PURCHASE AGREEMENT
dated as of September 1, 1999,
among
IFE SALES, LLC,
BE AEROSPACE, INC.,
BE INTELLECTUAL PROPERTY, INC.,
PURITAN-BENNETT AEROSYSTEMS CO.
and
THOMSON-CSF SEXTANT, INC.
TABLE OF CONTENTS
Page
ARTICLE IDEFINITIONS
1.01. Incorporation by Reference...............................................2
1.02. Additional Defined Terms.................................................2
1.03. Other Additional Defined Terms...........................................4
1.04. Use of Defined Terms.....................................................5
ARTICLE IIPURCHASE AND SALE
2.01. Purchase and Sale........................................................5
2.02. Fixed Purchase Price.....................................................5
2.03. Closing..................................................................5
2.04. Contingent Purchase Price................................................6
2.05. Initial Purchase Agreement Purchase Price Adjustment.....................8
ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF THE SELLER AND
BE AEROSPACE
3.01. Incorporation and Authority..............................................8
3.02. No Conflict..............................................................9
3.03. Consents, Approvals, Licenses, Etc.......................................9
3.04. Membership Interests of the Seller in the Company........................10
3.05. Absence of Litigation....................................................10
3.06. Brokers..................................................................10
ARTICLE IVREPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.01. Incorporation and Authority of the Purchaser.............................10
4.02. No Conflict..............................................................11
4.03. Consents and Approvals...................................................11
4.04. Absence of Litigation....................................................12
4.05. Investment Purpose.......................................................12
4.06. Financing................................................................12
4.07. Brokers..................................................................12
ARTICLE VADDITIONAL AGREEMENTS
5.01. Regulatory and Other Authorizations; Releases; Consents..................12
5.02. Further Action...........................................................13
5.03. Conveyance Taxes.........................................................13
5.04. Reports..................................................................13
5.05. Non-Competition..........................................................13
5.06. No Solicitation of Employees.............................................15
5.07. Transitional Services....................................................15
5.08. Conduct of the Business by the Purchaser.................................15
5.09. Access to Information....................................................16
5.10. Confidentiality..........................................................16
5.11. Governance...............................................................17
5.12. Guarantee of BE Aerospace................................................17
5.13. Assumption of BE Aerospace Obligations...................................19
ARTICLE VICONDITIONS TO CLOSING
6.01. Conditions to Obligations of the Seller and the Former Interest Holders..19
6.02. Conditions to Obligations of the Purchaser...............................20
ARTICLE VII INDEMNIFICATION
7.01. Survival.................................................................21
7.02. Indemnification by the Purchaser.........................................21
7.03. Indemnification by the Seller and BE Aerospace...........................23
7.04. Indemnification Procedures...............................................24
ARTICLE VIIITERMINATION, AMENDMENT AND WAIVER
8.01. Termination..............................................................27
8.02. Effect of Termination....................................................27
8.03. Waiver...................................................................27
ARTICLE IXGENERAL PROVISIONS
9.01. Expenses.................................................................28
9.02. Notices..................................................................28
9.03. Public Announcements.....................................................29
9.04. Headings.................................................................30
9.05. Severability.............................................................30
9.06. Entire Agreement.........................................................30
9.07. Assignment...............................................................30
9.08. No Third-Party Beneficiaries.............................................30
9.09. Waivers and Amendments...................................................30
9.10. Specific Performance.....................................................31
9.11. Governing Law; Dispute Resolution........................................31
9.12. Counterparts.............................................................31
PURCHASE AGREEMENT, dated as of September 1, 1999, among IFE
SALES, LLC, a Delaware limited liability corporation (the "Seller"), BE
AEROSPACE, INC., a Delaware corporation ("BE Aerospace"), BE INTELLECTUAL
PROPERTY, INC., a Delaware corporation ("BE IP") and PURITAN-BENNETT AERO
SYSTEMS CO., a Delaware corporation ("Puritan-Bennett" and, together with BE
Aerospace and BE IP, the "Former Interest Holders"), and THOMSON-CSF SEXTANT,
INC., a Florida corporation (the "Purchaser").
WHEREAS, the Seller owns 49% of the membership interests (the
"Interests") in Sextant In-Flight Systems, LLC (formerly known as In-Flight
Entertainment, LLC), a Delaware limited liability company (the "Company" or
"SIFS"), such Interests consisting of 100% of the Class Two Interests in the
Company;
WHEREAS, the Purchaser previously purchased the Class One
Interests in the Company from BE Aerospace pursuant to a Purchase Agreement
dated as of January 25, 1999 (the "Initial Purchase Agreement");
WHEREAS, the Former Interest Holders transferred the Interests
to the Seller pursuant to an Assignment and Assumption Agreement dated as of
September 1, 1999 among the Former Interest Holders, the Seller and the
Purchaser;
WHEREAS, the Seller wishes to sell to the Purchaser, and the
Purchaser wishes to purchase from the Seller, 100% of the Class Two Interests in
the Company (the "Purchased Interest"), upon the terms and subject to the
conditions set forth herein; and
WHEREAS, pursuant to a Guaranty to be executed on the Closing
Date in the form attached hereto as Exhibit 6.01(d) (the "Guaranty"),
Thomson-CSF Sextant, a societe anonyme organized under the laws of France (the
"Guarantor"), or, if the Board of Directors of the Guarantor has not had the
opportunity to approve the Guaranty prior to the Closing Date (as defined in
Section 2.03(a)), Aerospatiale Thomson Electronique de Vol, ATEV, S.A. ("ATEV"),
has agreed to guarantee the obligations of the Purchaser under this Agreement
until such approval is received;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements and covenants hereinafter set forth, the Purchaser, the Seller
and the Former Interest Holders hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Incorporation by Reference. Capitalized terms
used but not defined herein have the definitions given such terms in the Initial
Purchase Agreement, except as specified in Section 1.02. Unless otherwise
specified herein, section references in this Agreement are to Sections of this
Agreement. Except for Sections 2.04, 5.03, 5.06, 5.07, 7.01(h) and 7.02(f) of
the Initial Purchase Agreement, which are terminated in their entirety as of the
Closing Date, and as otherwise provided herein, all terms of the Initial
Purchase Agreement remain in full force and effect.
SECTION 1.02. ADDITIONAL DEFINED TERMS. As used in this
Agreement, the following additional terms have the following meanings:
"AGREEMENT" means this Purchase Agreement, dated as of
September 1, 1999, among the Seller, the Former Interest Holders and the
Purchaser (including the Exhibits hereto and the Disclosure Schedule) and all
amendments and modifications hereto made in accordance with Section 9.09.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreement, dated as of the date of this Agreement, among the Former
Interest Holders, the Seller and the Purchaser.
"BOOKINGS" means, for any period, a written commitment
consistent with industry practice by a customer of the Company or a firm
purchase order, in either case accepted by the Company during such period, minus
previously recorded orders canceled during such period, for SIFS Product Lines
(excluding SIFS Product Lines of B/E Harris LiveTV LLC ("LiveTV")), provided
that, with respect to Bookings in calendar year 1999, the term "Bookings" shall
mean Bookings for the period from March 1 through December 31, 1999.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule dated as
of the date of this Agreement and delivered to the Purchaser by the Seller
herewith.
"DISCLOSURE SCHEDULE OF THE INITIAL PURCHASE AGREEMENT" means
the Disclosure Schedule dated as of the date of the Initial Purchase Agreement
delivered to the Purchaser by BE Aerospace with the Initial Purchase Agreement.
"LLC AGREEMENT" means the Amended and Restated Limited
Liability Company Agreement of Sextant In-Flight Systems, LLC, dated as of
February 25, 1999, among the Former Interest Holders and the Purchaser, as such
Agreement may be amended from time to time.
"PRODUCT LINES" means the lines of business, operations and
activities conducted by or under development by any Person.
"SALES" means, for any period, net sales for such period,
determined in accordance with GAAP applied consistently with the current
practice of the Company since February 25, 1999 through the date hereof, of SIFS
Product Lines (excluding SIFS Product Lines of LiveTV), provided that, with
respect to Sales in calendar year 1999, the term "Sales" shall mean net sales
for the period from March 1 through December 31, 1999.
"SIFS PRODUCT LINES" means the following Product Lines of the
Company in existence, for which development was previously initiated or under
development at the date of this Agreement, together with reasonable
modifications thereof and derivative products therefrom:
1. In-Seat Power Distribution Systems;
2. Audio Distribution Systems - audio hardwired systems;
3. FDM Audio System;
4. Overhead Video System, in-seat audio (B/E 2020);
5. Distributed Video and Audio Systems (B/E 2000, BVS video system);
6. Distributed Video and Audio System, interactive games (B/E 4000);
7. Interactive Video, Audio, Telephony, Games-on-Demand System (MDDS);
8. Interactive Digital Video, Audio, Telephony and Games-on-Demand
System (Panther);
9 Video Content Loading System;
10. Cameras:
(a) Landscape Single Camera;
(b) Landscape Dual Camera;
(c) Down and Forward Camera;
(d) Worldview Camera System;
(e) Landing Gear Cameras; and
(f) Cockpit, Cabin and Flight Attendant Cameras;
11. Passenger Control Systems (PCUs), mechanical and digital (various types);
12. Noise Canceling Devices;
13. Spares and individual system or product components to support the
product lines in items (1) through (12) above;
14. Provision of services to support the product lines in items (1)
through (12) above;
15. Test equipment to support the product lines in items (1) through (12)
above; and
16. Non-recurring engineering related to the product lines in items (1)
through (15) above, including installation, design and other related
fee-generating activities.
SECTION 1.03. OTHER ADDITIONAL DEFINED TERMS. The following
additional terms have the meanings defined for such terms in the Sections set
forth below:
TERM SECTION
Adjustment Statement 2.04(a)(i)
Adjustment Years 2.04(a)(i)
ATEV Recitals
Closing 2.03(a)
Closing Date 2.03(a)
Company Certificate 5.04(a)
Company Debt 2.06
Confidential Information 5.10(a)
Contingent Purchase Price 2.01
Fixed Purchase Price 2.01
Former Interest Holders Preamble
Guaranteed Obligations 5.12(a)
In-Flight Entertainment Business 5.05(a)
In-Flight Entertainment Systems 5.05(a)
Indemnified Party 7.04(a)
Indemnifying Party 7.04(a)
Initial Purchase Agreement Recitals
Non-Competition Period 5.05(a)
Non-Objecting Party 2.04(a)(ii)
Pro Forma Company Certificate 5.04(c)
Purchased Interest Recitals
Seller Preamble
SIFS Guarantees Section 5.13
SECTION 1.04. USE OF DEFINED TERMS. The meanings of the terms
defined in this Agreement shall be applicable to the singular as well as the
plural forms of such terms, unless otherwise stated.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. PURCHASE AND SALE. Upon the terms and subject to
the conditions set forth in this Agreement, the Seller agrees to sell to the
Purchaser, and the Purchaser agrees to purchase from the Seller, the Purchased
Interest. The purchase price shall consist of a fixed portion (the "Fixed
Purchase Price"), payable as provided in Section 2.03(c), and a contingent
portion (the "Contingent Purchase Price"), payable as provided in Section 2.04.
SECTION 2.02. FIXED PURCHASE PRICE. The aggregate Fixed
Purchase Price shall be $22,000,000.
SECTION 2.03. CLOSING. (a) Subject to the terms and conditions
of this Agreement, the sale and purchase of the Class Two Interests contemplated
hereby shall take place at a closing (the "Closing") to be held at 10:00 a.m.,
local time, on the first Business Day that is not a Monday, after the later of
the following occurs: (i) the expiration or termination of the applicable
waiting periods under the HSR Act and (ii) the satisfaction or waiver of all
other conditions to the obligations of the parties set forth in Article VI, at
the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York
10022, or at such other time or on such other date or at such other place as the
Seller, BE Aerospace and the Purchaser may mutually agree upon in writing (the
day on which the Closing takes place being the "Closing Date").
(b) At the Closing, the Seller shall deliver or cause to be
delivered to the Purchaser: (i) such instruments and documents as shall be
reasonably necessary to effect the transfer of the Purchased Interest to the
Purchaser; and (ii) the certificate required to be delivered pursuant to Section
6.02(a).
(c) At the Closing, the Purchaser shall deliver to the Seller:
(i) a promissory note, substantially in the form of Exhibit 2.03(c) hereto, in
favor of the Seller which provides for payments of $11,000,000, together with
interest thereon from the Closing Date at a rate of 5% per annum, on each of the
first and second anniversaries of the Closing Date; (ii) the Guaranty,
substantially in the form of Exhibit 6.01(d) hereto; and (iii) the certificate
required to be delivered pursuant to Section 6.01(a).
SECTION 2.04. CONTINGENT PURCHASE PRICE. (a) Adjustment
Statement. (i) As soon as practicable after the end of the Company's fiscal year
in each of 1999, 2000 and 2001 (collectively, the "Adjustment Years"), but in
any event no later than 60 days after the end of each Adjustment Year, the
Company shall cause to be prepared and delivered to the Seller and BE Aerospace
a preliminary statement (each, an "Adjustment Statement") setting forth the
aggregate amount of Sales and Bookings of the Company during each such
Adjustment Year or, if applicable, the aggregate Sales and Bookings of SIFS
Product Lines as presented on any Pro Forma Company Certificate prepared
pursuant to Section 5.04(c) during such Adjustment Year, and the amount of the
Contingent Purchase Price, if any, credited with respect to such Adjustment Year
pursuant to the provisions of Section 2.04 of the Disclosure Schedule. Each
Adjustment Statement will be prepared in accordance with GAAP in accordance with
the current practice of the Company since February 25, 1999 through the date
hereof.
(ii) In the event that neither the Purchaser nor BE Aerospace
objects to the determination by the Company of any preliminary Adjustment
Statement by Notice of Objection delivered to the Company and BE Aerospace or
the Purchaser, as the case may be, (the "Non-Objecting Party") within thirty
(30) days after the delivery of such Adjustment Statement (such Notice of
Objection to describe in reasonable detail the proposed adjustments or
objections to such preliminary Adjustment Statement), such Adjustment Statement
shall be deemed final and binding on the parties hereto.
(iii) If either the Purchaser or BE Aerospace delivers a
Notice of Objection to such Adjustment Statement, then any dispute shall be
resolved in accordance with Section 2.04(b).
(iv) The Company will make available to the Purchaser and BE
Aerospace all work papers and records used in the preparation of each Adjustment
Statement.
(b) Resolution of Disputes. (i) If either or both of the
Purchaser or BE Aerospace delivers a Notice of Objection, then the Purchaser and
BE Aerospace shall promptly endeavor to resolve any differences with respect to
such Adjustment Statement. In the event that a written agreement as to the
matters contained in such Adjustment Statement has not been reached within 30
days after the date of receipt by the Company and the Non-Objecting Party of the
Notice of Objection, then the determination of the matters contained in such
Adjustment Statement shall be submitted to PricewaterhouseCoopers LLP (or, in
the event that PricewaterhouseCoopers LLP is unwilling or unable to act in such
capacity or is not, at the time of such submission, independent of the Purchaser
and BE Aerospace, to another Accounting Firm chosen by the Purchaser and BE
Aerospace within 30 days of the determination that PricewaterhouseCoopers LLP is
unavailable to determine such matters; provided that if the Purchaser and BE
Aerospace are unable to agree on the appointment of an Accounting Firm within 30
days, either the Purchaser or BE Aerospace may apply to the American Arbitration
Association to appoint another Accounting Firm within 30 days, which selection
shall be binding on the parties).
(ii) Nothing herein shall be construed to authorize or permit
the Accounting Firm to determine any question or matter whatever under or in
connection with this Agreement, except the determination of what adjustments, if
any, should be made in one or more of the items reflected in an Adjustment
Statement in order for the Sales and Bookings covered thereby to be determined
in accordance with the provisions of this Agreement. In making its
determination, the Accounting Firm shall act as an expert and not as an
arbitrator in an arbitration proceeding.
(iii) Within forty-five (45) days of the submission of any
dispute concerning the determination of an Adjustment Statement to the
Accounting Firm, the Accounting Firm shall render a decision in accordance with
this Section 2.04(b) along with a statement of reasons therefor. The decision of
the Accounting Firm shall be final and binding upon each party hereto.
(iv) The fees and expenses of the Accounting Firm for any
determination under this Section 2.04(b) shall be apportioned equally between
the Purchaser and BE Aerospace.
(c) Any payment required to be made by any party hereto
pursuant to this Agreement shall bear interest from the date such payment is due
through the date of payment at a rate equal to the one month London Interbank
Offered Rate as announced in The Wall Street Journal plus 300 basis points.
(d) Within 30 days of the final determination of the final
Adjustment Statement, payment of the Contingent Purchase Price shall be
made in accordance with Section 2.04 of the Disclosure Schedule.
SECTION 2.05. INITIAL PURCHASE AGREEMENT PURCHASE PRICE
ADJUSTMENT. BE Aerospace and the Purchaser agree that Section 2.04 of the
Initial Purchase Agreement is deleted in its entirety and that any adjustments
to the Purchase Price described therein shall not be made. In consideration of
the elimination of such purchase price adjustments, BE Aerospace agrees to
provide to or on behalf of the Purchaser, upon request, the consulting services
specified in Section 2.05 of the Disclosure Schedule.
SECTION 2.06. DEBT OF THE COMPANY. The Purchaser shall cause
the Company to pay to BE Aerospace the debt of the Company to BE Aerospace in
the aggregate principal amount of $9,350,289.15 outstanding as of the date
hereof (the "Company Debt"). The Company Debt shall be repaid in two equal
installments of $4,675,144.58, without interest thereon, on each of the first
and second anniversaries of the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND BE AEROSPACE
The representations of BE Aerospace made as of February 25,
1999 contained in Sections 3.02 through 3.04, 3.06 through 3.10, 3.12 through
3.16 and 3.18 through 3.30 of the Initial Purchase Agreement are incorporated
herein by reference, with effect as of such date. In addition, the Seller and BE
Aerospace, jointly and severally, represent and warrant as of the date hereof to
the Purchaser as follows:
SECTION 3.01. INCORPORATION AND AUTHORITY. Each of the Seller
and BE Aerospace is a corporation validly existing and in good standing under
the laws of the State of Delaware and has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. Each of the Seller and
BE Aerospace is duly qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its business makes such qualification necessary, except to the extent that the
failure to be so qualified would not have a Material Adverse Effect. The
execution and delivery of this Agreement by each of the Seller and BE Aerospace,
the performance by each of the Seller and BE Aerospace of its obligations
hereunder and the consummation by each of the Seller and BE Aerospace of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Seller and BE Aerospace, respectively. This Agreement
has been duly executed and delivered by each of the Seller and BE Aerospace, and
(assuming due authorization, execution and delivery by the Purchaser) this
Agreement constitutes a legal, valid and binding obligation of each of the
Seller and BE Aerospace enforceable against each of the Seller and BE Aerospace
in accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to the effect of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 3.02. NO CONFLICT. Assuming all consents, approvals,
authorizations and other actions described in Section 3.03 of this Agreement and
Section 3.03 of the Initial Purchase Agreement have been obtained and all
filings and notifications listed in Section 3.11 of the Disclosure Schedule of
the Initial Purchase Agreement have been made, and except as may result from any
facts or circumstances relating solely to the Purchaser, the execution, delivery
and performance of this Agreement by each of the Seller and BE Aerospace does
not and will not (a) violate, conflict with or result in a breach of any
provision of the charter or by-laws (or similar organizational documents) of the
Seller or BE Aerospace and, to the best knowledge of the Seller and BE
Aerospace, the Company or any subsidiary; (b) conflict with or violate any Law
or Governmental Order applicable to the Seller or BE Aerospace and, to the best
knowledge of the Seller and BE Aerospace, the Company or any subsidiary, except
as would not, individually or in the aggregate, (i) have a material adverse
effect on the ability of the Seller or BE Aerospace to consummate, or (ii) delay
the consummation of, the transactions contemplated by this Agreement; or (c)
result in any breach of, or constitute a default (or event which with the giving
of notice or lapse of time, or both, would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of any Encumbrance on the Interests pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument to which the Seller or BE Aerospace, and to the
best knowledge of BE Aerospace, the Company or any subsidiary is a party or by
which any of such assets or properties is bound or affected, including, without
limitation, the indenture dated as of November 2, 1998 between BE Aerospace and
the Bank of New York, except as would not, individually or in the aggregate, (i)
(A) have a material adverse effect on the ability of the Seller or BE Aerospace
to consummate, or (B) delay the consummation of, the transactions contemplated
by this Agreement, (ii) have a Material Adverse Effect or (iii) create any claim
against the Purchaser.
SECTION 3.03. CONSENTS, APPROVALS, LICENSES, ETC. No consent,
approval, authorization, license, order or permit of, or declaration, filing or
registration with, or notification to, any Governmental Authority, or any other
Person, is required to be made or obtained by the Seller or BE Aerospace in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, except: (i) applicable
requirements, if any, of the HSR Act; (ii) where the failure to obtain such
consents, approvals, authorizations, licenses, orders or permits of, or to make
such declarations, filings or registrations or notifications would not,
individually or in the aggregate, prevent the Seller or BE Aerospace from
performing its obligations under this Agreement and would not have a Material
Adverse Effect; and (iii) as may be necessary as a result of any facts or
circumstances relating solely to the Purchaser.
SECTION 3.04. MEMBERSHIP INTERESTS OF THE SELLER IN THE
COMPANY. The Class Two Interests constitute 49% of the Interests in the Company.
The Interests have been duly authorized and validly issued, are fully paid and
nonassessable, and were not issued in violation of or subject to any preemptive
rights. The Seller owns all of the Interests, free and clear of all
Encumbrances. There are no voting trusts, stockholder agreements, proxies or
other similar such agreements or arrangements in effect with respect to the
voting or transfer of Interests, other than the LLC Agreement. The delivery to
the Purchaser of the Interests pursuant to the provisions of this Agreement will
transfer to the Purchaser good and valid title thereto, free and clear of all
Encumbrances arising through the Seller, the Former Interest Holders, the
Company or their Affiliates.
SECTION 3.05. ABSENCE OF LITIGATION. (a) There are no Actions
pending or, to the knowledge of the Seller and BE Aerospace, threatened against
the Seller, BE Aerospace or any of the assets or properties of the Seller or BE
Aerospace that, individually or in the aggregate, would have a Material Adverse
Effect or would restrain or prevent the Seller or BE Aerospace from consummating
the transactions contemplated hereby or performing its obligations hereunder and
(b) none of the Seller, BE Aerospace nor any subsidiary nor their respective
assets and properties is subject to any Governmental Order having a Material
Adverse Effect or that would restrain or prevent the Seller or BE Aerospace from
consummating the transactions contemplated hereby or performing its obligations
hereunder.
SECTION 3.06. BROKERS. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement or the Initial Purchase
Agreement based upon arrangements made by or on behalf of the Seller or the
Former Interest Holders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller and the
Former Interest Holders as follows:
SECTION 4.01. INCORPORATION AND AUTHORITY OF THE PURCHASER.
The Purchaser is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
necessary corporate power and authority to enter into this Agreement, to carry
out its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Purchaser, the
performance by the Purchaser of its obligations hereunder and the consummation
by the Purchaser of the transactions contemplated hereby will have been duly
authorized by all requisite corporate action on the part of the Purchaser prior
to the Closing Date. This Agreement has been duly executed and delivered by the
Purchaser, and (assuming due authorization, execution and delivery by the other
parties hereto) at the Closing Date will constitute a legal, valid and binding
obligation of the Purchaser enforceable against it in accordance with its terms,
subject to the effect of any applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and subject, as
to enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 4.02. NO CONFLICT. Except as may result from any facts
or circumstances relating solely to the other parties hereto, the execution,
delivery and performance of this Agreement by the Purchaser does not and will
not: (a) conflict with or violate the Certificate of Incorporation or By-laws
(or other similar applicable documents) of the Purchaser, the Company or any
subsidiary; (b) conflict with or violate any Law or Governmental Order
applicable to the Purchaser, the Company or any subsidiary, except as would not,
individually or in the aggregate, have a material adverse effect on the ability
of the Purchaser to consummate, or delay the consummation of, the transactions
contemplated by this Agreement; or (c) result in any breach of, or constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on any of the assets or properties of the Purchaser pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument relating to such assets or properties to which the
Purchaser, the Company or any subsidiary is a party or by which any of such
assets or properties is bound or affected, except as would not, individually or
in the aggregate, have a material adverse effect on the ability of the Purchaser
to consummate, or delay the consummation of, the transactions contemplated by
this Agreement.
SECTION 4.03. CONSENTS AND APPROVALS. The execution and
delivery of this Agreement by the Purchaser do not, and the performance of this
Agreement by the Purchaser will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
governmental or regulatory authority, except (i) the notification and waiting
period requirements of the HSR Act, (ii) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification, would
not prevent or delay the Purchaser from performing any of its material
obligations under this Agreement and (iii) as may be necessary as a result of
any facts or circumstances relating solely to the other parties hereto.
SECTION 4.04. ABSENCE OF LITIGATION. No Action is pending or,
to the knowledge of the Purchaser, threatened against the Purchaser which seeks
to delay or prevent the consummation of the transactions contemplated hereby or
which would be reasonably likely materially and adversely to affect or restrict
the Purchaser's ability to consummate the transactions contemplated hereby or to
perform its obligations hereunder.
SECTION 4.05. INVESTMENT PURPOSE. The Purchaser is acquiring
the Class Two Interests solely for the purpose of investment and not with a view
to, or for offer or sale in connection with, any distribution thereof.
SECTION 4.06. FINANCING. The Purchaser has all funds necessary
to consummate the transactions contemplated by this Agreement.
SECTION 4.07. BROKERS. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. REGULATORY AND OTHER AUTHORIZATIONS; RELEASES;
CONSENTS. (a) Each party hereto shall use its best efforts to obtain all
authorizations, consents, orders, permits, licenses and approvals of, and to
give all notices to and make all filings with, all Governmental Authorities and
other third parties that may be or become necessary for its execution and
delivery of, and the performance of its obligations pursuant to, this Agreement
and will cooperate fully with the other parties in promptly seeking to obtain
all such authorizations, consents, orders and approvals, giving such notices,
and making such filings. Each party hereto agrees to make, or cause to be made,
an appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby as promptly as practicable,
but in no event later than September 15, 1999 and to supply promptly any
additional information and documentary material that may be requested pursuant
to the HSR Act. The parties hereto agree not to take any action that will have
the effect of unreasonably delaying, impairing or impeding the receipt of any
required authorizations, consents, orders or approvals.
(b) Without limiting the generality of the parties'
undertakings pursuant to Section 5.01(a), each of the parties hereto shall use
all reasonable efforts to (i) respond to any inquiries by any Governmental
Authority regarding antitrust or other matters with respect to the transactions
contemplated by this Agreement, (ii) avoid the imposition of any order or the
taking of any action that would restrain, alter or enjoin the transactions
contemplated by this Agreement and (iii) in the event any Governmental Order
adversely affecting the ability of the parties to consummate the transactions
contemplated by this Agreement has been issued, to have such Governmental Order
vacated or lifted.
SECTION 5.02. FURTHER ACTION. Subject to the terms and
conditions herein provided, each of the parties hereto covenants and agrees to
use its best efforts to deliver or cause to be delivered such documents and
other papers and to take or cause to be taken such further actions as may be
necessary, proper or advisable under applicable Laws to consummate and make
effective the transactions contemplated hereby.
SECTION 5.03. CONVEYANCE TAXES. BE Aerospace and the Purchaser
agree that each shall pay one-half of all sales, use, transfer, stamp, stock
transfer, real property transfer or gains and similar taxes incurred as a result
of the sale of the Purchased Interest contemplated hereby.
SECTION 5.04. REPORTS. (a) Within 60 days after the end of
each fiscal quarter of each Adjustment Year the Company shall prepare, at its
expense, and deliver to BE Aerospace a certificate setting forth the Company's
Sales and Bookings for such fiscal quarter (each, a "Company Certificate").
(b) Within 60 days after the end of each Adjustment Year, the
Company shall prepare, at its expense, and deliver to BE Aerospace a reconciled
Company Certificate for such fiscal year.
(c) In the event that the Purchaser, or any of its successors
or assigns, transfers any SIFS Product Line to another entity during an
Adjustment Year, at the times set forth in Sections 5.04(a) and (b) the
Purchaser shall prepare a pro forma Company Certificate (each, a "Pro Forma
Company Certificate") aggregating Sales and Bookings for all such SIFS Product
Lines, whether or not transferred, for each period set forth in Sections 5.04(a)
and (b).
(d) The Company Certificate and the Pro Forma Company
Certificate, if any, delivered pursuant to Section 5.04(b) and (c) shall be the
basis of preparation of Adjustment Statements pursuant to Section 2.04(a).
SECTION 5.05. NON-COMPETITION. (a) The Seller and the Former
Interest Holders agree that, from the date hereof until the date three years
after the Closing Date or, if earlier, the date of the dissolution or
liquidation of the Company (or any successor thereto) (the "Non-Competition
Period"), within any jurisdiction or marketing area in which the Company or any
of its Affiliates is doing business or is qualified to do business, directly or
indirectly, they shall not own, manage, operate, control, or participate in the
ownership, management, operation or control of, or be connected in any manner
with any manufacturer of products, including systems, equipment, software,
services, and support services related thereto, for entertainment, passenger
information, passenger communication and monitoring purposes used solely by
passengers and cabin crew on board commercial passenger transport aircraft
("In-Flight Entertainment Systems") (an "In-Flight Entertainment Business")
other than the Company, other than with respect to the current business of the
Seller and the Former Interest Holders in connection with (i) the provision of
aircraft-specific engineering services to commercial airlines, (ii) the
installation in aircraft of systems manufactured by third parties and (iii) the
servicing of such systems on an ongoing basis; provided, that any of the Seller
and the Former Interest Holders may incorporate goods and services produced by
an In-Flight Entertainment Business other than the Company in such party's
products if customers of such party request it to do so; and provided, further,
that nothing contained in this Section 5.05 shall restrict or prohibit any of
the Seller and the Former Interest Holders from providing repair or maintenance
service to Persons manufacturing, selling or servicing In-Flight Entertainment
Systems.
(b) Each of the Seller and the Former Interest Holders also
agrees for the duration of the Non-Competition Period not to persuade or attempt
to persuade any potential customer to which the Company or any of its
subsidiaries has made a presentation, or with which the Company or any of its
subsidiaries has been having discussions, not to hire the Company or such
subsidiary, or to hire another company.
(c) Each of the Seller and the Former Interest Holders also
agrees for the duration of the Non-Competition Period not to solicit for itself
or any Person other than the Company or any of its subsidiaries the business of
any Person, in connection with the sale of In-Flight Entertainment Systems,
which is a customer, supplier or distributor of the Company or any of its
subsidiaries, or was its customer, supplier or distributor within two years
prior to the date of this Agreement.
(d) Each of the Seller and the Former Interest Holders
acknowledges that a breach of its covenants contained in Sections 5.05(a)
through (c) may cause irreparable damage to the Purchaser, the exact amount of
which will be difficult to ascertain, and that the remedies at law for any such
breach will be inadequate. Accordingly, each of the Seller and the Former
Interest Holders agrees that if it breaches any of the covenants contained in
Sections 5.05(a) through (c) in addition to any other remedy which may be
available at law or in equity, the Purchaser shall be entitled to specific
performance and injunctive relief.
(e) Each of the Seller and the Former Interest Holders further
acknowledges that the time, scope, geographic areas and other provisions of
Section 5.05(a) have been specifically negotiated by sophisticated commercial
parties and agree that all such provisions are reasonable under the
circumstances of the activities contemplated by this Agreement. In the event
that the agreements in Section 5.05(a) shall be determined by any court of
competent jurisdiction to be unenforceable by reason of their extending for too
great a period of time or over too great a geographical area or by reason of
their being too extensive in any other respect, they shall be interpreted to
extend only over the maximum period of time for which they may be enforceable
and/or over the maximum geographical area as to which they may be enforceable
and/or to the maximum extent in all other respects as to which they may be
enforceable, all as determined by such court in such action.
SECTION 5.06. NO SOLICITATION OF EMPLOYEES. Each of the Seller
and the Former Interest Holders agrees that it shall not, during the period from
the date hereof until the Closing Date and, if the Closing occurs, for a period
of four (4) years from February 25, 1999, without the prior written consent of
the Purchaser, directly or indirectly, solicit on a specific or targeted basis
for employment or employ any person who is, at the time of such hiring or
solicitation, an employee of the Company, provided that this Section 5.06 shall
not prohibit any form of employment advertising or prevent the hiring of any
individual who contacts the Seller or any Former Interest Holder after
terminating his or her employment with the Company. This Section 5.06 replaces
Section 5.07 of the Initial Purchase Agreement in its entirety.
SECTION 5.07. TRANSITIONAL SERVICES. BE Aerospace agrees to
continue to provide administrative services to the Company in accordance with
Section 5.09 of the Initial Purchase Agreement for an additional 180 days after
the expiration of the period specified therein.
SECTION 5.08. CONDUCT OF THE BUSINESS BY THE PURCHASER. (a)
The Purchaser agrees that from the date of this Agreement through the end of the
final Adjustment Year, the Company will book orders and record sales and
revenues of SIFS Product Lines in accordance with the current practice of the
Company from February 25, 1999 through the date hereof; provided, that if an
SIFS Product Line is transferred to another Person, the Company will secure from
such Person an undertaking to provide the Company a statement of Sales and
Bookings for such transferred SIFS Product Line for all remaining Adjustment
Years prepared in accordance with the then-current practice of the Company.
(b) The Purchaser agrees to use commercially reasonable
efforts to maximize Sales and Bookings during the period from the date hereof
until the end of the final Adjustment Year; provided, that if an SIFS Product
Line is transferred to an Affiliate of the Purchaser prior to the end of the
final Adjustment Year, the Purchaser will secure from such Affiliate an
undertaking to use commercially reasonable efforts to maximize the Sales and
Bookings of such transferred SIFS Product Line during the period from the date
of transfer until the end of the final Adjustment Year. In the event that the
Company or any Affiliate of the Purchaser acquires or develops new Product Lines
after the date hereof, the Purchaser agrees to use commercially reasonable
efforts to ensure that the business relating to SIFS Product Lines will be
maintained and not be diverted to or disadvantaged by such subsequently acquired
or developed Product Lines.
SECTION 5.09. ACCESS TO INFORMATION. From the date of this
Agreement through the second anniversary of the Closing, upon reasonable prior
notice, the Purchaser shall, and the Purchaser shall cause the officers,
employees, auditors and agents of the Company to, (a) afford the officers,
employees and authorized agents and representatives of BE Aerospace reasonable
access, during normal business hours, to the financial Books and Records of the
Company to the extent that such financial Books and Records relate to a period
prior to the Closing Date and (b) furnish to the officers, employees, agents and
representatives of BE Aerospace, at the expense of BE Aerospace, such additional
existing financial and operating data and other information regarding the
assets, properties, goodwill and business of the Company with respect to Tax
matters for all fiscal years of the Company through 1999 as BE Aerospace may
from time to time reasonably request; provided, however, that BE Aerospace shall
have reasonable access to information as outlined above at any time after such
two-year period if such access is necessary to enable BE Aerospace to respond to
audits and inquiries of any taxing authority and provided, further that BE
Aerospace shall not unreasonably interfere with any of the businesses or
operations of the Company.
SECTION 5.10. CONFIDENTIALITY. (a) Any information relating to
the business, operations, and finances of any party hereto or the Company which
are proprietary to, or considered proprietary by, such party or the Company is
hereinafter referred to as "Confidential Information". All Confidential
Information in tangible form (plans, writings, drawings, computer software and
programs, etc.) or provided to or conveyed orally or visually to a receiving
party, shall be presumed to be proprietary at the time of delivery to the
receiving party. All such proprietary information shall be protected by the
receiving party from disclosure with the same degree of care with which the
receiving party protects its own Confidential Information from disclosure. Each
party hereto agrees: (i) not to disclose such Confidential Information to any
Person except to those of its employees or representatives who need to know such
Confidential Information in connection with the performance of such party's
obligations hereunder and who have agreed to maintain the confidentiality of
such Confidential Information; and (ii) neither it nor any of its employees or
representatives will use the Confidential Information for any purpose other than
the performance of such party's obligations hereunder; provided that such
restrictions shall not apply if such Confidential Information:
(x) is or hereafter becomes public, unless such publication
is a breach of this Agreement;
(y) was already in the receiving party's possession prior
to any disclosure of the Confidential Information to the receiving
party by the divulging party; or
(z) has been or is hereafter obtained by the receiving party
from a third party and the receiving party is not aware that such third
party is bound by any confidentiality obligation to the divulging party
with respect to the Confidential Information;
provided further that nothing herein shall prevent any party hereto from
disclosing any portion of such Confidential Information pursuant to judicial
order, but only to the extent of such order and after reasonable notice to the
original divulging party.
(b) TERMINATION. The obligations contained in this Section
5.10 shall terminate two years after the final
Adjustment Year.
SECTION 5.11. Governance. The Seller agrees that during the
period from the date hereof through the earlier to occur of the Closing Date and
the termination of this Agreement pursuant to Section 8.01, the Seller's rights
with respect to the governance of the Company contained in Section 10.6.1 and
10.7 of the LLC Agreement shall be suspended and the Purchaser shall be entitled
to take any actions set forth in Section 10.6.1 without the approval of the
Seller; provided that the Seller shall retain its rights with respect to the
following items contained in Schedule 10.6.1 of the LLC Agreement: (a), (c),
(h)(to the extent that such investment exceeds $500,000), (l), (o), (p), (r),
(s), (t) and the making of any modifications to the items listed in this
proviso.
SECTION 5.12. GUARANTEE OF BE AEROSPACE. (a) BE Aerospace
hereby unconditionally and irrevocably guarantees the punctual performance and
payment when due of all obligations, amounts and other liabilities of the Seller
now or hereafter existing under this Agreement, the LLC Agreement and the
Assignment and Assumption Agreement (such obligations, amounts and other
liabilities being the "Guaranteed Obligations"), and agrees to pay any and all
expenses (including reasonable counsel fees and expenses) incurred by the
Purchaser in successfully enforcing any rights under this Section 5.12. Without
limiting the generality of the foregoing, BE Aerospace's liability hereunder
shall extend to all amounts and obligations that constitute part of the
Guaranteed Obligations and would be owed by the Seller under this Agreement but
for the fact that they are unenforceable or not allowable in either case due to
the existence of a bankruptcy, reorganization or similar proceeding involving
the Seller or any Former Interest Holder or any breach or failure to perform of
the Seller or any Former Interest Holder under the Assignment and Assumption
Agreement.
(b) BE Aerospace guarantees that the Guaranteed Obligations
will be paid or performed strictly in accordance with the terms of this
Agreement, the LLC Agreement or the Assignment and Assumption Agreement, as the
case may be, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Purchaser with respect thereto. The obligations of BE Aerospace under this
Section 5.12 are independent of the Guaranteed Obligations or any other
obligations of BE Aerospace pursuant to this Agreement, and a separate action or
actions may be brought and prosecuted against BE Aerospace to enforce this
Section 5.12, irrespective of whether any action is brought against the Seller
or whether the Seller is joined in any such action or actions. The liability of
BE Aerospace under this Section 5.12 shall be irrevocable, absolute and
unconditional irrespective of, and BE Aerospace hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any or all of the
following:
(i) any lack of validity or enforceability of this Agreement,
the Assignment and Assumption Agreement or any agreement or instrument
relating thereto arising from the failure of the Seller to properly
authorize, execute and deliver this Agreement or the Assignment and
Assumption Agreement;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations or any
other obligations of the Seller under this Agreement or any agreement
or instrument relating thereto, or any other amendment or waiver of or
any consent to departure from this Agreement;
(iii) any change, restructuring or termination of the
corporate structure or existence of the Seller, the Company or any of
their respective subsidiaries; or
(iv) any failure of the Purchaser to disclose to BE Aerospace
any information relating to the financial condition, operations,
properties or prospects of the Company or any of its subsidiaries now
or in the future known to the Purchaser (BE Aerospace waiving any duty
on the part of the Purchaser to disclose such information).
This Section 5.12 shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the Purchaser or any other Person
upon the insolvency, bankruptcy or reorganization of the Seller, any Former
Interest Holder or the Company or otherwise, all as though such payment had not
been made.
(c) (i) BE Aerospace hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Section 5.12 and any requirement that the Purchaser exhaust
any right, pursue any remedy or take any action against the Seller, any Former
Interest Holder or any other Person.
(ii) BE Aerospace hereby waives any right to revoke this
Section 5.12, and acknowledges that this Section 5.12 is continuing in nature
and applies to all Guaranteed Obligations, whether existing now or in the
future.
SECTION 5.13. ASSUMPTION OF BE AEROSPACE OBLIGATIONS. As of
the Closing Date, the Purchaser shall assume all obligations of BE Aerospace
with respect to providing guarantees of SIFS obligations, including with respect
to LiveTV, and any indemnities by BE Aerospace with respect to any obligations
of SIFS post-Closing contained in any of the Material Contracts listed on
Sections 3.13(b) and 3.16(a) of the Disclosure Schedule to the Initial Purchase
Agreement ("SIFS Guarantees"); provided, that nothing in this Section 5.13 shall
affect the indemnification obligations of BE Aerospace to SIFS with respect to
any Material Contracts to which BE Aerospace or any Affiliate thereof and SIFS
are the only parties. The Purchaser shall use its best efforts to assist in
securing the consent to the assignment to it of all SIFS Guarantees and, in the
event that consent to the assignment of any SIFS Guarantee is not received by
the Purchaser, to indemnify BE Aerospace for the full amount of any payments
under any SIFS Guarantee for liabilities arising after the Closing Date.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01. Conditions to Obligations of the Seller and the
Former Interest Holders. The obligations of the Seller and the Former Interest
Holders to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or waiver, at or prior to the Closing, of each of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. (i) The
representations and warranties of the Purchaser contained in this
Agreement shall be true and correct in all material respects as of the
Closing, with the same force and effect as if made as of the Closing
Date, other than such representations and warranties as are made as of
another date, which shall be true and correct as of such date
(provided, however, that if any portion of any representation or
warranty is already qualified by materiality, for purposes of
determining whether this Section 6.01(a) has been satisfied with
respect to such portion of such representation or warranty, such
portion of such representation or warranty as so qualified must be true
and correct in all respects), (ii) the covenants and agreements
contained in this Agreement to be complied with by the Purchaser at or
prior to the Closing shall have been complied with in all material
respects; and (iii) the Seller and the Former Interest Holders shall
have received a certificate of the Purchaser as to the matters set
forth in clauses (i) and (ii) above signed by a duly authorized officer
of the Purchaser.
(b) HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the purchase of the Purchased Interest
contemplated hereby shall have expired or shall have been terminated.
(c) NO ORDER. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Governmental Order which
is in effect and has the effect of making the transactions contemplated
by this Agreement illegal or otherwise prohibiting consummation of such
transactions.
(d) GUARANTY. The Guarantor or, if the Board of Directors of
the Guarantor has not had the opportunity to approve the Guaranty prior
to such date, ATEV, shall have executed and delivered the Guaranty
substantially in the form of Exhibit 6.01(d) hereto.
(e) STATEMENT OF SALES AND BOOKINGS. The Purchaser shall have
delivered a statement of the Sales and Bookings of the Company for the
period from March 1, 1999 through June 30, 1999.
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at or prior to the
Closing, of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. (i) The
representations and warranties of the Seller and BE Aerospace contained
in this Agreement shall be true and correct in all material respects as
of the Closing, with the same force and effect as if made as of the
Closing Date, other than such representations and warranties as are
made as of another date, which shall be true and correct as of such
date (provided, however, that if any portion of any representation or
warranty is already qualified by materiality, for purposes of
determining whether this Section 6.02(a) has been satisfied with
respect to such portion of such representation or warranty, such
portion of such representation or warranty as so qualified must be true
and correct in all respects); (ii) the covenants and agreements
contained in this Agreement to be complied with by the Seller and the
Former Interest Holders at or prior to the Closing shall have been
complied with in all material respects; and (iii) the Purchaser shall
have received a certificate of each of the Seller and BE Aerospace as
to the matters set forth in clauses (i) and (ii) above signed by an
officer of each such party.
(b) HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the purchase of the Purchased Interest
contemplated hereby shall have expired or shall have been terminated.
(c) NO ORDER. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other Governmental Order which is in effect and has the
effect of making the transactions contemplated by this Agreement
illegal or otherwise prohibiting consummation of such transactions.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. SURVIVAL. The provisions of Article VIII of the
Initial Purchase Agreement remain in full force and effect. In addition, subject
to the limitations and other provisions of this Agreement, the representations,
warranties, covenants and agreements of the parties hereto contained herein
shall survive the Closing and shall remain in full force and effect, regardless
of any investigation made by or on behalf of the Seller, the Former Interest
Holders or the Purchaser, (a) as to the representations and warranties
incorporated herein by reference, for the periods set forth in Section 8.01 of
the Initial Purchase Agreement and (b) as to the other representations,
warranties, covenants and agreements set forth herein, for a period extending
from the Closing Date until the earlier of March 31, 2000 and the date of the
completion by the Company's auditors of the audit for the fiscal year ending
December 31, 1999; provided, however, that the covenant set forth in Section
5.03 hereof shall survive until the expiration of the applicable statute of
limitations for the Tax in question, the representations and warranties set
forth in the last sentence of Section 3.04 hereof shall survive until the
expiration of the applicable statute of limitations; and the covenants and
agreements set forth in Sections 2.04, Article V (with the exception of Section
5.03), Articles VII and IX hereof shall remain in full force and effect for the
applicable periods specified in the respective Sections or Articles or, if no
such period is specified, until the expiration of the applicable statute of
limitations.
SECTION 7.02. INDEMNIFICATION BY THE PURCHASER. (a) The
Purchaser agrees, subject to the other terms and conditions of this Agreement
and on an after Tax basis, to indemnify each Seller Indemnified Party against
and hold each Seller Indemnified Party harmless from all Losses arising out of
(i) the breach of any representation or warranty contained in Article IV hereof,
(ii) the breach of any covenant or agreement of the Purchaser herein and (iii)
the conduct of the business of SIFS after the Closing Date. Anything in Section
7.01 hereof to the contrary notwithstanding, no claim may be asserted nor may
any action be commenced against the Purchaser for breach of any representation,
warranty, covenant or agreement contained herein, unless written notice of such
claim or action is received by the Purchaser describing in detail the facts and
circumstances with respect to the subject matter of such claim or action on or
prior to the date on which the representation, warranty, covenant or agreement
on which such claim or action is based ceases to survive as set forth in Section
7.01 hereof, irrespective of whether the subject matter of such claim or action
shall have occurred before or after such date.
(b) The indemnification obligations of the Purchaser pursuant
to Sections 7.02(a)(i) and (iii) hereof shall not be effective until the
aggregate dollar amount of all Losses which would otherwise be indemnifiable
pursuant to Sections 7.02(a)(i) and (iii) hereof and to Section 8.02(a)(i) of
the Initial Purchase Agreement exceeds the Purchaser's Threshold Amount, in
which event such claims shall be indemnifiable from the first dollar thereof. In
addition, no claim may be made against the Purchaser for indemnification
pursuant to Sections 7.02(a)(i) and (iii) hereof with respect to any individual
item (or aggregation of similar items) of Loss, unless such item (or aggregation
of similar items) exceeds $10,000, nor shall any such item (or aggregation of
similar items) which does not exceed $10,000 be applied to or considered part of
the Purchaser's Threshold Amount. The indemnification obligations of the
Purchaser pursuant to Sections 7.02(a)(i) and (iii) hereof shall be effective
only until the dollar amount paid in respect of all Losses indemnified against
under Sections 7.02(a)(i) and (iii) hereof and to Section 8.02(a)(i) of the
Initial Purchase Agreement aggregates to an amount equal to $15,000,000. For the
purposes of this Section 7.02(b), in computing such individual or aggregate
amounts of claims, the amount of each claim shall be deemed to be an amount (i)
net of any Tax benefit actually realized by the Seller Indemnified Party making
such claim on or prior to the date of an indemnification payment under this
Section 7.02 and (ii) net of any insurance proceeds and any indemnity,
contribution or other similar payment actually recovered by the Seller
Indemnified Party making such claim from any third party with respect thereto
(on an after Tax basis).
(c) Payments by the Purchaser to any Seller Indemnified Party
pursuant to Section 7.02(a) hereof shall be limited to the amount of any Losses
that remains after deducting therefrom (i) any Tax benefit actually realized by
such Seller Indemnified Party on or prior to the date of an indemnification
payment under this Section 7.02 and (ii) any insurance proceeds and any
indemnity, contribution or other similar payment actually recovered by such
Seller Indemnified Party from any third party with respect thereto (on an after
Tax basis). If a payment is made by the Purchaser to any Seller Indemnified
Party in accordance with this Section 7.02, and if a Tax benefit subsequently is
actually realized by such Seller Indemnified Party or any Affiliate of such
Seller Indemnified Party (that was not previously taken into account to reduce
an amount otherwise payable by the Purchaser to such Seller Indemnified Party
under this Section 7.02), such Seller Indemnified Party shall promptly pay to
the Purchaser at the time of such realization the amount of such Tax benefit to
the extent that such amount would have resulted in a reduction in an obligation
of the Purchaser under Section 7.02 hereof if the Tax benefit had been obtained
at the time that such obligation was satisfied.
SECTION 7.03. INDEMNIFICATION BY THE SELLER AND BE AEROSPACE.
(a) The Seller and BE Aerospace agree, subject to the other terms and conditions
of this Agreement and on an after Tax basis, jointly and severally to indemnify
each Purchaser Indemnified Party against and hold each Purchaser Indemnified
Party harmless from all Losses arising out of (i) the breach of any
representation or warranty of the Seller or BE Aerospace contained in Article
III, (ii) the breach by the Seller or any Former Interest Holders of any
covenant or agreement of the Seller or such Former Interest Holders contained
herein, (iii) the actions taken by the Company prior to February 25, 1999 and
described in Section 3.20 of the Disclosure Schedule of the Initial Purchase
Agreement and (iv) Taxes imposed on or with respect to the income, assets, or
operations of the Company and its subsidiaries for taxable periods (or portions
thereof) ending on or prior to February 25, 1999 to the extent such Taxes were
required to have been paid to the appropriate taxing authority prior to February
25, 1999. Anything in Section 7.01 hereof to the contrary notwithstanding, no
claim may be asserted nor any action commenced against the Seller or BE
Aerospace for breach of any representation, warranty, covenant or agreement
contained herein, unless written notice of such claim or action is received by
BE Aerospace describing in detail the facts and circumstances with respect to
the subject matter of such claim or action within thirty days after the date on
which the representation, warranty, covenant or agreement on which such claim or
action is based ceases to survive as set forth in Section 7.01 hereof,
irrespective of whether the subject matter of such claim or action shall have
occurred before or after such date.
(b) The indemnification obligations of the Seller and BE
Aerospace pursuant to Section 7.03(a)(i) hereof shall not be effective until the
aggregate dollar amount of all Losses which would otherwise be indemnifiable
pursuant to Section 7.03(a)(i) hereof and to Section 8.03(a)(i) of the Initial
Purchase Agreement exceeds the Seller's Threshold Amount, in which event such
claims shall be indemnifiable from the first dollar thereof. In addition, no
claim may be made against the Seller or BE Aerospace for indemnification
pursuant to Section 7.03(a)(i) hereof with respect to any individual item of
Loss (or aggregation of similar items), unless such item (or aggregation of
similar items) exceeds $10,000, nor shall any such item (or aggregation of
similar items) which does not exceed $10,000 be applied to or considered part of
the Seller's Threshold Amount. The indemnification obligations of the Seller and
BE Aerospace pursuant to Section 7.03(a)(i) hereof shall be effective only until
the dollar amount paid by the Seller or BE Aerospace in respect of all Losses
indemnified against under Section 7.03(a)(i) hereof together with the dollar
amount paid by BE Aerospace under Section 8.03(a)(i) of the Initial Purchase
Agreement aggregates to an amount equal to $15,000,000, provided, however, that
with respect to claims relating to the representations and warranties contained
in the last sentence of Section 3.04 hereof and the covenant set forth in
Section 5.03 only, the indemnification obligations shall be effective until the
dollar amount paid in respect of all Losses aggregates to an amount equal to the
Fixed Purchase Price plus the Contingent Purchase Price, if any. For the
purposes of this Section 7.03(b), in computing such individual or aggregate
amounts of claims, the amount of each claim shall be deemed to be an amount (i)
net of any Tax benefit actually realized on or prior to the date of an
indemnification payment under this Section 7.03, and (ii) net of any insurance
proceeds and any indemnity, contribution or other similar payment actually
recovered by any Purchaser Indemnified Party from any third party with respect
thereto (on an after Tax basis).
(c) Payments by the Seller or BE Aerospace pursuant to Section
7.03(a) hereof shall be limited to the amount of any Losses that remains after
deducting therefrom (i) any Tax benefit actually realized on or prior to the
date of an indemnification payment under this Section 7.03, by such Purchaser
Indemnified Party and (ii) any insurance proceeds and any indemnity,
contribution or other similar payment actually recovered by any Purchaser
Indemnified Party from any third party with respect thereto (on an after Tax
basis). If a payment is made by the Seller or BE Aerospace in accordance with
this Section 7.03, and if a Tax benefit subsequently is actually realized by
such Purchaser Indemnified Party or any Affiliate of any Purchaser Indemnified
Party (that was not previously taken into account to reduce an amount otherwise
payable by the Seller and BE Aerospace to such Purchaser Indemnified Party under
this Section 7.03), the Purchaser shall promptly pay to the Seller or BE
Aerospace, as the case may be, at the time of such realization, the amount of
such Tax benefit to the extent that such amount would have resulted in a
reduction in an obligation of the Seller and BE Aerospace under this Section
7.03 if the Tax benefit had been obtained at the time that such obligation was
satisfied.
SECTION 7.04. INDEMNIFICATION PROCEDURES. (a) A Seller
Indemnified Party or a Purchaser Indemnified Party, as the case may be (for
purposes of this Section 7.04, an "Indemnified Party"), shall give the
indemnifying party under Section 7.02 or 7.03 hereof, as applicable (for
purposes of this Section 7.04, an "Indemnifying Party"), prompt written notice
of any claim, assertion, event or proceeding by or in respect of a third party
as to which it may request indemnification hereunder or as to which the Seller's
Threshold Amount or the Purchaser's Threshold Amount, as applicable, may be
applied as soon as is practicable and in any event within 45 days of the time
that such Indemnified Party learns of such claim, assertion, event or
proceeding; provided, that the failure to so notify the Indemnifying Party shall
not affect rights to indemnification hereunder except to the extent that the
Indemnifying Party is actually prejudiced by such failure. The Indemnifying
Party shall have the right to direct, through counsel of its own choosing, the
defense or settlement of any such claim or proceeding at its own expense;
provided, however, that the Indemnifying Party shall not, without the prior
written consent of the Indemnified Party (which consent shall not be
unreasonably withheld), enter into any settlement or otherwise compromise any
such claim or proceeding that relates to Taxes if such settlement or compromise
may adversely affect the Tax liability of the Indemnified Party or the Company,
or any Affiliate of either of the foregoing, for any taxable period. With
respect to such claims or proceedings relating to Taxes, the Indemnifying Party
shall allow the Indemnified Party to reasonably request updates regarding
developments that may be relevant to the Taxes of the Company or the Indemnified
Party, and shall allow the Indemnified Party to provide comments regarding the
direction of such claim or proceeding (which comments, subject to the foregoing
consent requirements with respect to settlements or compromises, the
Indemnifying Party will be free to accept or reject in its sole discretion). If
the Indemnifying Party elects to assume the defense of any such claim or
proceeding, the Indemnified Party may participate in such defense, but in such
case the expenses of such Indemnified Party shall be paid by such Indemnified
Party. Such Indemnified Party shall provide the Indemnifying Party with access
to its records and personnel relating to any such claim, assertion, event or
proceeding during normal business hours and shall otherwise cooperate with the
Indemnifying Party in the defense or settlement thereof, and the Indemnifying
Party shall reimburse such Indemnified Party for all its reasonable
out-of-pocket expenses in connection therewith. If the Indemnifying Party elects
to direct the defense of any such claim or proceeding, such Indemnified Party
shall not pay, or permit to be paid, any part of any claim or demand arising
from such asserted liability, unless the Indemnifying Party consents in writing
to such payment or unless the Indemnifying Party, subject to the last sentence
of this Section 7.04(a), withdraws from the defense of such asserted liability,
or unless a final judgment from which no appeal may be taken by or on behalf of
the Indemnifying Party is entered against such Indemnified Party for such
liability. If the Indemnifying Party shall fail to defend against such claim or
proceeding, or if, after commencing or undertaking any such defense, the
Indemnifying Party fails to prosecute or withdraws from such defense, such
Indemnified Party shall have the right to undertake the defense or settlement
thereof, at the Indemnifying Party's expense. If such Indemnified Party assumes
the defense of any such claim or proceeding pursuant to this Section 7.04(a) and
proposes to settle such claim or proceeding prior to a final judgment thereon or
to forego appeal with respect thereto, then such Indemnified Party shall give
the Indemnifying Party prompt written notice thereof and the Indemnifying Party
shall have the right to participate in the settlement or assume or reassume the
defense of such claim or proceeding.
(b) Each party hereto hereby acknowledges and agrees that from
and after the Closing, its sole and exclusive remedy with respect to any and all
claims relating to the representations and warranties contained in Article III
and Article IV and the covenants contained in this Agreement to be performed
prior to the Closing shall be pursuant to the indemnification provisions set
forth in this Article VII. In furtherance of the foregoing, each party hereto
hereby waives, to the fullest extent permitted under applicable law, any and all
other rights, claims and causes of action it may have, from and after the
Closing, against the other parties hereto or its officers, directors, employees,
agents, representatives and Affiliates relating thereto.
(c) Except as set forth in this Agreement, the parties hereto
are not making any representation, warranty, covenant or agreement with respect
to the matters contained herein. Notwithstanding anything to the contrary
contained in this Agreement, no breach of any representation, warranty, covenant
or agreement contained herein shall give rise to any right on the part of any
party hereto, after the consummation of the purchase and sale of the Purchased
Interest contemplated by this Agreement, to rescind this Agreement or any of the
transactions contemplated hereby.
(d) Notwithstanding anything to the contrary contained in this
Agreement, no party hereto shall have any liability under any provision of this
Agreement for, and in no event shall the Purchaser's Threshold Amount or the
Seller's Threshold Amount, as the case may be, be applied to, any consequential
damages. Each party hereto shall take all reasonable steps to mitigate its
Losses upon and after becoming aware of any event which could reasonably be
expected to give rise to any Losses.
(e) For purposes of Sections 7.02 and 7.03 hereof, a Tax
benefit shall be considered realized in the taxable year in which the Taxes of
an Indemnified Party are reduced as a result of any deduction, loss, credit,
allowance or similar item that relates to a claim or action for which an
indemnification payment was made by an Indemnifying Party under this Agreement
(it being understood that no Indemnifying Party shall forgo any Tax Benefit to
which it is properly entitled). Prior to the time that any indemnification
payment is made under this Article VII, and thereafter on a quarterly basis (on
January 15, April 15, July 15 and October 15 of each calendar year), the
Indemnified Party shall provide the Indemnifying Party with a certificate of an
internationally-recognized independent accounting firm, signed by a duly
authorized member of such firm and providing such firm's determination of the
amount that may be taken into account under Sections 7.02 or 7.03 hereof, as the
case may be, as the Tax benefits of the Indemnified Party that are actually
realized; it being understood that if the foregoing certificate is to be
provided by the Purchaser, such certificate shall be provided by Mazars &
Guerard or such other internationally-recognized independent accounting firm
chosen by the Purchaser, and if such certificate is to be provided by the Seller
or BE Aerospace, such certificate shall be provided by Deloitte & Touche, LLP or
such other internationally-recognized independent accounting firm chosen by BE
Aerospace; provided, however, that if the Indemnifying Party objects to the
determination set forth in the certificate, the matter shall be submitted to an
internationally-recognized independent accounting firm mutually acceptable to
the parties, whose determination of the Tax benefits actually realized by an
Indemnified Party shall be final and binding (and whose fees shall be paid by
the Indemnifying Party); it being further understood that the Indemnified Party
shall not be obligated to disclose and no accounting firm providing the
above-described certificate shall disclose to the Indemnifying Party any
information relating to the income or operations of the Indemnified Party or its
Affiliates or any other information relating to any Returns of such Indemnified
Party.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual written consent of BE Aerospace and the
Purchaser;
(b) by BE Aerospace or the Purchaser, if any Governmental
Authority with jurisdiction over such matters shall have issued a
Governmental Order restraining, enjoining or otherwise prohibiting the
sale of the Purchased Interest hereunder and such order, decree, ruling
or other action shall have become final and unappealable; provided,
that the provisions of this Section 8.01(b) shall not be available to
any party unless such party shall have complied with its obligations
under Section 5.01 or otherwise used its best efforts to oppose any
such Governmental Order or to have such Governmental Order vacated or
made inapplicable to the transactions contemplated by this Agreement;
or
(c) by BE Aerospace or the Purchaser, if the Closing shall not
have occurred on or prior to December 31, 1999; provided, however, that
the right to terminate this Agreement under this Section 8.01(c) shall
not be available to any party whose failure to fulfill any obligation
under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur prior to such date.
SECTION 8.02. EFFECT OF TERMINATION. In the event of
termination of this Agreement as provided in Section 8.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except that nothing herein shall relieve any party from liability for any
willful breach hereof.
SECTION 8.03. WAIVER. At any time prior to the Closing, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of another party hereto, (b) waive any inaccuracies in
the representations and warranties made to such party herein or in any document
delivered pursuant hereto or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. EXPENSES. Except as otherwise provided in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.
SECTION 9.02. NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 9.02):
(a) if to the Seller and the Former Interest Holders:
BE Aerospace, Inc.
1400 Corporate Center Way
Wellington, FL 33414
Attention: Thomas P. McCaffrey
Corporate Senior Vice President
of Administration and Chief
Financial Officer
Edmund J. Moriarty
Corporate Vice President
and General Counsel
Telecopier: (561) 791-3966
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Alfred J. Ross, Esq.
Telecopier: (212) 848-7179
(b) if to the Purchaser:
Thomson-CSF Sextant, Inc.
1924 NW 84th Avenue
Miami, Florida 33126
Attention: Franck Hebert
President
Telecopier: (305) 597-6366
with a copy to:
Thomson-CSF Sextant
Zone Aeronautique
Louis Breguet-BP 200
78141 Velizy-Villacoublay Cedex
France
Attention: Alain Villevieille
Telecopier: (011) 33.1.46.29.88.88
and
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: Alison M. Dreizen, Esq.
Telecopier: (212) 354-8113
SECTION 9.03. PUBLIC ANNOUNCEMENTS. Unless otherwise required
by applicable Law, no party to this Agreement shall make any public
announcements in respect of this Agreement or the transactions contemplated
hereby or otherwise communicate with any news media without prior notification
to the other parties, and the parties hereto shall cooperate as to the timing
and contents of any such announcement.
SECTION 9.04. HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 9.05. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
SECTION 9.06. ENTIRE AGREEMENT. This Agreement (including the
Disclosure Schedule and the Exhibits hereto) together with the Initial Purchase
Agreement (including the Disclosure Schedule of the Initial Purchase Agreement
and the Exhibits thereto) and the Assignment and Assumption Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and undertakings, both
written and oral, among the Seller, the Former Interest Holders and the
Purchaser with respect to the subject matter hereof and except as otherwise
expressly provided herein.
SECTION 9.07. ASSIGNMENT. This Agreement shall not be assigned
by any party hereto, provided that the Purchaser may, by written notice
delivered to BE Aerospace not less than three (3) days prior to the Closing
Date, designate an Affiliate to assume all or a portion of the obligations and
rights of the Purchaser under this Agreement, provided further, however, that no
such assignment shall release the Guarantor of its obligations under the
Guaranty.
SECTION 9.08. NO THIRD-PARTY BENEFICIARIES. Except as
specifically provided in Article VII, this Agreement is for the sole benefit of
the parties hereto and their permitted successors, assigns and nothing herein,
express or implied, is intended to or shall confer upon any other person or
entity any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
SECTION 9.09. Waivers and Amendments. This Agreement may be
amended or modified, and the terms and conditions hereof may be waived, only by
a written instrument signed by the parties hereto or, in the case of a waiver,
by each party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder, nor any single or partial exercise of any other right,
power or privilege hereunder, preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies which any party may otherwise have at Law or in equity.
SECTION 9.10. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
required to be performed prior to the Closing was not performed in accordance
with the terms hereof and that, prior to the Closing, the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at Law or in equity.
SECTION 9.11. GOVERNING LAW; DISPUTE RESOLUTION. (a) This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York applicable to contracts executed in and to be performed in
that State.
(b) In the event of any Dispute, the parties hereto shall
attempt in good faith to negotiate and resolve any such Dispute. If after good
faith negotiations the Dispute shall have not been resolved, either party may
deliver an Arbitration Notice to the other party. If the matter is not resolved
within ten (10) Business Days after the delivery of the Arbitration Notice, or
such later date as may be mutually agreed upon, then all Disputes shall be
finally settled by arbitration.
(c) The seat of the arbitration shall be in New York, and the
arbitration shall be conducted in English, in accordance with the Rules of
Conciliation and Arbitration of the International Chamber of Commerce by one or
more arbitrators appointed in accordance with such rules. The arbitrators are
precluded from considering or awarding consequential, special, punitive or
exemplary damages to any party in any arbitration conducted pursuant hereto. The
parties shall have the right to present documentary evidence and witnesses. The
parties shall also have the right to cross-examine witnesses. The decision of
the arbitrators shall be final and binding upon the parties, and no party shall
seek recourse to a law court or other authorities to appeal for revisions of
such decision. Nothing herein shall limit the ability of a party to seek
temporary or preliminary injunctive relief pending arbitration.
SECTION 9.12. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original and
all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto each by its
respective officers thereunto duly authorized have caused this Agreement to be
executed as of the date first written.
IFE SALES, LLC
By:____________________
Name:
Title:
BE AEROSPACE, INC.
By:____________________
Name:
Title:
BE INTELLECTUAL PROPERTY INC.
By:____________________
Name:
Title:
PURITAN-BENNETT AEROSYSTEMS CO.
By:____________________
Name:
Title:
THOMSON-CSF SEXTANT, INC.
By:______________________
Name: Franck Hebert
Title: President