services to or by the Group by or to Seller or any other
group, sector or Affiliate of Seller;
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(e) any confidentiality agreement that restricts in any
material way the business or operation of the Group or the use of any of the
Acquired Assets or any non-competition agreement that restricts in any way the
business or operation of the Group or the use of any of the Acquired Assets;
(f) any collective bargaining agreements with any labor union
or representative of employees relating to or affecting the Group or the
Acquired Assets;
(g) any partnership, joint venture, teaming, co-production or
profit sharing Contracts;
(h) any employment agreement with any Employee other than
Seller's standard form letter agreement;
(i) any agreement committing Seller or any of its Affiliates
to purchase or sell any property or asset in respect of the business or
operation of the Group outside the ordinary course of business;
(j) any Contract constituting a material distribution or
sales agency agreement;
(k) any material Software Licenses;
(l) any restricted contract; or
(m) any contract involving the handling, treatment, storage,
transportation, recycling, reclamation or disposal of waste or hazardous
substances generated by or used by the Group, which has not been entered into in
the ordinary course of business.
Except as prohibited by law, by the terms of such Material Contract, or
under any confidentiality agreement, or as specifically set forth on Schedule
3.9, Seller has made available to Buyer copies of all Material Contracts, which
copies are complete and accurate in all material respects. Except as described
on Schedule 3.9 or Schedule 3.10(a), each Material Contract is valid and binding
and is in full force and effect as to Seller, and, to Seller's Knowledge,
represents the legal, valid and binding obligation of the other party or parties
thereto, enforceable against such party or parties in accordance with its terms.
Except as disclosed on Schedule 3.9 or with respect to the Government Contracts,
which are the subject of Section 3.10 and therefore not covered by this
sentence, Seller or the applicable Affiliate of Seller has performed all
obligations required to be performed by it under each Material Contract through
the date this representation is made, except where the failure to perform is not
reasonably expected to result in a Material Adverse Effect, and is not (with or
without the lapse of time or the giving of notice, or both) in material breach
or material default thereunder and, to Seller's Knowledge, no other party
thereto is (with or without the lapse of time or the giving of notice, or both)
in material default under any Material Contract.
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3.10 Government Contracts.
(a) Compliance. Except as set forth on Schedule 3.10(a), with
respect to each and every Government Contract or Government Proposal and for all
periods from and after January 1, 1998 (i) Seller has complied with all terms
and conditions of such Government Contract or Government Proposal except where
the failure to comply is not reasonably expected to result in a Material Adverse
Effect; (ii) Seller has complied with all requirements of all Laws or agreements
pertaining to such Government Contract or Government Proposal except where the
failure to comply is not reasonably expected to result in a Material Adverse
Effect; (iii) all representations and certifications executed, acknowledged or
set forth in or pertaining to such Government Contract or Government Proposal
were, to Seller's Knowledge, complete and correct as of their effective dates
and, to Seller's Knowledge, Seller has complied with all such representations
and certifications; (iv) neither the United States Government nor any prime
contractor, subcontractor or other person has notified Seller in writing that
Seller has breached or violated any statute, regulation, certification,
representation, clause, provision or requirement pertaining to such Government
Contract or Government Proposal; (v) no termination for convenience, termination
for default, cure notice or show cause notice is currently in effect; (vi) with
respect to any Government Contract, the United States Government has not
questioned or disallowed costs exceeding $1,000,000 per contract; (vii) no money
due to Seller pertaining to such Government Contract or Government Proposal has
been withheld or set off, nor has any claim been made to withhold or set off
money, and, to Seller's Knowledge Seller is entitled to all progress payments
received with respect thereto; and (viii) each Government Contract is valid and
subsisting.
(b) Investigations. Except as set forth on Schedule 3.10(b),
with respect to the business and operation of the Group: (i) none of Seller, the
Group nor any employee or consultant of Seller or the Group is, or during the
last three years has been, under, to Seller's Knowledge, administrative, civil
or criminal investigation by the United States Government or under any internal
audit by Seller or the Group with respect to any alleged irregularity,
misstatement or omission arising under or relating to any Government Contract or
Government Proposal; (ii) during the last three years, Seller has not conducted
or initiated any material internal investigation or made a voluntary disclosure
to the United States Government with respect to any alleged irregularity,
misstatement or omission arising under or relating to a Government Contract or
Government Proposal, and (iii) during the last three years, none of the Seller,
the Group nor any employee or consultant of Seller or the Group has been
suspended or disbarred from doing business with the United States Government or
has been the subject of a finding of nonresponsibility on a Government Proposal
nor has any debarment or suspension proceeding been initiated against Seller or
the Group. To Seller's Knowledge, there exist no facts or circumstances that
would warrant the institution of suspension or debarment proceedings or the
finding of nonresponsibility on the part of Seller or the Group or any of their
respective directors, officers or employees. No payment has been made by or on
behalf of Seller or the Group in connection with any Government Contract or
Government Proposal in violation of applicable procurement laws, rules and
regulations or in violation of, or requiring disclosure pursuant to, the Foreign
Corrupt Practices Act of 1977, as amended.
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(c) Absence of Claims. Except as set forth on Schedule
3.10(c), with respect to the Group, there exist: (i) to Seller's Knowledge, no
outstanding material claims against Seller either by the United States
Government or by any prime contractor, subcontractor, vendor or other third
party, arising under or relating to any Government Contract or Government
Proposal; and (ii) no material disputes between Seller and the United States
Government under the Contract Disputes Act or between Seller and any prime
contractor, subcontractor or vendor arising under or relating to any Government
Contract or Government Proposal.
(d) Cost Accounting Systems. Except as set forth on Schedule
3.10(d), the cost accounting and contractor purchasing systems maintained by
Seller in connection with the conduct of the business and operations of the
Group with respect to Government Contracts are in compliance with all applicable
Laws (including all applicable cost accounting standards) in all material
respects.
3.11 Permits. Seller currently has all Permits from all federal,
state, local and foreign authorities as are necessary for the conduct of the
business or operation of the Group as currently conducted as of the date hereof,
except where the failure to have any Permit is not reasonably expected to result
in a Material Adverse Effect.
3.12 Clearances. Except to the extent prohibited by Law, Schedule 3.12
sets forth with respect to the Acquired Assets or business or operation of the
Group, all material facility security clearances held by Seller (the
"Clearances").
3.13 Financial Statements. Seller has provided to Buyer a copy of the
Balance Sheet as of the Balance Sheet Date, the Pro Forma Balance Sheet as of
the Balance Sheet Date and the income statement for the Group for the six (6)
month period ending on the Balance Sheet Date (collectively, the "Financial
Statements"), true copies of which are attached to this Agreement as Exhibit H.
The Financial Statements (a) are in accordance with the Books and Records of
Seller; (b) have been prepared in accordance with GAAP in all material respects,
except as disclosed on Exhibit H; and (c) present fairly and accurately the
financial condition and results of operations for the periods indicated. The
Financial Statements have not been prepared, reviewed or audited by an outside
accounting firm. The reserves in the Financial Statements for Contracts,
warranties, customer claims, and other liabilities have been determined based on
Seller's historical experiences and represent Seller's reasonable good faith
estimate of the expected liabilities to which they relate and are reflected in
the Financial Statements in accordance with GAAP.
3.14 Absence of Undisclosed Liabilities. Except as disclosed or
reserved against on the Balance Sheet, or as specifically set forth on Schedule
3.14, and except for the Excluded Liabilities, Seller does not have, with
respect to the business or operation of the Group, any debts, liabilities, or
obligations of any nature, whether accrued, absolute, contingent or otherwise,
other than: (i) liabilities incurred in the ordinary and usual course of
business since the Balance Sheet Date, (ii) other debts, liabilities or
obligations which are not, in the aggregate, in excess of $1,000,000, and (iii)
liabilities not required by GAAP to be included or disclosed on a balance sheet
prepared in accordance with GAAP or any notes thereto.
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3.15 Absence of Certain Changes or Events. Except as disclosed on
Schedule 3.15, since the Balance Sheet Date:
(a) Seller has conducted the business and operations of the
Group in the ordinary and usual course of business, and there has not been any
event or series of events that has had or is reasonably expected to have a
Material Adverse Effect; provided, however, any effect resulting from any change
that is generally applicable to the United States economy or securities markets
as a whole or to industries in which the Group operates generally, in each case
where such change does not adversely affect the business or operation of the
Group or the value of the Acquired Assets disproportionately, shall not
constitute a Material Adverse Effect under this Section 3.15(a);
(b) there has been no change in the condition, financial or
otherwise, of the Group, the Acquired Assets or the Assumed Liabilities, other
than any such changes in the ordinary course of business, none of which changes,
individually or in the aggregate, are reasonably expected to be material to the
Group, the Acquired Assets or the Assumed Liabilities;
(c) except to the extent required by GAAP, applicable Law, or
the United States Government, there has been no change in the method of
accounting or keeping of books of account or accounting practices with respect
to the Acquired Assets, the Assumed Liabilities or the business or operation of
the Group;
(d) Seller has not accelerated, delayed or postponed payment
of Accounts Payable or the collection of Accounts Receivable outside the
ordinary course of business consistent with past practices;
(e) Seller has not made any capital expenditure or commitment
in excess of the amounts set forth in the Capital Acquisition Report;
(f) Seller has not canceled, compromised, waived or released
any right or claim material to the business or operations of the Group that is
reasonably expected to result in a Material Adverse Effect; and
(g) Seller has not committed or agreed to do any of the
foregoing.
3.16 Brokers. No broker, investment banker, financial advisor or other
Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based on arrangements made by or on behalf of Seller, except
pursuant to arrangements with those investment banks listed on Schedule 3.16,
for which Seller is solely responsible.
3.17 Warranty Disclaimer The representations and warranties set forth
in this Agreement and in the Ancillary Agreements and other instruments
contemplated hereby and thereby are the only representations and warranties made
by Seller with respect to the Group and the Acquired Assets. Except as
specifically set forth herein, Seller is selling the Acquired Assets to Buyer
"AS IS" and "WHERE IS" and with all faults. EXCEPT AS SPECIFICALLY SET FORTH IN
THIS AGREEMENT, SELLER MAKES NO WARRANTY, EXPRESS OR
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IMPLIED, AS TO ANY MATTER WHATSOEVER RELATING TO THE ACQUIRED ASSETS, INCLUDING
THE CONDITION OF THE ACQUIRED ASSETS, THEIR MERCHANTABILITY OR THEIR FITNESS FOR
ANY PARTICULAR PURPOSE. SELLER FURTHER SPECIFICALLY DISCLAIMS ANY WARRANTY
REGARDING THE PROFITABILITY OF THE GROUP OR THE STATUS, OUTCOME OR LIKELIHOOD OF
SUCCESS OF ANY LITIGATION REFERENCED HEREIN.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller, as of the date hereof,
and as of the Closing Date, as follows:
4.1 Organization; Qualification. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Buyer has the requisite corporate power to own its properties and
carry on its business as now conducted. Buyer is duly licensed or qualified to
do business and is in good standing in each jurisdiction in which it is required
to be licensed or qualified to do business and in which the failure to be so
licensed or qualified or in good standing would have a material adverse effect
on the ability of Buyer to perform its obligations under this Agreement and the
Ancillary Agreements.
4.2 Due Execution. All corporate acts required to be taken by Buyer
to authorize the execution and delivery of this Agreement, the Ancillary
Agreements and all instruments and transactions contemplated hereby have been
duly and properly taken. This Agreement has been, and the Ancillary Agreements,
documents and instruments to be delivered by Buyer at Closing will be, duly and
validly executed and delivered by Buyer and constitute the valid and legally
binding obligations of Buyer enforceable against it in accordance with their
respective terms, except in each case as such enforceability may be limited by
bankruptcy, moratorium, insolvency, reorganization or other similar laws
affecting or limiting the enforcement of creditors rights generally and except
as such enforceability is subject to general principles of equity.
4.3 No Violations.
(a) The execution, delivery and performance of this Agreement
and the Ancillary Agreements by Buyer and the consummation by Buyer of the
transactions contemplated hereby and thereby do not and will not (i) conflict
with or result in a breach or violation of any provision of Buyer's certificate
of incorporation or by-laws or of any statute, rule, regulation or ordinance
applicable to Buyer, (ii) conflict with or violate or result in a breach of or
constitute a default (or an event that is reasonably expected, upon the passage
of time or the giving of notice, or both, to constitute a default) under any
provision of, result in the acceleration or cancellation of any obligation
under, or give rise to a right by any party to terminate or amend its
obligations under, any mortgage, deed of trust, note, loan, indenture, lien,
lease, agreement, instrument, order, judgment, decree or other arrangement or
commitment to which Buyer is a party or by which it or its assets or properties
are bound, or (iii) conflict with or violate any order, judgment, decree, rule
or regulation of any court or any Governmental Authority having jurisdiction
over Buyer, except in each case for such conflicts, breaches, violations or
defaults as
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are not reasonably expected to result in a material adverse effect on the
ability of Buyer to consummate the transactions contemplated by this Agreement
and the Ancillary Agreements.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Person is required by Buyer in
connection with the execution and delivery of this Agreement and the Ancillary
Agreements or the consummation of the transactions contemplated hereby or
thereby, except for (i) any of the same the failure of which to obtain or make
is not reasonably expected to result in a material adverse effect on the ability
of Buyer to consummate the transactions contemplated by this Agreement and the
Ancillary Agreements, (ii) any filings required to be made under the HSR Act and
(iii) such consents, approvals, orders, authorizations, registrations,
declarations or filings the failure of which to obtain would not, individually
or in the aggregate, have a material adverse effect on Buyer's ability to
consummate the transactions contemplated hereby and thereby.
4.4 Litigation. There are no Proceedings pending or, to Buyer's
Knowledge, threatened against Buyer relating to the Group, the Acquired Assets,
the Assumed Liabilities or Buyer's ability or authority to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements where
the outcome is reasonably expected to result in a material adverse effect on the
ability of Buyer to consummate the transactions contemplated by this Agreement
and the Ancillary Agreements.
4.5 Financing. Buyer has the capability or sufficient funds or
financing in place as of the date hereof to fund the consideration to be paid at
Closing to Seller for the Acquired Assets.
4.6 Eligibility. During the last three years, neither Buyer nor any
director or executive officer of Buyer has been debarred, suspended, proposed
for debarment, or found to be nonresponsible by the United States or any United
States government entity. To Buyer's Knowledge, there exist no facts or
circumstances that would warrant the institution of debarment or suspension
proceedings or the finding of nonresponsibility on the part of Buyer or any
director or executive officer of Buyer.
4.7 Foreign Ownership. Buyer is not under "foreign ownership, control
or influence," as such term is defined in the U.S. Department of Defense
Industrial Security Manual for Safeguarding Classified Information.
4.8 Brokers. No broker, investment banker, financial advisor or other
Person is entitled to any broker's, finder's financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based on arrangements made by or on behalf of Buyer.
ARTICLE V
CLOSING
5.1 Closing. The closing ("Closing") of the sale and purchase of the
Acquired Assets and the assignment and assumption of the Assumed Liabilities
shall take place at the offices of Jenner & Block, LLC, One IBM Plaza, Chicago,
Illinois at 10:00 a.m. Central Time on the first
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business day after satisfaction or waiver of the conditions set forth in
Sections 6.1 and 6.2 herein, or at such place, date and time as the parties may
agree (the "Closing Date"), but in any event no later than December 31, 2001.
All acts and transactions to be taken or effected at the Closing shall be deemed
to have been taken simultaneously and shall be deemed to be effective as of
12:01 a.m. Central Time on the Closing Date.
5.2 Deliveries by Seller. At the Closing, Seller shall deliver or
cause to be delivered to Buyer all instruments, duly executed, which are
required by the terms hereof to be delivered at the Closing, including:
(a) the Assignment and Assumption Agreement;
(b) the Bill of Sale;
(c) the Intellectual Property Agreement;
(d) the Employee Matters Agreement;
(e) the Environmental Matters Agreement
(f) the Transition Services Agreements;
(g) the Lease;
(h) the Strategic Alliance Agreement;
(i) the Commercial Agreements;
(j) a certificate of Seller, dated as of the Closing Date,
certifying to the fulfillment of the conditions specified in Section 6.1(a) of
this Agreement;
(k) an affidavit pursuant to Section 1445(b)(2) of the Code
stating under penalty of perjury Seller's federal employer identification number
and that Seller is not a foreign person and such other certificates and
affidavits relating to Tax matters as may reasonably be requested by Buyer; and
(l) all such other bills of sale, special or limited warranty
deeds, assignments and other instruments of assignment, transfer or conveyance
as Buyer may reasonably request or as may be otherwise necessary to evidence and
effect the sale, transfer, assignment, conveyance and delivery of the Acquired
Assets to Buyer and to put Buyer in actual possession or control of the Acquired
Assets.
5.3 Deliveries by Buyer At the Closing, Buyer shall deliver or cause
to be delivered to Seller all instruments, duly executed, which are required by
the terms hereof to be delivered at the Closing, including:
(a) an amount equal to the Purchase Price by wire transfer of
immediately available funds in U.S. dollars;
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(b) the Assignment and Assumption Agreement;
(c) the Intellectual Property Agreement;
(d) the Employee Matters Agreement;
(e) the Environmental Matters Agreement;
(f) the Transition Services Agreements;
(g) the Lease;
(h) the Strategic Alliance Agreement;
(i) the Commercial Agreements; and
(j) a certificate of Buyer dated as of the Closing Date,
certifying to the fulfillment of the conditions specified in Section 6.2(a) of
this Agreement.
5.4 Consummation of Transactions. Each of the parties hereto agrees
to use all commercially reasonable efforts to consummate all of the transactions
contemplated herein and to be performed by it hereunder.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE
6.1 Conditions Precedent to Buyer's Obligations. All obligations of
Buyer hereunder are subject to the fulfillment on or before the Closing Date of
each of the following conditions:
(a) No Misrepresentation or Breach of Covenants and
Warranties. There shall have been no material breach by Seller in the
performance of any of its covenants and agreements contained herein or in the
Primary Ancillary Agreements; each of the representations and warranties of
Seller contained or referred to in this Agreement and the Primary Ancillary
Agreements that are qualified as to materiality shall be true and correct and
the other representations and warranties of Seller contained or referred to in
this Agreement and the Primary Ancillary Agreements shall be true and correct in
all material respects, in each case on the Closing Date as though made on the
Closing Date, unless such representations and warranties are made only as of an
earlier date, in which case they shall be true and correct, or true and correct
in all material respects, as the case may be, as of such earlier date, and
Seller shall have delivered a certificate confirming the matters set forth in
this Section 6.1(a).
(b) No Injunction. No order of any court or administrative
agency shall be in effect that enjoins, restrains, conditions or prohibits
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements.
(c) HSR Act. Any applicable waiting period under the HSR Act
relating to the transactions contemplated by this Agreement shall have expired
or been terminated.
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(d) Consents. Seller shall have obtained and delivered to
Buyer the written consents specified on Schedule 6.1(d).
(e) Title Policy. The Title Company shall be prepared to issue
to Buyer a title policy in the amount of the fair market value of the Owned
Premises as reasonably determined by Buyer, naming Buyer as the insured party
thereunder, insuring good and marketable fee simple title to the Owned Premises,
subject only to the Permitted Liens and containing such endorsements as Buyer
shall reasonably require including, without limitation, the following
endorsements: (i) extended coverage, (ii) zoning, with parking (or its
equivalent), (iii) access and (iv) contiguity (the "Title Policies"). The Title
Policies also shall provide affirmative insurance with respect to all easements
benefiting the Owned Premises. All title insurance premiums and charges payable
in connection with the issuance of the Title Policies shall be shared equally by
Buyer and Seller.
(f) No Material Adverse Effect. Since the Balance Sheet Date
there shall have been no change in the business or operation or the assets,
liabilities or condition (financial or otherwise) of the Group, which is
reasonably expected to result in a Material Adverse Effect, excluding any such
change that is generally applicable to the United States economy or securities
markets as a whole or to industries in which the Group operates generally, in
each case where such change does not adversely affect the business or operation
of the Group or the value of the Acquired Assets disproportionately.
(g) Delivery of Documents. Seller shall have delivered the
documents, instruments and certificates identified in Section 5.2.
6.2 Conditions Precedent to Seller's Obligations. All obligations of
Seller hereunder are subject to the fulfillment on or before the Closing Date of
each of the following conditions:
(a) No Misrepresentation or Breach of Covenants and
Warranties. There shall have been no material breach by Buyer in the performance
of any of its covenants and agreements contained herein or in the Primary
Ancillary Agreements; each of the representations and warranties of Buyer
contained or referred to in this Agreement and the Primary Ancillary Agreements
that are qualified as to materiality shall be true and correct and the other
representations and warranties of Buyer contained or referred to in this
Agreement and the Primary Ancillary Agreements shall be true and correct in all
material respects, in each case on the Closing Date as though made on the
Closing Date, unless such representations and warranties are made only as of an
earlier date, in which case they shall be true and correct, or true and correct
in all material respects, as the case may be, as of such earlier date, and Buyer
shall have delivered a certificate confirming the matters set forth in this
Section 6.2(a).
(b) No Injunction. No order of any court or administrative
agency shall be in effect that enjoins, restrains, conditions or prohibits
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements.
(c) HSR Act. Any applicable waiting period under the HSR Act
relating to the transactions contemplated by this Agreement shall have expired
or been terminated.
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(d) Delivery of Documents. Buyer shall have delivered the
documents, instruments and certificates identified in Section 5.3.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by Seller. Subject to the limitations set forth
in this Article VII, Seller hereby agrees to indemnify and hold harmless Buyer
or any of its Affiliates or any of their respective directors, officers,
employees or agents (collectively the "Buyer Parties") against any and all
Damages incurred by Buyer in connection with or arising or resulting from:
(a) any breach by Seller of, or any other failure of Seller to
perform, any of its covenants, agreements or obligations in this Agreement or in
any Primary Ancillary Agreement;
(b) the failure of any representation or warranty of Seller
contained or referred to in this Agreement, any Primary Ancillary Agreement, or
any certificate delivered by or on behalf of Seller pursuant hereto or thereto
to have been true in all respects when made and as of the Closing Date unless
such representations and warranties are made only as of an earlier date, in
which case they shall be true and correct as of such earlier date; and
(c) the Excluded Liabilities.
7.2 Indemnification by Buyer. Subject to the limitations set forth in
this Article VII, Buyer hereby agrees to indemnify and hold harmless Seller or
any of its Affiliates or any of their respective directors, officers, employees
or agents (collectively the "Seller Parties") against any and all Damages
incurred by Seller in connection with or arising or resulting from:
(a) any breach by Buyer of, or any other failure of Buyer to
perform, any of its covenants, agreements or obligations in this Agreement or in
any Primary Ancillary Agreement;
(b) the failure of any representation or warranty of Buyer
contained or referred to in this Agreement, any Primary Ancillary Agreement, or
any certificate delivered by or on behalf of Buyer pursuant hereto or thereto to
have been true in all respects when made and as of the Closing Date unless such
representations and warranties are made only as of an earlier date, in which
case they shall be true and correct as of such earlier date; and
(c) the Assumed Liabilities.
7.3 Limitation on Indemnification Obligation. Notwithstanding the
foregoing, Seller shall not be required to indemnify the Buyer Parties under
Section 7.1(b) and Buyer shall not be required to indemnify the Seller Parties
under Section 7.2(b), in each case until, and then only to the extent that, the
aggregate amount of such Damages exceeds $10,000,000 and provided that the
aggregate amount of Damages that either party shall be required to indemnify and
hold harmless pursuant to Section 7.1(b) or Section 7.2(b), as the case may be,
shall not exceed $82,500,000.
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7.4 Survival. The representations and warranties of Buyer and Seller
contained in this Agreement or any Primary Ancillary Agreement shall survive for
a period of two years following the Closing Date, except (a) for the
representations and warranties contained in the first sentence of Section
3.6(a), in Section 3.16 and in Section 4.8, which shall survive indefinitely,
(b) for the representations and warranties contained in Section 3.4, which shall
survive until the expiration of the applicable statute of limitations, and (c)
as specifically provided in the Primary Ancillary Agreements. Neither Seller nor
Buyer shall have any liability whatsoever with respect to any such
representations or warranties after the survival period for such representation
or warranty expires, except for claims then pending or theretofore asserted in
writing by a party in accordance with the terms and conditions of this
Agreement.
7.5 Procedures for Indemnification. The indemnified party shall give
prompt written notice to the indemnifying party of any Claim by any Third Party
in respect of which indemnity may be sought, but a failure to give such notice
or delaying such notice shall not affect the indemnified party's right to
indemnification and the indemnifying party's obligation to indemnify as set
forth in this Agreement, except to the extent the indemnifying party's ability
to remedy, contest, defend or settle with respect to such Claim is actually
prejudiced thereby. The obligations and liabilities of the parties with respect
to any such Claim shall be subject to the following additional terms and
conditions:
(a) The indemnifying party shall have the right to undertake,
by counsel or other representatives of its own choosing, the defense or
opposition to such Claim.
(b) In the event that the indemnifying party shall elect not
to undertake such defense or opposition, or, within thirty (30) days after
written notice (which shall include sufficient description of background
information explaining the basis for such Claim) of any such Claim from the
indemnified party, the indemnifying party shall fail to undertake to defend or
oppose such Claim, the indemnified party (upon further written notice to the
indemnifying party) shall have the right to undertake the defense, opposition,
compromise or settlement, subject to clause (c) below, of such Claim, by counsel
or other representatives of its own choosing, on behalf of and for the account
and risk of the indemnifying party (subject to the right of the indemnifying
party to assume defense of or opposition to such Claim at any time prior to
settlement, compromise or final determination thereof).
(c) Anything herein to the contrary notwithstanding: (i) in
the event that the indemnifying party undertakes defense of or opposition to any
Claim, (A) the indemnified party shall have the right, at its own cost and
expense, to participate in the defense, opposition, compromise or settlement of
the Claim and the indemnifying party and the indemnified party and their
respective counsel or other representatives shall cooperate in good faith with
respect to such Claim; and (B) the indemnifying party shall not, without the
indemnified party's written consent (which consent shall not be unreasonably
withheld), settle or compromise any Claim or consent to entry of any judgment in
respect of such Claim; and (ii) in the event that the indemnified party
undertakes defense of or opposition to any Claim, (A) the indemnifying party
shall have the right, at its own cost and expense, to participate in the
defense, opposition, compromise or settlement of the Claim and the indemnifying
party and the indemnified party and their respective counsel or other
representatives shall cooperate in good faith with respect to such
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Claim; and (B) the indemnified party shall not, without the indemnifying party's
written consent (which consent shall not be unreasonably withheld), settle or
compromise any Claim or consent to entry of any judgment in respect of such
Claim.
(d) All Claims not disputed shall be paid by the indemnifying
party within thirty (30) days after receiving notice of the Claim. In the event
there is a Disputed Claim with respect to any Damages, the indemnifying party
shall be required to pay the indemnified party the amount of such Damages for
which the indemnifying party has, pursuant to a final determination, been found
liable within ten (10) days after there is a final determination with respect to
such Disputed Claim. A final determination of a Disputed Claim shall be (i) a
judgment of any court of competent jurisdiction determining the validity of a
Disputed Claim, if no appeal is pending from such judgment and if the time to
appeal therefrom has elapsed; (ii) an award of any arbitration determining the
validity of such disputed claim, if there is not pending any motion to set aside
such award and if the time within which to move to set aside such award has
elapsed; (iii) a written termination of the dispute with respect to such claim
signed by the parties thereto or their attorneys; (iv) a written acknowledgment
of the indemnifying party that it no longer disputes the validity of such claim;
or (v) such other evidence of final determination of a disputed claim as shall
be acceptable to the parties. No undertaking of defense or opposition to a Claim
shall be construed as an acknowledgment by such party that it is liable to the
party claiming indemnification with respect to the Claim at issue or other
similar Claims.
(e) Any amounts payable under this Article VII by the
indemnifying party to or on behalf of the indemnified party in respect of any
Damages shall be reduced to the extent that the indemnified party receives any
insurance proceeds with respect to a Claim. If the amount of any Claim, at any
time subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by or
against any Third Party, the amount of such reduction, less any costs, expenses
or premiums incurred in connection therewith, will promptly be repaid by the
indemnified party to the indemnifying party with respect to such Claim.
7.6 Ancillary Agreements. The provisions of this Article VII shall be
without limitation of the parties' rights to indemnification under or other
remedies specifically provided for under the Ancillary Agreements.
ARTICLE VIII
COVENANTS
8.1 Operation of the Business. Seller covenants and agrees that
during the period from the date of this Agreement to the Closing (except as
Buyer otherwise has consented in writing, which consent will not be unreasonably
withheld), the business and operation of the Group and the Premises will be
conducted only in the ordinary course of business, consistent with past
practices, and Seller shall use commercially reasonable efforts to preserve the
business and operations of the Group intact, and to preserve the goodwill of
customers and suppliers of the Group. During the period from the date of this
Agreement through the Closing, Seller shall
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not, with respect to the Acquired Assets, the Assumed Liabilities or the Group,
without the prior written consent of Buyer, which consent will not be
unreasonably withheld:
(a) cancel or waive, or agree to cancel or waive, any debt, claim or
right (absolute or contingent), having a value or potential value
(individually or in the aggregate) in excess of $500,000;
(b) make any capital expenditure, capital commitment, additions to
property, plant or equipment in excess of the amounts set forth in
the Capital Acquisition Report attached hereto as Schedule 8.1(b);
(c) take any action which individually or in the aggregate is
reasonably expected to have a Material Adverse Effect on the
Group's business relationship with any major customer or supplier;
(d) sell, lease, license or otherwise dispose of, or agree to sell,
lease, license or otherwise dispose of, any interest in any of the
Acquired Assets, except for (i) sales of Inventory in the ordinary
course of business and (ii) the sale or disposal of excess and
obsolete assets in the ordinary course of business in compliance
with Group policies and practices and in an amount not to exceed
$100,000 per month;
(e) increase in any manner the compensation of, or enter into any new
bonus or incentive agreements or arrangements with, or establish
any new employee benefit plans or programs for, or increase the
benefits under any existing employee benefit plan or program for,
any employees of the Group other than in connection with a
promotion, in the ordinary course of business (including any such
changes that are not related to the transactions contemplated by
this Agreement and that are generally applicable to all similarly
situated Seller or Seller Affiliate employees), or as expressly
provided for in the Employee Matters Agreement or any agreements
forming a part thereof;
(f) enter into a lease of real property with respect to the business or
operations of the Group having annual lease payments in excess of
$500,000;
(g) change with respect to the business or operation of the Group its
accounting methods, principles or policies in any material respect
except to the extent required by GAAP, applicable Law, or the
United States Government;
(h) make any Tax election that could carry over to Buyer and have a
Material Adverse Effect after the Closing;
(i) make any change to the revenue recognition procedures as used in
the preparation of the Financial Statements;
(j) amend in any material adverse respect any Contract except with
respect to the settlement of a debt, claim or right in accordance
with Section 8.1(a);
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(k) pay, distribute, loan or advance any amount received in connection
with or related to advance payments or deposits on Contracts to any
stockholder, officer, employee, director or Affiliate, except as
otherwise contemplated by this Agreement or the Ancillary
Agreements;
(l) (i) delay or postpone payment on, or otherwise alter the payment
terms of, Accounts Payable other than consistent with past
practices, (ii) factor, discount or otherwise accept less than full
payment with regard to, or accelerate the collection of, Accounts
Receivable or other amounts due other than in the ordinary course
of business, (iii) offer or extend any special discounts or terms
on the sale of Inventory, except in the ordinary course of
business, or (iv) sell any Inventory at less than fair market value
or make any bulk sale of Inventory other than in the ordinary
course of business;
(m) incur or assume any indebtedness or other liabilities (whether
absolute, accrued, contingent or otherwise) or guarantee any such
indebtedness or commitments for the same, except liabilities (other
than indebtedness or guarantees of indebtedness) in the ordinary
course of business, and in amounts and on terms consistent with
past practice;
(n) take any other action which individually or in the aggregate
materially affects the Financial Statements outside the ordinary
course of business consistent with past practice; or
(o) commit or agree to do any of the foregoing.
8.2 Access.. From the date hereof through the Closing Date, Seller
shall give Buyer and its representatives access during normal business hours and
under reasonable circumstances to all properties and records of the Group,
subject to the terms and conditions as may be required by the landlords under
the Assumed Real Property Leases. Seller shall furnish Buyer with all financial
and other information in its possession relating to the Group, the Acquired
Assets and the Assumed Liabilities as Buyer may from time to time reasonably
request. At the request of Buyer and after the public announcement of the
transactions contemplated hereby in accordance with this Agreement, Seller shall
arrange joint visits to significant customers and suppliers of the Group. Buyer
shall not communicate with any employee customer, supplier, landlord or tenant
of the Group without the prior consent (written or oral) of Seller's Senior Vice
President/Director of Finance (Bob Kell), Seller's Corporate Vice
President/General Manager (Bob McCall), Ralph Smith or Michelle Warner. All
rights of access to information and documents granted under this Section 8.2 are
subject to restrictions on access to classified facilities and information
imposed by Governmental Authorities.
8.3 Cooperation; Records and Documents.
(a) In the event and for so long as either party is actively
contesting or defending against any Proceeding in connection with (i) any
transaction contemplated under this Agreement or the Ancillary Agreements or
(ii) any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act or transaction on or
prior to the Closing Date involving the Group, the other party shall cooperate
with the
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contesting or defending party and its counsel in the contest or defense, make
available its personnel and provide such testimony and access to its books and
records as may be necessary in connection with the contest or defense, at the
sole cost and expense of the contesting or defending party (unless the
contesting or defending party is entitled to indemnification therefor under
Article VII or such costs and expenses are allocated differently under Sections
8.3(c)-(e)). The provisions of this Section 8.3(a) shall not be applicable in
the case of any Proceeding by one party to this Agreement against the other.
(b) Following the Closing Date, Seller shall grant to Buyer
and its representatives, at Buyer's reasonable request (subject to any
limitations that are reasonably required to preserve any applicable privilege or
Third Party confidentiality obligation), reasonable access during normal
business hours and under reasonable circumstances to, and the right to make
copies at Buyer's sole expense of, those records and documents in Seller's
possession related to the Group, the Acquired Assets or the Assumed Liabilities
as may be reasonably necessary for Buyer's operation of the Group after the
Closing. Following the Closing Date, Buyer shall grant to Seller and its
representatives, at Seller's reasonable request (subject to any limitations that
are reasonably required to preserve any applicable privilege or Third Party
confidentiality obligation), access during normal business hours and under
reasonable circumstances to, and the right to make copies at Seller's sole
expense of, those records and documents covering any period prior to the Closing
related to the Group or the Acquired Assets as may be reasonably necessary for
litigation, preparation of financial statements, tax returns and audits or other
valid business purposes. If Buyer elects to dispose of any of such records
within six (6) years after the Closing Date, Buyer shall first give Seller sixty
(60) days' written notice, during which period Seller shall have the right to
take such records without payment of consideration. All rights of access to
information and documents granted under this Section 8.3 are subject to
restrictions on access to classified facilities and information imposed by
Governmental Authorities.
(c) In addition to the provisions of Sections 8.3(a) and (b),
Buyer and Seller shall fully cooperate in connection with (i) Seller's defense
of the ongoing investigation relating to the FMU-140 contract, (ii) Seller's
defense in any other Proceedings involving allegations of pre-Closing criminal
conduct or civil fraud, (iii) Seller's actions in connection with any other
Proceeding for which Seller has retained liability under this Agreement, the
Ancillary Agreements or any other agreement referenced or contemplated hereby or
thereby and (iv) Seller's prosecution of affirmative claims relating to the
FMU-140 contract; provided that such cooperation shall not be applicable in the
case of any Proceeding by a party to this Agreement against the other party. It
is understood and agreed by Buyer and Seller that (y) Buyer's cooperation
hereunder is predicated on Seller's performance under this Agreement and the
Ancillary Agreements of its obligations to Buyer in respect of the Excluded
Liabilities and nothing contained in this Section 8.3(c) shall be construed to
limit Buyer's rights in the event of Seller's non-performance and (z) Buyer's
cooperation under this Section 8.3(c) is not intended to require it to engage in
activities where Buyer, in the exercise of its reasonable judgment, would be
required to engage outside counsel or other professionals.
(d) In connection with the cooperation specified in Section
8(c), each of Buyer and Seller shall (i) designate (A) a senior management point
of contact who shall be responsible
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for oversight of such party's cooperation obligations hereunder and (B) an
operational level point of contact who shall be responsible for day-to-day
coordination in connection with Seller's investigation or prosecution
activities, (ii) enter into joint defense agreements where appropriate in form
and substance mutually acceptable to Buyer and Seller and (iii) otherwise fully
cooperate to the extent necessary to permit Seller to vigorously defend itself
and, to the extent applicable, Buyer in such Proceedings. In addition, Buyer
shall (x) provide appropriate on-site working space as necessary for Seller's
investigative and legal personnel equipped with or with access to appropriate
communications and copying equipment, (y) ensure the retention of documents
relevant to Seller's investigation in accordance with the provisions of Section
8.3(b), subject to the cost provisions of Section 8.3(e), and (z) make
reasonably available to Seller such employees of Buyer as have relevant
knowledge or expertise to assist Seller in resolving those matters referred to
in Sections 8.3(c)(i)-(iv). Seller shall not settle any Proceeding described in
Section 8.3(c) that is initiated by a Governmental Authority without the express
written consent of Buyer, which consent shall not be unreasonably withheld, if
such settlement requires Buyer to take, or prohibits Buyer from taking, any
action.
(e) With respect to the costs of any Proceeding described in
Sections 8.3(c)(i)-(iv), (1) Seller shall bear all of its own costs and shall
reimburse Buyer for all of its reasonable out-of-pocket expenses related to the
Proceeding (which shall not include the fees and expenses of Buyer's counsel
unless otherwise agreed to by Seller) and (2) Buyer shall bear all of its own
internal costs of cooperation.
(f) Seller's February 16, 1996 Advance Agreement with the
United States Government Regarding Environmental Litigation Costs and May 13,
1998 Advance Agreement with the United States Government for Environmental
Remediation Costs (the "Advance Agreements") are scheduled Excluded Liabilities.
To the extent the United States Government asserts any rights or claims it may
have under the Advance Agreements by issuance of a contracting officer's final
decision under a contract novated or to be novated pursuant to this Agreement,
Buyer agrees to enter into a sponsorship agreement or other similar arrangement
under which Seller will have the right to appeal in the name of Buyer the final
decision to a final resolution. Any such appeals will be at Seller's risk and
expense, and the parties will cooperate as contemplated in Sections 8(a) and (b)
in connection with any appeals.
8.4 Novation of Government Contracts. Promptly following the Closing,
Seller shall, in accordance with, and to the extent required by, the Federal
Acquisition Regulation Part 42, Subpart 42.12, submit in writing to each
responsible contracting officer a request for the United States Government to:
(a) recognize Buyer as the successor in interest to all of the Government
Contracts; and (b) enter into a novation agreement (the "Novation Agreement")
substantially in the form contemplated by such regulations. Seller shall use
reasonable commercial efforts to obtain all consents, approvals and waivers
required for the purpose of processing, entering into and completing the
Novation Agreements with regard to the Government Contracts, including
responding promptly to any request for information by the United States
Government with regard to such Novation Agreements. Following the Closing,
Buyer, who is likely to be in the better position to respond to inquiries from
the United States Government concerning such Novation Agreements, shall use
reasonable commercial efforts to provide all information and take all other
actions necessary to execute and consummate such Novation Agreements, including
responding
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promptly to any request for information by the United States Government with
regard to such Novation Agreements. Such Government information requests may
include, without limitation: (i) a list of all affected contracts between Seller
and the Government in accordance with FAR 42.1204(e)(2); (ii) evidence of the
Buyer's capability to perform; (iii) balance sheets of the Buyer as of the dates
immediately before and after the transfer of assets, audited by independent
accountants; (iv) evidence that any security clearance requirements have been
met; (v) the consent of sureties, if any, of all contracts listed under
subparagraph (i) above; and (vi) information, if any, identifying and evaluating
any potentially significant Organizational Conflicts of Interest as contemplated
under FAR 42.1204(d).
8.5 Assignment of Contracts.
(a) Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign or
otherwise sell, convey or transfer any Contract, or any claim, right or benefit
arising thereunder or resulting therefrom, or to enter into any other agreement
or arrangement with respect thereto, if an attempted assignment, sale,
conveyance or transfer thereof, or entering into any such agreement or
arrangement, without the consent of a Third Party, would constitute a breach
thereof, or other contravention thereunder, be ineffective with respect to any
party thereto or in any way adversely affect the rights of Seller or Buyer
thereunder; provided, however, that at such time, if any such Contract may be so
assigned, sold, conveyed or transferred without having any of the foregoing
consequences, such Contract shall be so assigned, sold, conveyed and
transferred. With respect to any such Contract as to which the consent of a
Third Party is necessary, or any claim, right or benefit arising thereunder or
resulting therefrom, promptly after the date hereof, Seller and Buyer will use
commercially reasonable efforts, which shall not require the expenditure of any
money by Seller or Buyer, to obtain the written consent of other parties to any
such Contract for the sale, transfer or assignment thereof to Buyer, or written
confirmation from such parties reasonably satisfactory in form and substance to
Seller and Buyer confirming that such consent is not required.
(b) Until such consent is obtained with respect to any such
Contract, Seller and Buyer will cooperate to establish an arrangement (including
through a subcontracting, subleasing, sublicensing or similar arrangement to the
extent not prohibited under such Contract) effective as of the Closing Date
reasonably satisfactory to Buyer and Seller under which Buyer would obtain, to
the maximum extent possible, the claims, rights and benefits of Seller under
such Contract, with reasonable costs and expenses of Seller and its Affiliates
related thereto to be promptly reimbursed by Buyer. Seller will enforce, at the
reasonable request of and for the benefit of Buyer, any and all claims, rights
and benefits of Seller against any Third Party thereto arising from any such
Contract (including the right to elect to terminate such Contract in accordance
with the terms thereof upon the request of Buyer). To the extent permitted by
applicable Law and the terms of any Contract not assigned pursuant to this
Section 8.5, Buyer will use its commercially reasonable efforts to perform the
obligations under each such Contract for the benefit of Seller and the other
party or parties thereto in accordance with the arrangement established with
Seller and will indemnify and hold Seller and its Affiliates harmless from any
Damages relating to, resulting from or arising out of any failure by Buyer so to
perform or pay.
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(c) Seller will promptly pay to Buyer, when received, all
monies received by Seller under any Contract or any claim, right or benefit
arising under any such Contract not assigned pursuant to Section 8.5(a), less
any actual out-of-pocket costs or expenses incurred by Seller as a result of
receiving such monies.
(d) At the request of Seller, Buyer shall use commercially
reasonable efforts to assist Seller in seeking the unconditional release of
Seller from any and all obligations or liabilities under or in respect of any
Contract, Assumed Lease or Government Proposal constituting an Acquired Asset.
(e) The obligations of Buyer and Seller with respect to
Contracts the assignment of which requires the consent of a Third Party shall be
subject to the further provisions set forth on Schedule 8.5(e).
8.6 Confidentiality.
(a) Each party hereby agrees that, except as required by
applicable Law, it will not disclose, nor will it permit any of its employees,
agents or representatives to disclose, to any Third Party any confidential
information obtained from the other party in connection with the transactions
contemplated hereby, this Agreement, the Ancillary Agreements, or the fact that
discussions regarding such transactions are taking place or that this Agreement
has been executed without the prior consent of the other party. If this
Agreement is terminated without consummation of the transactions contemplated
hereunder, promptly after termination, each party shall destroy or return to the
other party all such confidential information, including any copies, extracts or
other reproductions in whole or in part. Such return or destruction shall be
certified in writing to each party by an authorized officer of the other party.
The provisions of this Section 8.6(a) shall survive any termination of this
Agreement.
(b) Seller agrees that from and after the Closing Date it
shall, and shall cause its directors, officers, employees, advisors and
Affiliates to, keep the Group Confidential Information (as defined below)
confidential for a period of five (5) years from the Closing Date, except that
any Group Confidential Information may be disclosed if such disclosure is (i)
required by law or any regulatory body; provided however that Seller shall first
have given notice to Buyer and reasonably cooperated with Buyer with respect to
Buyer's efforts to obtain a protective order with respect to the Group
Confidential Information required to be disclosed; or (ii) necessary to
establish rights under this Agreement. For purposes hereof, the term "Group
Confidential Information" means all information that relates to the Acquired
Assets or the Assumed Liabilities, other than any such information that (i) is
available to the public on the Closing Date, or thereafter becomes available to
the public other than as a result of a breach of this Section 8.6; (ii) is
disclosed by Buyer to a Third Party without an obligation of confidence; (iii)
can be shown by Seller to have been developed by it completely independently of
the Group; or (iv) can be shown by Seller to have been rightfully received
completely independently from a third party without any obligation of
confidence.
(c) Buyer agrees that from and after the Closing Date it
shall, and shall cause its directors, officers, employees, advisors and
Affiliates to, keep the Seller Confidential Information (as defined below)
confidential for a period of five (5) years from the Closing Date,
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except that any Seller Confidential Information may be disclosed if such
disclosure is (i) required by law or any regulatory body; provided however that
Buyer shall first have given notice to Seller and reasonably cooperated with
Seller with respect to Seller's efforts to obtain a protective order with
respect to Seller Confidential Information required to be disclosed; or (ii)
necessary to establish rights under this Agreement. For purposes hereof, the
term "Seller Confidential Information" means all information of Seller and its
Affiliates that relates to the Excluded Assets or the Excluded Liabilities and
provided to Buyer in connection with the transactions contemplated by this
Agreement or otherwise in Buyer's (including the Group's) possession from and
after the Closing, other than any such information that (i) is available to the
public on the Closing Date, or thereafter becomes available to the public other
than as a result of a breach of this Section 8.6; (ii) is disclosed by Seller to
a Third Party without an obligation of confidence; (iii) can be shown by Buyer
to have been developed by it completely independently of Seller; or (iv) can be
shown by Buyer to have been rightfully received completely independently from a
third party without any obligation of confidence.
(d) Each party shall notify the other party promptly upon
discovery of any unauthorized use or disclosure of the other party's
Confidential Information, and will cooperate with the other party in every
reasonable way to help the other party regain possession of such Confidential
Information and to prevent its further unauthorized use. For these purposes,
"Confidential Information" shall mean Group Confidential Information or Seller
Confidential Information, as applicable.
8.7 Filings and Authorizations. Seller and Buyer shall, as promptly
as practicable after the date hereof, file or supply, or cause to be filed or
supplied, or will make, or cause to be made, the following:
(a) All notifications and information required to be filed
or supplied pursuant to the HSR Act (including any request for additional
information or production of personnel for administrative interviews made
pursuant to the HSR Act) and all information or interviews reasonably requested
by state officials in connection with the sale and transfer of the Acquired
Assets; and
(b) All such other filings and submissions under Laws
applicable to it as may be required for it to consummate the transactions
contemplated by this Agreement.
(c) Each of Buyer and Seller shall immediately inform the
other party of any communication from any governmental authority in connection
with the filings made by the parties and any review of such filings and the
transactions contemplated by this Agreement conducted by such authority pursuant
to the HSR Act or such other similar foreign Law.
8.8 Notification of Breach. Each party shall promptly notify the
other party in writing of (i) the occurrence, or failure to occur, of any event
where such occurrence or failure is reasonably expected to cause any of such
party's representations or warranties contained in this Agreement to be untrue
or inaccurate in any material respect or (ii) any material failure of such party
to comply with or satisfy any of its covenants, conditions or agreements to be
complied with or satisfied by it under this Agreement; provided, however, that
such disclosure shall not be
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deemed to cure any breach of a representation, warranty, covenant or agreement
or to satisfy any condition.
8.9 Post-Closing Refunds. If Seller receives any refund (including
without limitation any refund for Taxes) relating to the business or operations
of the Group for periods prior to the Closing Date and the liability to which
such refund relates was included as a cost in a cost-reimbursement or
fixed-price incentive (cost-redeterminable) Government Contract, then Seller
shall cooperate with Buyer to determine the appropriate portion of such refund
due to any Governmental Authority as if Buyer had pursued and obtained an
identical refund. Once the appropriate portion due any Governmental Authority is
determined, Seller shall promptly remit to Buyer such amount to be paid to such
Governmental Authority in an appropriate manner to be determined by Buyer. If
Buyer is liable for any Taxes (net of any Tax benefit to Buyer in making payment
to the Governmental Authority) as a result of such reimbursement by Seller,
Seller shall also pay to Buyer such additional amounts required to pay such
Taxes including any Tax on such payment.
8.10 Noncompetition Agreement.
(a) Seller agrees that, during the five-year period
commencing on the Closing Date, it shall not and shall not cause or permit any
of its Affiliates to, directly or indirectly, engage in any activities which
compete with the business or operation of the Group, anywhere in the world, for:
(i) the programs for which the Group has been awarded a Contract as of the
Closing Date, or for which the Group has submitted a bid or proposal as of the
date of this Agreement (which has not expired, been withdrawn or awarded to a
third-party); (ii) any extensions of such programs or follow-ons directly
derived from such programs; (iii) any contract subject to Cost Accounting
Standards ("CAS") coverage; (iv) any U.S. governmental military, defense or NASA
program; and (v) any program to provide space-borne equipment to a Governmental
Authority. The foregoing activities are referred to in this Agreement
collectively as "Seller Competitive Activities."
(b) Notwithstanding the foregoing, the provisions of Section
8.10(a) shall not prohibit Seller or any of its subsidiaries from:
(i) providing components, products or services under any
contract (other than any Government Contract) with (A)
the United States Government (acting on its own behalf
or on behalf of another country or international
organization), (B) any prime contractor performing under
a prime contract with the United States Government, (C)
any subcontractor performing under a prime contract with
the United States Government, or (D) any foreign
government (a "Non-IISG Government Contract") to which
Seller or any of its subsidiaries is a party as of the
date of this Agreement or under any bid or proposal with
respect to any Non-IISG Government Contract that was
submitted as of the date of this Agreement (which has
not expired, been withdrawn or awarded to a third party)
and any extensions or follow-ons directly derived from
programs to which such Non-IISG Government Contracts
relate; or
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(ii) selling or otherwise providing commercial items (as
defined in FAR 2.101 as of January 1, 2001) or services
related solely to Seller commercial items ("Related
Services") (including, without limitation, the following
products that meet the definition of commercial item
and/or Related Services: wireline or wireless telephony,
two-way radios, infrastructure equipment, network
management, paging, equipment maintenance, systems
integration services, data systems, voice processing or
commercial items or Related Services premised upon
packet switching or cell-based technologies (including
Internet protocols and security services)), including,
without limitation, those commercial items and Related
Services offered by Seller's Commercial, Government,
Industrial Solutions Sector, which delivers integrated
communication and information solutions for work teams
in business and government; or
(iii) engaging in the business of designing, manufacturing or
selling semiconductor components; or
(iv) engaging in business conducted by a business unit
currently within the Motorola Corporate Technology
Office and currently subject to modified CAS coverage,
provided such business does not exceed $50,000,000.00 in
revenue in any Seller fiscal year; or
(v) competing for awards and providing components, products
or services under any order issued under the Army's Base
Radio Systems contract; or
(vi) competing for awards and providing components, products
or services under any law enforcement or public safety
contracts subject to CAS coverage, provided that such
contracts are not with the U.S. Department of Defense,
or a component thereof.
(c) Notwithstanding the provisions of Section 8.10(a), the
acquisition (by asset purchase, stock purchase, merger, consolidation or
otherwise) by Seller or any of its Affiliates of the stock, business or assets
of any Person that at the time of such acquisition is engaged in Seller
Competitive Activities, and the continuation of such Seller Competitive
Activities following such acquisition, shall not be in breach of the terms of
this Section 8.10 if: (i) the portion of the revenues of such Person and its
subsidiaries on a consolidated basis for the fiscal year ending prior to the
date of such acquisition that is attributable to Seller Competitive Activities
by such Person and its subsidiaries ("Seller Competitive Revenues") account for
less than 20 percent of the revenues of such Person and its subsidiaries on a
consolidated basis for such fiscal year; or (ii) in the event the foregoing
condition is not satisfied, Seller offers, or cause its Affiliates to offer the
portion of such business or assets that represents Seller Competitive Activities
to Buyer and negotiates in good faith with Buyer as to the terms and conditions
of Buyer's purchase of such business and assets, provided that (A) if Buyer
notifies Seller in writing that it is unwilling to purchase such business or
assets, or (B) if following such good faith negotiations, the parties are unable
to reach agreements on the terms of such a purchase, Seller
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promptly uses its reasonable efforts to sell such business or assets, including,
without limitation, by actively marketing the business or assets on commercially
reasonable terms.
(d) Nothing in this Section 8.10 will restrict or prevent
Seller or any of its subsidiaries from maintaining and/or undertaking passive
investments in Persons primarily engaged in the Seller Competitive Activities so
long as the aggregate interest represented by such investments does not exceed
(i) 5% of any class of the outstanding debt or equity securities of any such
Person, in the case of a Person whose shares are listed on a national securities
exchange or the NASDAQ National Market System or equivalent foreign exchange or
quotation system or (ii) 5% of any class of the outstanding equity or debt
securities in the case of any other Person;
(e) If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 8.10 is invalid
or unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision and this Agreement
shall be enforceable as so modified. Seller acknowledges that Buyer would not
have an adequate remedy at law in the event of the violation of this Section
8.10 and that the scope, duration and area restrictions on Seller's activities
provided by this Section 8.10 are fair and reasonably required for the
protection of Buyer and its Affiliates. Therefore, in addition to any other
remedies which Buyer may have under this Agreement or otherwise, Buyer shall be
entitled to apply to any court of competent jurisdiction for an injunction
restraining Seller from committing or continuing any violation of this Section
8.10 without the requirement of posting any bond or other indemnity.
8.11 Real Property Matters
(a) From and after the date hereof, Seller agrees to
cooperate with Buyer and to provide Buyer's employees, agents and
representatives with access to the Premises for purposes of performing such
inspections, tests and surveys of the Premises as Buyer reasonably determines
are necessary in connection with the transactions contemplated by this
Agreement. Prior to performing any such inspections, tests and surveys of the
Premises, Buyer shall obtain Seller's consent to each such procedure. Such
inspections, tests and surveys of the Leased Premises shall be conducted only
after Seller obtains the consent of Seller and Seller obtains the consent of the
respective landlords of the Leased Premises.
(b) Seller has delivered to Buyer a current title commitment
(the "Title Commitment") from a title insurance company reasonably acceptable to
Buyer (the "Title Company") with respect to the Owned Premises. If the Title
Commitment discloses any Lien other than a Permitted Lien (each, an "Unpermitted
Lien"), Seller shall remove, or cause to be removed, all Unpermitted Liens or,
in the alternative, obtain title insurance in a form reasonably satisfactory to
Buyer insuring over all of such Unpermitted Liens.
(c) Within fourteen (14) days after the execution and
delivery of this Agreement, Seller will deliver to Buyer a current survey (the
"Survey") of the Owned Premises certified to Buyer and the Title Company,
prepared by a licensed surveyor and conforming to the
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current ALTA/ACSM Minimum Standard Detail Requirements for Land Title Surveys,
disclosing the location of all improvements, easements, roadways, utility lines
and other matters customarily shown on such surveys (including such Table A
items as Buyer may reasonably request). The Survey shall affirmatively show that
the Owned Premises has access to publicly dedicated streets and shall otherwise
be reasonably acceptable to Buyer. The costs and expenses incurred in connection
with the Survey will be shared equally by Seller and Buyer.
(d) On or before the Closing, Seller shall use commercially
reasonable efforts to obtain an estoppel agreement in form and substance
reasonably satisfactory to Buyer from the landlords under the Assumed Real
Property Leases for the Leased Premises designated on Schedule 8.11(d). Buyer
acknowledges that certain of the Assumed Real Property Leases do not contain
clauses requiring the respective landlords to provide such estoppel agreements.
8.12 Settlement of Indirect Expense Rates. Schedule 8.12 sets forth
(1) the indirect expense billing rates by cost pool that have been or are being
used by Seller for the novated flexibly-priced contracts of the Group for the
contractor's fiscal years not yet settled with the United States Government
("Open Years"); (2) for each of such Open Years, the allocation base for novated
flexibly-priced contracts to which indirect expens