UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 30, 1998
Moog Inc.
______________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
New York 1-5129 16-0757636
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
East Aurora, New York 14052
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (716) 652-2000
NONE
______________________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets
On November 30, 1998, Moog Inc. (the Company) completed the
acquisition from Raytheon Aircraft Company of all the outstanding
common stock of Raytheon Aircraft Montek Company (Montek) for
approximately $160 million in cash. Montek, located in Salt Lake
City, Utah, is a supplier of flight controls to the Boeing Commercial
Airplane Group and to manufacturers of regional aircraft and business
jets including the Raytheon Aircraft Company. Montek also produces
steering controls for tactical missiles and servovalves for both
industrial and aerospace applications. For its fiscal year ending
December 31, 1997, Montek had sales of $79.4 million and operating
profit of $13.5 million.
The nature and amount of consideration related to the acquisition
were determined by arms-length negotiations between representatives of
the Company and Raytheon Aircraft Company.
In connection with the acquisition of Montek, the Company
refinanced its Domestic credit facilities. Effective November 30,
1998, the Company entered into a $340 million Corporate Revolving and
Term Loan Agreement (Credit Facility) with a banking group. The
Credit Facility provides for $265 million in a revolving facility and
a $75 million term loan with interest starting at LIBOR plus 200 basis
points, with the spread adjusted based on leverage. The Credit
Facility is for a five year period with quarterly principal payments
on the term loan of $3.75 million commencing in March 1999. The
Credit Facility is secured by substantially all of the Company's
Domestic assets. The loan agreement includes customary covenants for
a transaction of this nature, including maintaining various ratios.
The Credit Facility was used principally to acquire Montek for $160
million and to refinance $72 million of existing revolving credit
facilities, with the remaining balance available for future working
capital requirements.
Item 7. Exhibits.
(a) Financial statements of businesses acquired
(b) Pro forma financial information
It was impracticable to file the required financial statements
for the business acquired, as well as the required pro forma
financial information with respect to the acquisition, at the
time this report was filed. The omitted information will be
filed as soon as practicable, but in no event later than 60 days
after this report is required to be filed.
(c) The following exhibit is filed as a part of this report:
Exhibit 2 (i) Stock Purchase Agreement dated October 20, 1998
between Raytheon Aircraft Company and Moog Inc. Pursuant to
rule 601(b)(2) of Regulation S-K, schedules to this agreement
have been omitted. The Company hereby agrees to supplementally
provide to the Securities and Exchange Commission copies of the
schedules upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
MOOG INC.
MOOG INC.
(Registrant)
Date: December 1, 1998 By:/s/Robert R. Banta
Robert R. Banta
Executive Vice President
Exhibit 2(i)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of
October 20, 1998, is by and between Raytheon Aircraft Company, a
Kansas corporation ("Seller"), and Moog Inc., a New York corporation
("Buyer").
WHEREAS, Raytheon Aircraft Montek Company, a Kansas corporation
and direct wholly owned subsidiary of Seller and indirect subsidiary
of Raytheon, designs, manufactures and sells aircraft and missile
control systems, custom designed servovalves and solenoids for
aerospace and industrial applications;
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, one thousand (1,000) shares of common stock
of the Company (the "Shares"), which constitute 100% of the
outstanding shares of capital stock of the Company, upon the terms and
subject to the conditions set forth herein (the sale and purchase of
stock of the Company being herein referred to as the "Stock
Purchase");
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Article I.
Certain Definitions
Section 1.1. Definitions. As used herein, unless the context
otherwise requires, the following terms (or any variant in the form
thereof) have the following respective meanings. Terms defined in the
singular shall have a comparable meaning when used in the plural, and
vice versa, and the reference to any gender shall be deemed to include
all genders. Unless otherwise defined or the context otherwise
clearly requires, terms for which meanings are provided herein shall
have such meanings when used in any Schedule hereto and each
collateral document and certificate executed or required to be
executed pursuant hereto or thereto or otherwise delivered, from time
to time, pursuant hereto or thereto.
"Action" means any litigation or legal or other actions,
arbitrations, counterclaims, investigations, proceedings, requests for
material information by or pursuant to the order of any Governmental
Authority, or suits, at law or in arbitration, equity or admiralty
commenced by any Person.
"Adverse", "Adversely" when used in conjunction with "Affect,"
"Change" and "Effect" shall mean, with respect to Seller, the Company
or Buyer, whichever is the obligor in the context to which such term
applies, any event which could reasonably be expected, in a material
respect or manner or to a material degree, to (a) adversely affect the
enforceability of this Agreement by the obligee, (b) adversely affect
the properties, financial condition or results of operation of
Seller, the Company or Buyer, whichever is the obligor in the context
to which such term applies, (c) impair the obligor's ability to
fulfill its obligations under the terms of this Agreement or (d)
adversely affect the aggregate rights and remedies of the obligee
under this Agreement; and for the purposes of this Agreement,
materiality shall, unless specifically stated to the contrary, be
determined without regard to the fact that various provisions of this
Agreement set forth specific dollar amounts or the basis for
calculating such amounts.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person,
with "control" for such purpose meaning the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities or voting interests, by contract or otherwise.
"Balance Sheet" means the unaudited balance sheet of the Company
as of September 20, 1998.
"Balance Sheet Date" means September 20, 1998.
"Benefits Maintenance Period" means a period of one year
commencing with the Closing Date.
"Boeing" means The Boeing Company, a Delaware corporation.
"Buyer Employee Benefit Plan" means (a) any "employee benefit
plan" as defined in Section 3(3) of ERISA or (b) any other
compensation or benefit arrangement described in one or more of the
following categories: (i) any employment or consulting agreement; (ii)
any arrangement providing for insurance coverage or workers'
compensation benefits; (iii) any incentive bonus or deferred bonus
arrangement; (iv) any arrangement providing a termination allowance,
severance pay, salary continuation for disability or other leave of
absence, supplemental unemployment benefits, lay-off benefit,
reduction in force benefit or similar benefits; (v) any stock option
or equity compensation plan; (vi) any deferred compensation plan; and
(vii) any educational assistance arrangements or policies.
"Closing" means the consummation of the transactions contemplated
by Section 2.1 of this Agreement.
"Closing Date" means the later of (i) the third business day
after expiration or termination of all waiting periods prescribed
under the HSR Act, (ii) the date on which the conditions set forth in
Articles VIII and IX shall be satisfied or duly waived, or if Seller
and Buyer mutually agree on a different date, the date upon which they
have mutually agreed and (iii) December 7, 1998.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, or any similar state statute.
"Code" means the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"Collateral Document" means any of the Lease, the IP License
Agreement, the Transitional Services Agreement and the certificates
delivered to Sections 8.1(c) and 9.1(c).
"the Company" means Raytheon Aircraft Montek Company, a Kansas
corporation, and its predecessors (including, without limitation, the
businesses, assets, liabilities, operations or activities of Raytheon
E-Systems, Inc. and E-Systems, Inc. insofar as such businesses,
assets, operations or activities relate to the business conducted by
the Company).
"Company Employee" means any individual who is, as of the
Effective Time, employed by the Company, including any individual who
is actively at work or on approved leave of absence (including sick
leave, family and medical leave, short-term disability leave, vacation
or holiday, or jury duty), but excluding any individual who is on
long-term disability leave.
"Company's knowledge" (including the term "to the knowledge of
the Company") means the actual knowledge of Kenneth H. Guss, Robert F.
Nash, Frank L. Bernhard, Frank W. Campbell, Marshall Brough, E.
Johnson (only with respect to 3.12 hereof), K. Johnson (only with
respect to 3.12 hereof), Buck Buchanan (only with respect to Section
3.11 hereof), David E. Williams (only with respect to Section 3.16
hereof) and Stephen M. Loewenburg - Director of Taxes, Raytheon
Company (only with respect to Section 3.17 and Article VII hereof).
"Company Intellectual Property" means Intellectual Property which
is owned by the Company, including, without limitation, the "Montek"
name and, to the extent the Company has any rights with respect
thereto, the "SR" tradename.
"Contract" means any written note, bond, mortgage, indenture,
lease, contract, instrument, license, agreement, sales order, purchase
order, open bid or other obligation or commitment and all rights
therein.
"Controlled Group" means the Company and any trade or business,
whether or not incorporated, which is part of a controlled group,
under common control or affiliated with the Company within the meaning
of Section 4001(b)(1) of ERISA, or Sections 414 (b), (c), (m) or (o)
of the Code.
"Determination" means a "determination" as defined by Section
1313(a) of the Code.
"Dual-Use Intellectual Property" means Intellectual Property
exclusive of trademarks and trademark applications which is owned by
Seller or a Non-Montek Affiliate which is used by the Company in the
operation of the Company's business (other than Company Intellectual
Property).
"Effective Time" means 9:00 a.m. Salt Lake City local time on the
Closing Date.
"Employee Benefit Plan" means (a) any "employee benefit plan" as
defined in Section 3(3) of ERISA in which any Company Employee
participates or pursuant to which the Company has or may have any
obligation to make contributions or payments with respect to Company
Employees or (b) any other compensation or benefit arrangement in
which any Company Employee participates or pursuant to which the
Company has or may have any obligation to make contributions or
payments with respect to Company Employees described in one or more of
the following categories: (i) any employment or consulting agreement;
(ii) any arrangement providing for insurance coverage or workers'
compensation benefits; (iii) any incentive bonus or deferred bonus
arrangement; (iv) any arrangement providing a termination allowance,
severance pay, salary continuation for disability or other leave of
absence, supplemental unemployment benefits, lay-off benefit,
reduction in force benefit or similar benefits; (v) any stock option
or equity compensation plan; (vi) any deferred compensation plan; and
(vii) any educational assistance arrangements or policies.
"Entity" means any Person other than a natural Person.
"Environmental Laws" means all Federal, state, local and foreign
Laws relating to pollution or protection of the environment, including
but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. 9601 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., the
Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq., the Clean
Air Act, 42 U.S.C. 7401 et seq., and the Toxic Substances Control Act,
15 U.S.C. 2601 et seq., and all analogous state Laws.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Final Determination" means (a) with respect to federal Income
Taxes, a "determination" as defined in Section 1313(a) of the Code or
execution of an Internal Revenue Service Form 870AD and, with respect
to Taxes other than federal Income Taxes, any final determination of
liability in respect of a Tax that, under applicable law, is not
subject to further appeal, review or modification through proceedings
or otherwise (including the expiration of a statute of limitations or
a period for the filing of claims for refunds, amended returns or
appeals from adverse determinations), or (b) the payment of Tax by
Seller, Buyer or any of their Affiliates, whichever is responsible for
payment of such Tax liability under applicable law, with respect to
any item disallowed or adjusted by a Taxing Authority, provided that
such responsible party determines that no action should be taken to
recoup such payment and the indemnifying party, if any, agrees.
"GAAP" means generally accepted accounting principles in the
United States.
"Governmental Authorization" mean any approval, concession,
consent, franchise, license, permit, plan, registration or other
authorization of any Governmental Authority.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any federal, state,
local or foreign Entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including any government authority, agency, department, board,
commission, or instrumentality of the United States, any State of the
United States or political subdivision thereof, and any tribunal or
arbitral authority of competent jurisdiction, and any self-regulatory
organization.
"Hazardous Substance" means any substance that is defined or
regulated as a "hazardous waste," "hazardous material," "hazardous
substance", "toxic substance", "petroleum" or similar term under any
Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Income Taxes" means federal, state or local income or franchise
taxes or other taxes measured by income and all other taxes reported
on domestic Returns which include federal, state or local income or
franchise taxes or other taxes measured by income, together with any
interest or penalties imposed with respect thereto.
"Intellectual Property" means patents, patent applications,
unfiled invention disclosures, trademarks, trademark applications,
mask works, and mask work applications, Licensed third party
intellectual property rights, copyrights, trade secrets and
proprietary know-how.
"IRS" means the Internal Revenue Service.
"Laws" means statutes, regulations, ordinances, rules and other
laws promulgated by a Governmental Authority.
"Licenses" means permits, franchises or other authorizations
including without limitation authorizations with respect to patents,
trademarks, service marks, trade names, copyrights, computer software
programs, technology, trade secrets and know-how, and means, when used
as a verb, the act of granting a License.
"Lien" means an adverse claim, restriction on voting or transfer
or pledge, lien, mortgage, hypothecation, collateral assignment,
charge, encumbrance, easement, covenant, restriction, title defect,
encroachment or security interest of any kind.
"Non-Montek Affiliate" means any Affiliate of Seller (including,
without limitation, Raytheon) other than the Company.
"Orders" means judgments, orders, injunctions, decrees,
stipulations or awards (whether rendered by a court, administrative
agency, arbitrator or other tribunal) and whether imposed or entered
by consent.
"Other Taxes" means all Taxes which are not Income Taxes.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means any Liens (i) for Taxes attributable to
any taxable period beginning on or prior to the Closing Date and not
yet due or payable or being contested in good faith, (ii) that are not
material and constitute mechanics', carriers', workers' or like liens
incurred in the ordinary course of business, (iii) that are zoning
restrictions, easements, rights of way and other restrictions and
similar charges or encumbrances relating to real property, (iv)
securing capitalized lease obligations or in favor of landlords under
leases identified on Schedule 3.12 hereto, (v) incurred on pledges or
deposits made in the ordinary course of business in connection with
workmen's compensation, unemployment insurance, social security laws
or similar legislation, or (vi) (including deposits) incurred in the
ordinary course of business to secure bids or tenders or the
performance of statutory obligations, leases, contracts, surety and
appeal bonds, performance bonds, and other obligations of a like
nature, so long as such Liens do not in the aggregate materially
detract from the value of the Company's assets or materially impair
the use thereof in the operation of the Company's business.
"Person" means an individual, a corporation, a limited liability
company, a partnership (including a joint venture), an association, a
trust or any other entity or organization, including a government or
political subdivision or any agency or instrumentality thereof and,
for purposes of this Agreement, the Company.
"Product Recall" means any systemic failure or other product flaw
attributable to product design or engineering defects or defective
manufacturing processes or procedures, in each case that occurred or
existed on or prior to the Closing Date, as a result of which the
Company reasonably recalls all or substantially all of a product or a
specific lot or lots thereof for replacement or repair.
"Product Recall Costs" means all expenses and costs of the
Company (to the extent that such expenses and costs are not reimbursed
by insurance policies of Buyer or the Company) incurred by the Company
in performing any remedial work in connection with a Product Recall.
The prices for any replacement elements and parts and repair services
will be at the Company's total cost exclusive of profit.
"Purchase Price" means one hundred sixty million dollars
($160,000,000), representing the aggregate consideration to be paid by
Buyer pursuant hereto.
"Raytheon" means Raytheon Company, a Delaware corporation.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing into the environment.
"Returns" means returns, reports and forms required to be filed
with any Governmental Authority.
"Schedule" means any Schedule hereto.
"Section 338 Forms" means all returns, documents, statements, and
other forms that are required to be submitted to any federal, state,
county, or other local Taxing Authority in connection with a Section
338(h)(10) Election. Section 338 Forms shall include any "statement
of section 338 election" and United States Internal Revenue Service
Form 8023A (together with any schedules or attachments thereto) that
are required pursuant to Treas. Reg. Section 1.338-1 or Treas. Reg.
Section 1.338(h)
(10)-1.
"Section 338(h)(10) Election" means an election described in
Section 338(h)(10) of the Code with respect to Seller's sale of the
Shares to Buyer pursuant to this Agreement. Section 338(h)(10)
Election shall include any corresponding election under any other
relevant Tax Laws for which a separate election is permissible with
respect to Buyer's acquisition of the Shares from Seller under this
Agreement.
"Tax Benefit" means the tax effect of any item of loss, deduction
or credit or any other item which decreases Taxes paid or payable or
increases tax basis including any interest with respect thereto or
interest that would have been payable but for such item.
"Taxes" means all taxes (whether federal, state, local or
foreign) based upon or measured by income and any other tax
whatsoever, including gross receipts, profits, sales, use, occupation,
value added, ad valorem, transfer, franchise, withholding, payroll,
employment, excise or property taxes, together with any interest or
penalties imposed with respect thereto.
"Tax Laws" means the Code, federal, state, county, local or
foreign laws relating to Taxes and any regulations or official
administrative pronouncements released thereunder.
"Tax Returns" means federal, state or local Returns relating to
Taxes required to be filed with any U.S. Taxing Authority that include
any of the Company or its Affiliates.
"Taxing Authority" means any Governmental Authority, domestic or
foreign, having jurisdiction over the assessment, determination,
collection or other imposition of Tax.
"Third-Party Claim" means any Action by or before any
Governmental Authority asserted by a Person other than any party
hereto or their respective Affiliates which gives rise to a right of
indemnification hereunder.
Section 1.2. Other Definitions. The following terms are defined
in the Sections indicated:
Term Section Term Section
Agreement Recitals Parker 5.2 1 (c)
Allocation Agreement 7.9 Premises 3.20(a)
Antitrust Division 5.2(b) PWC 5.12
Audited Financial
Statements 5.12 Raytheon Group 5.10
Buyer Recitals Raytheon
Indemnified
Parties 10.3
Buyer Indemnified
Parties 10.2 Restricted Business 5.10
Claim 5.11(a) Restricted Period 5.10
Closing Documents 2.2(c) Restricted
Trademarks 5.7(a)
Covered Liabilities 10.2 Retention Plans 6.3
Environmental Permits 3.16(b) Seller Recitals
Financing Documents 4.5 Seller's Insurance
Policies 5.11(a)
Financial Statements 3.2 Seller Retention
Payments 6.3
FTC 5.2(b) Separate Counsel 10.4
Guarantees 3.13 Shares Recitals
IP License Agreement 3.5 Stock Purchase Recitals
Lease 8.4 Subsequent Loss 7.5(f)
NLS 5.20 Transitional
Services Agreement 8.4
Owned Premises 3.20(b) WARN Act 6.2
Article II.
Sale of Shares: Closing
Section 2.1. Purchase and Sale. On the basis of the
representations, warranties, covenants and agreements and subject to
the satisfaction or waiver of the conditions set forth herein, at the
Closing, Buyer will purchase from Seller and Seller will sell,
transfer, assign and deliver to Buyer, free and clear of all liens,
encumbrances or restrictions of any kind (other than restrictions
arising under federal or state securities laws), the Shares.
Section 2.2. Closing Documents. At the Closing:
(a) Seller will deliver certificates for the Shares, with
appropriate stock powers attached, properly signed, and shall execute
and deliver to Buyer such instruments of transfer, duly prepared and
executed in accordance with relevant law, as may be necessary to
effect the transfer of the Shares to Buyer or such Person as Buyer may
designate to hold such Shares free and clear of all liens,
encumbrances or restrictions of any kind (other than restrictions
arising under federal or state securities laws).
(b) Buyer shall pay by wire transfer the Purchase Price in
immediately available funds to the account specified by Seller.
(c) Seller and Buyer shall deliver the certificates and other
documents required to be delivered under Articles VIII and IX
(together with the other documents specified in Sections 2.2(a) and
2.2(b) the "Closing Documents").
Section 2.3. Time and Place of Closing. The Closing shall take
place as of the Effective Time on the Closing Date at 10:00 A.M.,
Boston time, at the offices of Sullivan & Worcester LLP, One Post
Office Square, Boston, Massachusetts 02109, or such other place or
time as the parties may agree.
Section 2.4. Intercompany Account; Distributions. As of the
close of business on the day immediately preceding the Closing Date,
all intercompany receivables or payables and loans then existing
between Seller or any Non-Montek Affiliate, on the one hand, and the
Company, on the other hand, shall be settled by way of capital
contribution (with respect to intercompany payables or loans due to
Seller or any Non-Montek Affiliate) or by way of dividend in kind
(with respect to receivables of the Company owed by Seller or any Non-
Montek Affiliate). Notwithstanding the foregoing, all receivables
owing to the Company pursuant to purchase orders and subcontracts
between the Company and any Non-Montek Affiliate (including, without
limitation, any outstanding obligations of the Navigation Landing
Systems division of Raytheon to the Company) shall remain in effect
after the Closing. It is the understanding of the parties that,
consistent with Seller's obligations under Section 5.4 hereof, the
Company will dividend to Seller all available cash of the Company
between the date hereof and the Closing Date; provided, however, that
the Company will not be left with negative cash (i.e., outstanding
checks for which funds are not available), as determined in accordance
with GAAP, at the close of business on the day immediately preceding
the Closing Date.
Article III.
Representations and Warranties of Seller
Seller hereby represents and warrants to Buyer as follows:
Section 3.1. Incorporation; Authorization; Capitalization; Etc.
(a) Seller is a Kansas corporation in good standing under the laws of
the State of Kansas. The Company is duly organized and validly
existing, in good standing under the laws of the State of Kansas and
is qualified to transact business and is in good standing in each
other jurisdiction in which the nature of property owned or leased by
the Company or the conduct of its business requires it to be so
qualified, except where the failure to be in good standing or to be
duly qualified to transact business, would not, individually or in the
aggregate, reasonably be expected to have an Adverse Effect on the
Company.
(b) Seller has all requisite power and authority (corporate and
other) to own the Shares, to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The Company has all
requisite power to own its properties and assets and to carry on its
business as it is now being conducted.
The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate proceedings on the part of
Seller and its Board of Directors and no proceedings on the part of
Seller's stockholders are required. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not (i) violate any provision of Seller's or
the Company's respective certificates of incorporation or bylaws, (ii)
except as disclosed in Schedule 3.1(b), violate any provision of, or
be an event that is (or with the giving of notice or the passage of
time will result in) a violation of, or result in the acceleration of
or entitle any Person to accelerate (whether after the giving of
notice or lapse of time or both) any obligation under, or result in
the imposition of any lien, encumbrance or other restriction (other
than restrictions arising under federal or state securities laws) upon
the Shares or any Lien (other than Permitted Liens) on any of the
assets or properties of the Company, pursuant to any Contract or Order
to which Seller or the Company is a party or by which it is bound, or
(iii) except as listed on Schedule 3.1 (b), violate or conflict with
any other material restriction of any kind or character to which
Seller or the Company is subject, that, in the case of any of clauses
(ii) (other than with respect to liens, encumbrances or other
restrictions upon the Shares) and (iii), would, individually or in the
aggregate, reasonably be expected to Adversely Affect Seller or the
Company. This Agreement has been duly executed and delivered by
Seller, and, assuming the due execution hereof by Buyer, this
Agreement constitutes the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
(c) At the Closing, Seller will deliver to Buyer good title to
the Shares free and clear of all liens, encumbrances or restrictions
of any kind (other than restrictions arising under federal or state
securities laws), including preemptive rights.
(d) The Shares constitute the entire authorized and outstanding
capital stock of the Company and are owned free and clear of any
liens, encumbrances or restrictions of any kind (other than
restrictions arising under federal or state securities laws) by
Seller. There are no outstanding options, warrants or other rights of
any kind relating to the sale, issuance or voting of any equity
interests in the Company (including, without limitation, the Shares)
which have been issued, granted, or entered into by Seller or the
Company. No share of capital stock of the Company has been issued in
violation of any preemptive or similar right.
(e) The Company is not the owner of the capital stock or other
equity interests in any Entity.
Section 3.2. Financial Statements. Attached hereto as Schedule
3.2 are true and complete copies of the unaudited balance sheets of
the Company, as of December 31, 1997 and as of September 20, 1998 and
the related unaudited statements of income and cash flows
(collectively, the "Financial Statements"). The Financial Statements
fairly present in all material respects the historical results and
financial position of the Company in each case in accordance with GAAP
consistently applied except as set forth on Schedule 3.2.
Section 3.3. Undisclosed Liabilities. Except as disclosed herein
or in the Schedules hereto, (i) and except as reflected, reserved
against or otherwise disclosed in the Balance Sheet, at the Balance
Sheet Date, there were no liabilities or obligations of or relating to
the Company that would be required to be reflected on a balance sheet
(including the notes thereto) prepared in accordance with GAAP that
are not so reflected on the Balance Sheet and (ii) since the Balance
Sheet Date the Company has not incurred any obligations or
liabilities, other than obligations and liabilities incurred in the
ordinary course of business consistent with past practice of the
Company, except for such liabilities or obligations under clause (i)
or (ii) above as would not reasonably be expected to have an Adverse
Effect on the Company.
Section 3.4. Properties; Sufficiency of Assets. (a) With the
exception of properties disposed of since the Balance Sheet Date, the
Company has (or will have prior to the Closing Date) good title to, or
holds by valid and existing lease or License, free and clear of all
Liens, all real and personal property, tangible and intangible (other
than goodwill or Intellectual Property), used in the Company's
business or otherwise capitalized on or included in the Balance Sheet
and to all real and personal property, tangible and intangible,
acquired by the Company since the Balance Sheet Date that would, had
it been acquired prior to such date, be capitalized on or included in
the Balance Sheet, except in any of the foregoing cases for Permitted
Liens. Schedule 3.4 sets forth a list as of September 17, 1998 of all
of the tangible assets having a value of $50,000 or greater owned by
the Company as of such date including, without limitation, all
machinery, equipment, fixtures, furniture, office equipment, computer
equipment, tooling and vehicles.
(b) The assets of the Company will, at the Closing Date, include
all real and personal property, tangible and intangible (other than
Intellectual Property, for which Section 3.5 is applicable, and
goodwill attributable to Seller and the Non-Montek Affiliates) used or
held primarily for use in the operation of the Company's business as
conducted on the date hereof.
(c) Except as disclosed on Schedule 3.4, since the Balance Sheet
Date, the Company has not disposed of any of its properties or assets
except in the ordinary course of business consistent with past
practice.
(d) The assets of the Company do not include any ownership
interest in any Entity.
Section 3.5. Intellectual Property. Schedule 3.5(i)(a) and
Schedule 3.5(i)(b) collectively list all material patents, patent
applications, unfiled invention disclosures, trademarks, trademark
applications, maskworks, and maskwork applications used in the
Company's business (but as to trademarks and trademark
applications, only those trademarks and trademark applications which
are owned by the Company), with Schedule 3.5(i) (a) listing all such
property that constitutes Company Intellectual Property and Schedule
3.5(i)(b) listing all such property that constitutes Dual Use
Intellectual Property. Seller covenants that all Dual Use
Intellectual Property will be licensed to the Company at the Closing
Date pursuant to a license agreement substantially in the form
attached hereto as Exhibit 3.5 (the "IP License Agreement"). The
Company owns, or will own on the Closing Date, all right, title and
interest in and to all Company Intellectual Property (which does not
include the Licensed third party Intellectual Property which is the
subject of the license agreements identified on Schedule 3.5(ii)) free
and clear of all liens and encumbrances. Schedule 3.5(ii) excludes
licenses for any commercial, off-the-shelf software which is used by
the Company. Except as set forth on Schedule 3.5(iii), to the
Company's knowledge, there exist no claims of infringement of a third
party's patent, copyright or trademark or other intellectual property
right which (i) are based upon the Company's operations or use of the
Intellectual Property and (ii) would, individually or in the
aggregate, reasonably be expected to have an Adverse Affect on the
Company. Except for commercial, off-the-shelf software which is used
by Company, and except for the trademarks referred to in Section 5.7,
to the Company's knowledge, there is no Intellectual Property used in
to the Company's operation as conducted by the Company as of the date
hereof other than that Intellectual Property identified on Schedules
3.5(i)(a), 3.5(i)(b) and 3.5(ii) and the know-how and trade secrets
which are either owned by the Company or which are licensed to the
Company pursuant to the IP License Agreement (it being understood by
the parties that the representation in this sentence is not intended
to be a representation. regarding infringement of a third party's
intellectual property rights which representation is made in the
immediately preceding sentence) other than know-how and trade secrets
the failure to own or License would not result in an Adverse Effect on
the Company.
Section 3.6. Absence of Certain Changes. Except as disclosed
herein or in the Schedules hereto, since the Balance Sheet Date, (a)
there has been no Adverse Change in the condition (financial or
other), properties, assets, liabilities or operations of the Company
except for any change resulting from (i) general economic, financial
or market conditions, (ii) conditions or circumstances generally
affecting the industry in which the Company operates and (iii) a
deterioration or change in the Company's relationship with Boeing
resulting from the execution of this Agreement and the transactions
contemplated hereby, (b) there has been no physical damage,
destruction or loss that would reasonably be expected to have an
Adverse Effect on the Company and (c) there has been no material
change in any accounting policy of the Company.
Section 3.7. Litigation; Orders. Except as disclosed in Schedule
3.7, there are no Actions pending, or to the Company's knowledge,
threatened against the Company or against Seller which specifically
relate to the Company that would, individually or in the aggregate,
reasonably be expected to have an Adverse Effect on the Company.
Except as disclosed in Schedule 3.7, as of the date hereof, there are
no Orders against the Company or its properties or business that
would, individually or in the aggregate, reasonably be expected to
have an Adverse Effect on the Company. Except as disclosed in
Schedule 3.7, to the Company's knowledge, there are no events or
conditions which would reasonably be expected to result in an Action
against it that would, individually or in the aggregate, reasonably be
expected to have an Adverse Effect on the Company.
Section 3.8. Licenses, Approvals, Other Authorizations, Consents,
Reports, Etc. Except as disclosed on Schedule 3.8, the Company has
all Licenses relating to its business (except as relates to Licenses
under Environmental Laws, for which Section 3.16 is applicable) that
are required in order to permit the Company to carry on its business
as it is presently conducted, except where the failure to have such
Licenses would not, individually or in the aggregate, reasonably be
expected to have an Adverse Effect on the Company. All such Licenses
are in full force and effect, and the Company is in compliance with
the terms of such Licenses, except where the failure of such Licenses
to be in full force and effect, or of the Company to be in compliance
with such Licenses would not, individually or in the aggregate,
reasonably be expected to have an Adverse Effect on the Company.
Section 3.9. Labor Matters. Schedule 3.9 sets forth, as of the
date hereof, a list of all collective bargaining or similar agreements
with labor unions or associations representing Company Employees. No
material work stoppage against the Company is pending or, to the
Company's knowledge, threatened. To the Company's knowledge, there is
no pending or threatened union organizational drive. The Company is
not involved in or, to the Company's knowledge, threatened with, any
labor dispute, arbitration, lawsuit or administrative proceeding
relating to labor matters involving any Company Employees (excluding
routine workers' compensation claims) that would, individually or in
the aggregate, reasonably be expected to have an Adverse Effect on the
Company. Schedule 3.9 sets forth a complete and accurate list as of
October 5, 1998 of all Company Employees and specifies the following
information with respect to each: date of hire, salary or wage rate,
and title or position.
Section 3.10. Compliance with Laws. Except as may be indicated
in the Schedules hereto, the conduct of business by the Company
complies with all Laws and Orders applicable thereto (including the
Occupational Safety and Health Act, as amended), except for violations
or failures so to comply, if any, that would not reasonably be
expected to have an Adverse Effect on the Company. This Section 3.10
does not relate to Employee Benefits matters (for which Section 3.11
is applicable), Tax matters (for which Section 3.17 is applicable) or
Environmental matters (for which Section 3.16 is applicable).
Section 3.11. Employee Benefits.
(a) Schedule 3.11(a) lists all material Employee Benefit Plans
maintained at any time during the 3-year period ending on the Closing
Date in which any Company Employees participate or that provides,
previously provided or may provide benefits or payments for Company
Employees or their dependents or former employees or dependents of
former employees of the Company (other than individuals who are or
remained employed by a member of the Controlled Group other than the
Company, and their dependents) or which commits the Company or any
other member of the Controlled Group to provide benefits or payments
for any person upon or following retirement from the Company or other
termination of employment with the Company.
(b) All of the Employee Benefit Plans are, in all material
respects, in compliance with and have been administered in accordance
with their terms and all applicable requirements of law, including,
without limitation, the Code and ERISA, and all contributions required
to be made to each such plan under the terms of each Employee Benefit
Plan, ERISA or the Code for all periods of time prior to the date
hereof and the Closing Date have been or will be, as the case may be,
made or accrued on the Balance Sheet or as may be accrued between the
Balance Sheet Date and the Closing Date in accordance with past
practice.
(c) The Company is not, with respect to any Company Employees,
required to contribute to, nor during the 5-year period ending on the
Closing Date will have been required to contribute to, any "multi-
employer plan" as such term is defined in Section 4001(a)(3) or 3(37)
of ERISA or Section 414(f) of the Code.
(d) Neither the Company nor any other member of the Controlled
Group has incurred nor expects to incur, except for any liability that
would not reasonably be expected to have an Adverse Effect on the
Company, either directly or indirectly, any liability under Title IV
of ERISA, including, without limitation, any withdrawal liability
within the meaning of Title IV of ERISA, but excluding liability for
premiums to the PBGC.
(e) Neither the Company, nor any other member of the Controlled
Group, nor any Employee Benefit Plan, nor any "party in interest" or
"disqualified person" with respect to any Employee Benefit Plan as
defined, respectively, in Section 3(14) or ERISA or Section 4975 of
the Code, nor any fiduciary with respect to any Employee Benefit Plan,
has engaged in any "prohibited transaction" as defined in Section 406
of ERISA or Section 4975 of the Code, other than any transaction
subject to statutory or administrative exemption, or as would not
reasonably be expected to have an Adverse Effect on the Company.
(f) Except as otherwise set forth in Schedule 3.11(f), neither
the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (i) result in any material
payment (including severance, unemployment compensation, golden
parachute or otherwise) becoming due from any Employee Benefit Plan or
from the Company under any Employee Benefit Plan, (ii) materially
increase any benefits otherwise payable to any Company Employee from
any Employee Benefit Plan or from the Company under any Employee
Benefit Plan or (iii) result in the acceleration of the time of
payment or vesting of any such benefits to any material extent.
Section 3.12. Material Contracts; Warranty. (a) Except as set
forth on Schedule 3.12, the Company is not a party to any (i)
employment or consulting agreement requiring payments of base
compensation in excess of $100,000 per year or having a term in excess
of one year, (ii) distributor or manufacturer's representative
contract which is not terminable on six months' (or less) notice
without the incurrence of any liability or obligation by the Company,
(iii) joint venture or similar contract or agreement, (iv) contract
that is material to its business which is terminable by the other
party thereto upon a sale of the Company, (v) note, mortgage,
indenture, other obligation, agreement or other instrument for or
relating to any lending or borrowing (including assumed debt) or any
security agreement, pledge agreement, conditional sale agreement or
similar agreement relating to any obligation of $200,000 or more
relating to any properties or assets employed by the Company or any
Guaranty of any such obligation of a third party, (vi) Contracts for
the purchase by the Company of goods and/or services involving an
estimated total future payment or payments in excess of $200,000,
(vii) Contracts for the sale by the Company of goods and/or services
involving an estimated total future payment or payments in excess of
$200,000, (viii) other Contracts entered into other than in the
ordinary course of business, involving an estimated total future
payment or payments in excess of $200,000, (ix) leases of personal
property (whether the Company is lessee or lessor) involving an
estimated total future payment or payments in excess of $200,000 in
the aggregate, (x) leases of real property (whether Company is lessee
or lessor), (xi) any non-competition or similar agreement which
restricts, or purports to restrict, the business activities of the
Company, (xii) contracts or agreements relating to the disposal of
hazardous waste, or (xiii) Contracts for the sale of goods and/or
services to Seller or any Non-Montek Affiliate. With respect to all
such Contracts, except as set forth on Schedule 3.12, neither Seller
nor the Company, and to the Company's knowledge, no other party to any
such Contract is in breach thereof or default thereunder, and there
does not exist under any provision thereof, any event that, with the
giving of notice or the lapse of time or both, would constitute such a
breach or default, except for such breaches, defaults and events as to
which requisite waivers or consents have been or are obtained or which
would not, individually or in the aggregate, reasonably be expected to
have an Adverse Effect on the Company. Complete and accurate copies
of all Contracts identified on Schedule 3.12 have been delivered by
Seller to Buyer.
(b) Schedule 3.12(b)(i) identifies the product warranty terms
for products sold by the Company most favorable to the Company's
customers and (ii) identifies the product warranty provisions for
products sold by the Company to Seller or any other Non-Montek
Affiliate.
(c) Since January 1, 1997, the Company has not received any
written claim or request for equitable adjustment or refund under any
material Contract with a Governmental Authority.
(d) As of the date hereof, to the Company's knowledge, Schedule
3.12(d) sets forth all Contracts as to which there are open purchase
orders that in accordance with the Company's practices the Company is
projected to incur a loss (i.e., costs exceed revenues).
Section 3.13 Guaranty of Obligations of the Company. Set forth
on Schedule 3.13 are all guarantees, letters of credit, letters of
comfort, surety bonds or other similar agreements and instruments
(collectively "Guarantees") for the benefit of the Company under which
Seller or any Non-Montek Affiliate has any obligations.
Section 3.14 Brokers, Finders, Etc. Except for the services of
Morgan Stanley Dean Witter, Inc., whose fee shall be paid by Seller,
neither Seller, the Company nor any of their respective Affiliates has
employed, nor is any of them subject to any valid claim of, any
broker, finder, consultant or other intermediary in connection with
the Stock Purchase who might be entitled to a fee or commission in
connection therewith.
Section 3.15 No Implied Representation. Notwithstanding anything
contained in this Article III or any other provision of this
Agreement, it is the explicit intent of each party hereto that Seller
is not making any representation or warranty whatsoever, express or
implied, beyond those expressly given in this Agreement, including any
implied warranty or representation as to condition, merchantability,
or suitability as to any of the properties or assets employed by the
Company and it is understood that, except as provided herein, Buyer
takes the Company and its business as is and where is. It is
understood that any cost estimates, projections or other predictions
contained or referred to in the offering materials that have been
provided to Buyer are not and shall not be deemed to be
representations or warranties of Seller.
Section 3.16 Environmental Matters. Except as set forth on
Schedule 3.16:
(a) The Company is and has been since May 1, 1995 in compliance
with all applicable Environmental Laws except where the failure to be
in compliance would not, individually or in the aggregate, reasonably
be expected to have an Adverse Effect on the Company.
(b) The Company has or has applied for all Licenses required
under Environmental Laws for the operation of its business as
presently conducted (the "Environmental Permits") and there are no
violations, and no pending, or, to the knowledge of the Company,
threatened, investigations or proceedings with respect to such
Environmental Permits except where the failure to have such
Environmental Permits or where the violation, investigation or
proceeding relating thereto would not, individually or in the
aggregate, reasonably be expected to have an Adverse Effect on the
Company.
(c) No written notice, notification, demand, request for
information, citation, summons, complaint or Order has been received
by, is pending, or, to the knowledge of the Company, threatened by any
Person against, the Company in connection with the business or
facilities of the Company as to which the Company has or will have an
obligation after the Closing Date nor has any material penalty been
assessed against the Company for any alleged violation of any
Environmental Law or liability thereunder that has not been paid in
full, other than where such notice, notification, demand, request for
information, citation, summons, complaint or Order has been fully
resolved, or where resolution would not, individually or in the
aggregate, reasonably be expected to have an Adverse Effect on the
Company.
(d) To the Company's knowledge, no underground storage tanks for
the storage of Hazardous Substances are located on the Owned Premises.
(e) To the Company's knowledge, there has been no Release of any
Hazardous Substance on, at or from the Owned Premises which through
soil, subsoil, bedrock, surface water, groundwater or airborne
migration, has come to be located, on, at, in or under the Owned
Premises or any real property adjacent thereto, except for such
Releases which would not reasonably be expected to have an Adverse
Effect on the Company.
(f) There has been no Release from any facility not owned or
operated by the Company of any Hazardous Substance which was disposed
of by or on behalf of the Company at such facility since January 1,
1988, except for Releases which would not reasonably be expected to
have an Adverse Effect on the Company.
Section 3.17. Tax Matters.
(a) The Company has filed all Tax Returns that it was required
to file. All such Tax Returns were correct and complete in all
material respects. All Taxes owed by the Company (whether or not
shown on any Tax Return) have been paid. Except as provided on
Schedule 3.17(a), the Company currently is not the beneficiary of any
extension of time within which to file any Tax Return.
(b) Except as provided on Schedule 3.17(b), there is no material
dispute or claim concerning any Tax liability of the Company either
(A) claimed or raised by any authority in writing or (B) as to which
Seller or the Company has knowledge based upon personal contact with
any agent of such authority.
(c) Schedule 3.17(c) (i) lists all federal, state, local, and
foreign Tax Returns filed with respect to the Company for taxable
periods ended on or after December 31, 1993, (ii) indicates those Tax
Returns that have been audited, and (iii) indicates those Tax Returns
that currently are the subject of audit. Seller has delivered to the
Buyer correct and complete copies of all federal Tax Returns,
examination reports, and statements of deficiencies assessed against,
or agreed to by any of the Company since December 31, 1993. Except as
provided on Schedule 3.17(c), the Company has not waived any statute
of limitations in respect of Taxes or agreed to any extension of time
with respect to an Tax assessment or deficiency.
(d) The Company has not filed a consent under Code
Section 341(f) concerning collapsible corporations.
(e) The Company has not made any material payments, is not
obligated to make any material payments, or is not a party to any
agreement that under certain circumstances could obligate it to make
any material payments that will not be deductible under Code
Section 280G.
(f) The Company has not been a United States real property
holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section
897(c)(1)(A)(ii).
(g) The Company is not a party to any tax allocation or sharing
agreement which will remain in effect after the Closing Date.
(h) The Company (i) has not been a member of an Affiliated Group
filing a consolidated federal Tax Return (other than a group the
common parent of which was Raytheon) or (ii) has no liability for the
taxes of any Person (other than the Company) under Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law),
as a transferee or successor, by contract, or otherwise.
Section 3.18. Inventories; Accounts Receivable. The amounts at
which inventories are carried on the Balance Sheet and on the books of
the Company reflect the normal inventory valuation policy of the
Company of valuing inventory at the lower of cost or market value in
accordance with GAAP. All accounts receivable of the Company have
arisen only in the ordinary course of business consistent with past
practice for goods sold or services performed and, to the Company's
knowledge, are (i) good and collectible in the ordinary course of the
Company's business and (ii) are not subject to any offsets or
counterclaims. Attached hereto as Schedule 3.18 is a complete and
accurate aging report of the Company's accounts receivable as of
October 4, 1998.
Section 3.19. Insurance. Included in Schedule 3.19 hereto is a
list of all policies of property, fire, liability, life and other
forms of insurance, and indemnity bonds, carried by the Company
identifying the nature of risks covered and the amount of coverage in
each case and specifies any year or years since January 1, 1994 when
any such insurance was not in effect. The amount of coverage for each
such policy has been equal to or greater than the amount required by
contracts entered into by the Company. All such policies are in full
force. Seller believes the Company is adequately insured against the
kinds of risks usually incurred by corporations engaged in the same or
similar business.
Section 3.20. Real Estate.
(a) All of the real property presently owned, occupied or used
by the Company or in which the Company otherwise has an interest and
the owners thereof is identified in Schedule 3.20(a) hereto (the
"Premises"). To the Company's knowledge, there are no Actions pending
or threatened before any Governmental Authority affecting the Premises
that would, individually or in the aggregate reasonably be expected to
have an Adverse Effect on the Company. The Company and, to the
Company's knowledge, the owners of the Leased Premises (as hereinafter
defined) are not in default with respect to any Order of any
Governmental Authority with respect to the Premises (other than an
Order relating to Environmental Laws, for which Section 3.16 is
applicable or other than such defaults that would not, individually or
in the aggregate, reasonably be expected to have an Adverse Effect on
the Company). All water, sewer, gas, electric, telephone and drainage
facilities and all other utilities required for the use and operation
of the Premises are available at the Premises. To the Company's
knowledge, such public utilities are all connected pursuant to valid
permits, are all in good working order and are adequate to service the
operations of the Premises as currently conducted. The Premises have
adequate access to public streets. To the Company's knowledge, there
are no pending or threatened assessments for municipal improvements
which may affect or become a Lien on the Premises.
(b) Schedule 3.20(b) sets forth the legal description of the
Premises owned by the Company ("Owned Premises") and the most current
fee title insurance policy in the Company's possession relating to the
Owned Premises. The Company has (or will have prior to the Closing
Date) good and marketable fee simple title to the Owned Premises, free
and clear of all Liens (other than Permitted Liens). Except as set
forth in Schedule 3.20(b), all structures and other improvements on
the Owned Premises are within the lot lines and do not encroach on the
properties of any other Person. No portion of the Owned Premises is
located in a flood plain, flood hazard area or designated wetlands
area. The Company has not received any written notice of assessments
for public improvements against the Owned Premises (or any portion
thereof) or any written notice or Order by any Governmental Authority
or any insurance company which has issued a policy with respect to the
Owned Premises or any board of fire underwriters or other body
exercising similar functions that (A) relates to violations of
building, safety or fire ordinances or regulations, (B) claims any
defect or deficiency with respect to the Owned Premises or (C)
requests the performance of any repairs, alterations or other work to
or in the Owned Premises or in the streets bounding the same, other
than such assessments, notices or orders that would not, individually
or in the aggregate, reasonably be expected to have an Adverse Effect
on the Company. To the Company's knowledge, there is no pending
condemnation, expropriation, eminent domain or similar proceeding
against the Company affecting all or any portion of the Owned
Premises.
Section 3.21. Year 2000. The Company has adopted and implemented
a commercially reasonable plan to investigate and correct any "year
2000 problems" associated with (i) the operation of the Company's
business; and (ii) the products manufactured and distributed by the
Company. Seller, however, does not represent and warrant that this
plan will find and correct all "year 2000 problems" which may arise in
connection with the operation of the Company's business or the
products manufactured by the Company.
Section 3.22. Schedules. (a) Any matter set forth in any Schedule
shall be deemed to be referred to on all other Schedules to which such
matter logically relates and where such reference would be appropriate
and can reasonably be inferred from the matters disclosed on the first
Schedule as if set forth on such other Schedules.
(b) The inclusion of any item on any Schedule to this Agreement
shall not be construed as an indication that such item is material in
any respect.
Article IV.
Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
Section 4.1. Incorporation; Authorization; Etc. Buyer is a
corporation duly incorporated, validly existing and in good standing
under the laws of New York. Buyer has full power (corporate and
other) to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement, the performance
of Buyer's obligations hereunder and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of Buyer and no other corporate proceedings
or actions on the part of Buyer, its Board of Directors or
stockholders are necessary therefor. The execution, delivery and
performance of this Agreement will not (i) violate any provision of
the charter or bylaws or similar organizational instruments of Buyer
or any of its Affiliates, (ii) except as disclosed on Schedule 4.1,
violate any provision of, or be an event that is (or with the passage
of time will result in) a violation of, or result in the acceleration
of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any obligation under, or result in
the imposition of any Lien upon or the creation of a security interest
in any of Buyer's or any of its Affiliates' assets or properties
pursuant to, any Contract or Order to which Buyer or any of its
Affiliates is a party or by which Buyer or any of its Affiliates is
bound, or (iii) except as disclosed on Schedule 4.1, violate or
conflict with any other material restriction of any kind or character
to which Buyer or any of its Affiliates is subject, that, in the case
of clauses (ii) and (iii), would, individually or in the aggregate,
reasonably be expected to have an Adverse Effect on Buyer or Buyer and
its subsidiaries, taken as a whole. This Agreement has been duly
executed and delivered by Buyer, and, assuming the due execution
hereof by Seller, this Agreement constitutes the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance
with its terms.
Section 4.2. Brokers, Finders, Etc. Buyer has not employed, and
is not subject to the valid claim of, any broker, finder, consultant
or other intermediary in connection with the transactions contemplated
by this Agreement who might be entitled to a fee or commission from
Seller in connection with such transactions.
Section 4.3. Licenses, Approvals, Other Authorizations, Consents,
Reports, Etc. Other than the HSR Act or filings Buyer is required to
make under federal securities laws, no filing with, notice to or
authorization, consent or approval of, any Governmental Authority is
required to be made, filed, given or obtained by Buyer or any of its
Affiliates, in connection with the consummation of the Stock Purchase
except for (i) those that become applicable solely as a result of the
specific regulatory status of Seller, or (ii) the failure to make,
file, give or obtain which would not, individually or in the
aggregate, reasonably be expected to have an Adverse Effect on Buyer
or Buyer and its subsidiaries, taken as a whole.
Section 4.4. Acquisition of the Shares and Operation of Company
Business for Investment. Buyer has such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of its purchase of the Shares and operation of the
Company's business. Buyer confirms that Seller has made available to
Buyer the opportunity to ask questions of the officers of Seller and
the Company and to acquire additional information about the Company's
business and the financial condition of the Company.
Section 4.5. Financing. Buyer has, or has received written
commitments from financially responsible third parties to obtain,
funds necessary to consummate the Stock Purchase and to pay related
fees and expenses. Copies of definitive agreements or commitment
letters relating to such financing have been supplied to Seller by
Buyer (the "Financing Documents"). Buyer is not aware of any facts or
circumstances that create a reasonable basis for Buyer to believe that
it will not be able to obtain financing in accordance with the terms
of the Financing Documents. Buyer will not waive, release, modify,
rescind, terminate or otherwise amend any of the material terms or
conditions in the Financing Documents in a manner which could
reasonably be expected to adversely affect the ability of Buyer to
obtain the financing and consummate the Stock Purchase and the
transactions contemplated hereby, without the prior written consent of
Seller. Assuming that the financing contemplated by the Financing
Documents is consummated in accordance with the terms thereof, the
funds to be borrowed by, and/or provided thereunder to, Buyer will
provide sufficient funds to pay the Purchase Price and all related
fees and expenses.
Article V.
Covenants of Seller and Buyer
Section 5.1. Investigation of Business; Access to Properties and
Records. (a) Seller shall afford to representatives of Buyer
reasonable access to the offices, plants, properties, books and
records of the Company during normal business hours, in order that
Buyer may have full opportunity to make such investigations as it
desires of the affairs of the Company; provided, however, that such
investigation shall not unreasonably disrupt the personnel and
operations of the Company. Except as set forth in Section 10.2
hereto, the investigation by Buyer and the furnishing of information
to Buyer shall not affect the right of Buyer to rely on the
representations, warranties and covenants of Seller herein.
(b) Until the Closing, any information (other than information
relating to any Non-Montek Affiliate) provided to Buyer or its
representatives pursuant to this Agreement shall be held by Buyer and
its representatives in accordance with, and shall be subject to the
terms of, the Confidentiality Agreement dated August 11, 1998 by and
between Raytheon and Buyer, which is hereby incorporated in this
Agreement as though fully set forth herein.
(c) Buyer agrees (i) to hold all of the books and records of the
Company existing on the Closing Date and not to destroy or dispose of
any thereof for a period of five (5) years from the Closing Date or
such longer time as may be required by Law, and (ii) following the
Closing Date to afford Seller, its accountants and counsel, during
normal business hours, upon reasonable request, full access to such
books, records and other data (to the extent such information is not
subject to an attorney-client privilege and, with respect to non-
privileged information, subject to the terms of a confidentiality
agreement between, and reasonably acceptable to, Buyer and Seller) and
to the employees of the Company to the extent that such access may be
reasonably requested for any legitimate purpose, including without
limitation responding to Governmental Authorities, defending or
prosecuting litigation, preparation of Tax Returns and other tax
filings, at no cost to Seller (other than for reasonable out-of-pocket
expenses); provided, however, that any such access by Seller, its
accountants or counsel shall not unreasonably disrupt the personnel or
operations of the Company and, provided, further, that nothing herein
shall limit any of Seller's rights of discovery. Buyer shall have the
same rights, and Seller the same obligations, as are set forth above
in this Section 5.1(c), with respect to any records of the Company
that are retained by Seller, with the exception of Returns relating to
Taxes that are not the responsibility of Buyer.
Section 5.2. Best Efforts; Obtaining Consents. (a) Subject to the
terms and conditions herein provided, each of Seller and Buyer agrees
to use its best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable
to consummate and make effective as promptly as practicable, the
transactions contemplated by this Agreement and to cooperate with the
other in connection with the foregoing, including using its best
efforts (i) to obtain all necessary waivers, consents and approvals
from other parties to material Contracts, (ii) to obtain all consents,
approvals and authorizations that are required to be obtained under
any Law, (iii) to lift or rescind any Order adversely affecting the
ability of the parties hereto to consummate the Stock Purchase, (iv)
to effect all necessary registrations and filings including filings
under the HSR Act and submissions of information requested by
Governmental Authorities (it being understood by the parties that the
filings required of such party or any of its subsidiaries or
Affiliates under the HSR Act with respect to the transactions
contemplated by this Agreement shall be filed within three (3)
business days after the date of this Agreement), and (v) to fulfill
all conditions to this Agreement (it being understood that such
efforts shall not include any requirement of Seller or Buyer to expend
material sums of money or grant any material financial or other
accommodation). Seller and Buyer further covenant and agree, with
respect to a threatened or pending Order or Law that would adversely
affect the ability of the parties hereto to consummate the Stock
Purchase, to use their respective best efforts to prevent the entry,
enactment or promulgation thereof, as the case may be (it being
understood that such efforts shall not include any requirement of
Seller or Buyer to expend material sums of money or grant any material
financial or other accommodation).
(b) Buyer agrees to use commercially reasonable efforts to
resolve such objections, if any, as the Antitrust Division of the
Department of Justice (the "Antitrust Division"), the Federal Trade
Commission (the "FTC") or any similar Governmental Authority may
assert with respect to the Stock Purchase under any antitrust law
prior to the expiration of any applicable waiting period under the HSR
Act.
(c) In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Section 5.2,
the proper officers and/or directors of Buyer, Seller or any of their
respective Affiliates, including, to the extent applicable, any Entity
designated to hold the Shares, shall take all such necessary action.
(d) Either party hereto shall promptly inform the other of any
material communication from the Antitrust Division, the FTC or any
other Governmental Authority regarding any of the transactions
contemplated hereby. If either party or any Affiliate thereof
receives a request for additional information or documentary material
from any such Governmental Authority with respect to the transactions
contemplated hereby, then such party will endeavor in good faith to
make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in
compliance with such request. Buyer will advise Seller promptly in
respect of any understandings, undertakings or agreements (oral or
written) which Buyer proposes to make or enter into with the Antitrust
Division, the FTC or any other Governmental Authority in connection
with the transactions contemplated hereby.
Section 5.3. Further Assurances. Seller and Buyer agree that,
from time to time, whether before, at or after the Closing Date, each
of them will execute and deliver such further instruments of
conveyance and transfer and take such other action as may be
reasonably required or desirable to carry out the purposes and intent
of this Agreement. In case at any time after the Closing Date, any
further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each party to
this Agreement shall take all such necessary or desirable action.
Without limiting the generality of the foregoing, when requested by
Seller or its Affiliates, Buyer shall cause itself or one its
Affiliates to be substituted in all respects for Seller or any Non-
Montek Affiliate, effective as of the Closing Date, in respect of all
obligations of Seller or any Non-Montek Affiliate under any Guaranty
such that, from and after the Closing Date, Seller and the Non-Montek
Affiliate shall cease to have any obligation whatsoever arising from
or in connection with any such Guaranty; provided, however, if the
beneficiary of such guarantee does not agree to such substitution,
Buyer shall satisfy its obligations under this sentence by
indemnifying Seller or such Non-Montek Affiliate for any payment made
in respect of such Guaranty (such indemnification to be in form and
substance reasonably satisfactory to Buyer and Seller). Seller shall
reimburse Buyer for its reasonable out-of-pocket costs and expenses
associated with such substitution (which shall not include any payment
to the beneficiary unless agreed to by Seller and Buyer).
Section 5.4. Conduct of Business. From the date hereof through
the Closing, except as disclosed on Schedule 5.4 or otherwise provided
for in, or contemplated by, this Agreement, and, except as consented
to or approved by Buyer in writing (which consent shall not be
unreasonably withheld or delayed), Seller covenants and agrees that:
(a) Seller shall, and shall cause the Company to use reasonable
efforts to operate its business in the ordinary and usual course in
all material respects in accordance with past practices. Without
limiting the generality of the foregoing, Seller shall cause the
Company not to engage in any action, activity or practice inconsistent
with the ordinary actions, activities and practices the Company has
previously followed, the effect would to accelerate the payment of the
accounts receivable of the Company or to delay the payment of the
accounts payable of the Company; provided, however, Seller shall be
allowed to cause the Company to take such actions as is necessary to
reduce the net working capital of the Company on the Closing Date to
the same level as the net working capital of the Company on June 21,
1998;
(b) except in the ordinary course of business or as required by
Law, Contract or the terms of any Employee Benefit Plan existing on
the date hereof, Seller shall not permit the Company hereafter to (i)
increase the compensation of, or enter into any new bonus or incentive
agreement or arrangement with, any Company Employee; (ii) pay or agree
to pay any pension, retirement allowance or other employee benefit to
any such Company Employee, whether past or present; (iii) enter into
any employment, severance, consulting or other compensation agreement
with any such Company Employee; or (iv) commit itself to any pension,
profit sharing, deferred compensation, group insurance, severance pay,
retirement or other employee benefit plan, fund or similar arrangement
in addition to those in effect on the date hereof and intended
exclusively for Company Employees, or amend or commit itself to amend
any of such plans, funds or similar arrangements in existence on the
date hereof intended for the benefit of the Company Employees
generally if the effect thereof would exclusively benefit Company
Employees; provided, however, that (i) bonuses, severance payments or
other incentives committed to in connection with or in contemplation
of the Stock Purchase or a similar transaction as set forth on
Schedule 5.4(b) may be paid by Seller or the Company at or prior to
Closing and (ii) Raytheon or Seller may take such actions as it may
deem appropriate under any Employee Benefit Plan so long as neither
the Company nor Buyer has any liability or obligation with respect to
or resulting from such action;
(c) except as otherwise provided for in or contemplated by this
Agreement, Seller shall not permit the Company hereafter to (i)
assume, incur or guarantee, except in the ordinary course of business
consistent with past practice, any obligation for borrowed money, (ii)
cancel or compromise, except in the ordinary course of business
consistent with past practice, any debts owed to it, (iii) waive or
release any rights of material value, (iv) close any plants or any
other material facilities, (v) except for purposes of transferring
cash and liquidating intercompany accounts as contemplated by Section
2.4, declare any dividend or make any distribution with respect to its
equity interests, (vi) take any act or enter into any transaction
which would cause any representation or warranty under this Agreement
to be not true, (vii) change any of its accounting policies in any
material respect or (viii) enter into or amend any contract with
Seller or any Non-Montek Affiliate if the revenues to be received, or
the costs to be incurred, by the Company are expected (individually or
in the aggregate with respect to a group or series of related
Contracts) to exceed $250,000 (other than with respect to the Hawker
Horizon Contract which is addressed in Section 5.21 hereof;
(d) except in the ordinary course of business, Seller shall not
permit the Company hereafter to (i) sell, transfer, distribute as a
dividend in kind or otherwise dispose of any material asset (other
than dividends of cash to Seller or the sale or transfer of inventory
in the ordinary course of business consistent with past practice),
(ii) create or permit to exist any Lien on its assets (other than a
Permitted Lien), or (iii) enter into any joint venture, partnership or
other similar arrangement or form any other new material arrangement
for the conduct of its business; and
(e) On or as soon as reasonably practicable after the Closing,
Buyer shall cause the Company to obtain and utilize with respect to
its operation of the Company a new EPA identification number (and to
the extent required, new State and local identification numbers) for
the generation of Hazardous Substances disposed of on or after the
Closing Date.
Section 5.5. Preservation of Business. From the date hereof to
the Closing Date, subject to the terms and conditions of this
Agreement, Seller shall, and shall cause the Company to, use
reasonable efforts (i) to keep available to the Company and Buyer the
services of the Company Employees, and (ii) to preserve the good will
of customers and others having business relations with the Company.
Section 5.6. Public Announcements. Seller and Buyer will consult
with each other before issuing, or permitting any agent or Affiliate
to issue, any press releases or otherwise making or permitting any
agent or Affiliate to make, any public statements with respect to this
Agreement and the transactions contemplated hereby, and, except as may
be required by applicable law or any listing agreement with any
securities exchange, will not issue any such press release or make any
such public statement, unless the text of such statement shall have
been agreed upon by the parties.
Section 5.7 Use of Raytheon Name.
(a) From and after the Closing, except for purposes of
announcing Buyer's acquisition of the Company or responding reasonably
to inquiries with respect thereto, Buyer and its Affiliates
(including, without limitation, the Company) shall not use or permit
the use of the names or marks "Raytheon", "RTN", "E-Systems", any
trademark or trade name owned or controlled by Raytheon, Seller or an
Affiliate of Seller (except for trademarks or trade names owned or
controlled by the Company), any name or mark incorporating the
foregoing, or any trademarks or trade names confusingly similar
thereto (the "Restricted Trademarks"), nor shall Buyer or any of its
Affiliates use or permit the use of such names and marks in connection
with the operation or disposition of the Company or the proceeds
thereof; provided, however, that (i) for a period of one hundred and
twenty (120) days from the Closing Date, Buyer may make use of
promotional and sales literature possessed by the Company at Closing,
provided that such literature is stickered or otherwise marked to
indicate the change of ownership, and (ii) nothing in this Section 5.7
shall require the amendment of any Contracts nor limit, where
relevant, any accurate and complete statement of facts concerning
ownership of the Company prior to the Closing in any Action or in any
filing with a Government Authority. Effective as of the Closing Date,
Seller shall, and shall cause its Affiliates to, expressly terminate
any implied or express license to the Company to use the Restricted
Trademarks which the Company may have acquired by implication or
otherwise in connection with the conduct of the Company's business
prior to the Closing Date.
(b) Notwithstanding anything in this Section 5.7 to the
contrary, it is understood that with respect to tooling, maskworks and
nameplates which incorporate a Restricted Trademark, Buyer shall be
permitted to continue to use such tooling, maskwork or nameplate in
the manner and form in which they are presently incorporated in said
items and to distribute the resulting products using such Restricted
Trademark for a transitional period extending until the later of
either one hundred and twenty (120) days from the Closing Date or the
consent under, or novation of, the relevant Contract by the
counterparty to such Contract (it being understood that Buyer shall
use commercially reasonable efforts to obtain such consent or novation
within the 120-day period); provided, however, that, commencing as
soon as practicable after the Closing Date (but in no event more than
30 days after the Closing Date), the shipping documents which
accompany the resulting products properly designate Buyer as the
source of origin of such product and that Buyer is solely responsible
for such products. In connection with the permitted uses of the
Restricted Trademarks, Buyer shall defend, indemnify and hold-harmless
the Raytheon Indemnified Parties from and against any Covered
Liabilities arising out of such permitted uses.
Section 5.8. Performance of Obligations. Buyer agrees from and
after the Closing Date to perform and fulfill (or cause to be
performed and fulfilled) all Contracts, whether existing as of the
Closing Date or entered into thereafter, between the Company (to the
extent that the Company remains an Affiliate of Buyer) and Seller or
any of its Affiliates. Seller agrees from and after the Closing Date
to perform and fulfill, and cause each other Non-Montek Affiliate (to
the extent that such entity remains an Affiliate of Seller) to perform
and fulfill, all Contracts, whether existing as of the Closing Date or
entered into thereafter, between the Company, on the one hand, and any
Non-Montek Affiliate on the other hand.
Section 5.9. Buyer's Warranty Obligation. Subject to the terms
of Section 5.13, Buyer covenants and agrees that it will cause the
Company to honor fully and perform in accordance with their terms all
of the Company's product warranty, guaranty and product return
obligations, express or implied, which arise from or are related to
products manufactured or services provided by the Company prior to the
Closing, including, with respect to products manufactured for or
services provided to Seller or any Non-Montek Affiliate.
Section 5.10. Noncompetition. Seller agrees that for a period of
ten (10) years after date hereof (the "Restricted Period"), none of
Raytheon, Seller or any other direct or indirect subsidiary of
Raytheon (the "Raytheon Group"), will engage directly or indirectly in
competition with the Company, whether individually or as a consultant,
partner, owner or stockholder owning more than five percent (5%) of an
Entity, in the business of manufacture and sale of servovalves or
servoactuation systems used in the flight control of commercial and
military aircraft and missiles anywhere in the world (the "Restricted
Business"). Notwithstanding the foregoing, nothing herein shall
prohibit any member of the Raytheon Group from (a) owning, directly or
indirectly, less than fifteen percent (15%) of any class of securities
listed on a national securities exchange or traded publicly in the
over-the-counter market, (b) directly or indirectly acquiring from an
unaffiliated third party in a bonafide transaction a business which
engages in the Restricted Business or (c) continuing to manufacture
and sell those products now being manufactured and sold by members of
the Raytheon Group (including within the foregoing all products that
Raytheon can demonstrate to have been under development as of the date
hereof; provided, however, that in no event shall any member of the
Raytheon Group develop, manufacture or sell to any customer of the
Company on the date hereof any product sold by the Company on the date
hereof.
The rights of Buyer and the obligations of the Raytheon Group set
forth in this Section 5.10 are in addition to, and not in lieu of, all
other rights and obligations provided by applicable law. If any
provision of this Section 5.10 shall for any reason be held to be
excessively broad as to any activity or subject, it shall be
construed, by limiting and reducing it, to be enforceable to the
extent compatible with applicable law.
Section 5.11. Insurance. (a) From and after the Closing, the
Company, subject to the terms of the Seller's Insurance Policies (as
hereinafter defined), shall retain the right to make claims and
receive recoveries for the benefit of the Company as well as for the
benefit of Seller and its Affiliates, under any insurance policies
maintained at any time prior to the Closing by Seller and its
Affiliates (collectively, the "Seller's Insurance Policies"), covering
any loss, liability, claim, damage or expense relating to the assets,
business, operations, conduct, products and employees (including
former employees) of the Company and its predecessors that relates to
or arises out of occurrences prior to the Closing (a "Claim"). Seller
agrees to use commercially reasonable efforts (which shall not require
acceptance of adverse changes in its existing insurance policies or
other adverse effects on Seller) so that the Company shall have the
right, power and authority, subject to any required consent of the
carriers under the Seller's Insurance Policies, in the name of Seller
or any of its Affiliates to make directly any Claims under the
Seller's Insurance Policies and to receive directly recoveries
thereunder. Seller shall obtain, at its sole cost, for the benefit of
the Company aircraft products liability insurance for the period from
April 1, 1997 through the Closing Date to replace the policy issued by
Travel Air Insurance Company (which is described on Schedule 3.19
hereto), which replacement policy shall not provide for any deductible
or retention.
(b) Buyer agrees to reimburse, indemnify and hold Seller and its
Affiliates harmless for out-of-pocket costs and expenses (including
any retroactive premiums and current or prospective premium increases
imposed on Seller or any of its Affiliates solely arising from Claims,
but not including normal internal administrative expenses of Seller
but excluding amounts payable by Seller under the last sentence of
Section 5.11(a)) incurred after the Closing Date to carry out any
obligations pursuant to this Section 5.11 or as a result of Claims
being made after the Closing. Buyer will pay and bear all amounts
relating to any self retention or deductible and any gaps in or limits
on coverage applicable to a Claim asserted at any time after the
Closing; provided that such amount shall be reduced to the extent of
any prior claim payments made in respect of a deductible under such
Seller Insurance Policy whether made by Seller or the Company. In the
event that any legal action, arbitration, negotiation or other
proceedings are required for the Company to assert coverage against
any insurer or to perfect its Claim, (i) Buyer shall, to the extent
possible, do so at its own expense or (ii) if Buyer is not permitted
to assert coverage or perfect a Claim, Seller shall do so, and, in
either event, Buyer shall hold harmless and indemnify Seller and its
Affiliates for any costs and expenses that they might incur because of
such action (other than the incurrence of normal internal
administrative expenses).
(c) Seller shall use commercially reasonable efforts (i) to
cooperate fully and to cause its Affiliates to cooperate fully with
Buyer and the Company in submitting good faith Claims on behalf of the
Company under the Seller's Insurance Policies, (ii) to execute any and
all agreements and other documents including limited powers of
attorney, on behalf of the Company which are reasonably necessary or
appropriate in connection with any of the foregoing, including the
assignment to the Company of any right to receive payments under all
such policies in the event consent to such assignment can be or is
obtained from any insurer, and (iii) to pay promptly over to Buyer any
and all amounts received by Seller or its Affiliates under such
policies with respect to Claims.
(d) Seller and its Affiliates shall retain ownership and custody
of the Seller's Insurance Policies and any and all service contracts,
claim settlements and all other insurance records relating thereto and
Buyer and the Company shall have access to and the right to make
copies of all such documents and records upon the reasonable request
to Seller or its Affiliates. If Seller desires to destroy any such
policies or records it shall first notify Buyer which shall have the
right to cause the same to be delivered to it upon reimbursing Seller
for reasonable out-of-pocket handling and shipping expenses.
(e) Buyer acknowledges that, except as otherwise provided in
this Agreement, Seller and its Affiliates shall have no responsibility
for obtaining any insurance or bearing any loss, liability, claim,
damage or expense relating to the assets, business, operations,
conduct, products and employees (including former employees) of the
Company that relates to or arises out of occurrences on or subsequent
to the Closing Date. Except for its obligations to perform the
covenants set forth in this Section 5.11, nothing herein shall create
any obligation on the part of Seller to provide any insurance coverage
for any loss, liability, Lien, damage or expense of Buyer and the
Company (it being understood by the parties that this sentence does
not limit Seller's indemnification obligations under Section 10.2.).
Section 5.12. Audit. Prior to the Closing, Seller shall, at its
sole cost and expense, engage PricewaterhouseCoopers LLP ("PWC") to
prepare audited financial statements of the Company for the fiscal
years ending December 31, 1996 and 1997 (the "Audited Financial
Statements"). Such engagement shall include PWC's commitment to
prepare up to three (3) consents (the costs of which consents shall be
borne solely by Buyer) required by Buyer to utilize PWC's reports on
the aforementioned financial statements for inclusion in Buyer's
filings under applicable federal securities laws. Such financial
statements and reports shall be in a form meeting the requirements of
Regulation S-X under the Securities Act of 1933, as amended.
Section 5.13. Product Recall and Warranty.
(a) Seller shall reimburse the Company in respect of (i) all
Product Recall Costs with respect to the products manufactured on
prior to the Closing Date and specified on Schedule 5.13(a) hereto and
(ii) only that portion of Product Recall Costs incurred during the
periods indicated, and in accordance with the sharing percentages set
forth, in the table below with respect to all other products
manufactured on or prior to the Closing Date.
Allocation of Responsibility
Period Company Seller
Closing until First Anniversary
of Closing Date 20% 80%
Day after First Anniversary until Second
Anniversary of Closing Date 40% 60%
Day after Second Anniversary until Third
Anniversary of Closing Date 60% 40%
Day after Third Anniversary until Fourth
Anniversary of Closing Date 80% 20%
After Fourth Anniversary of
Closing 100% 0%
Seller shall have no other liability to Buyer or the Company, and
Buyer and the Company shall indemnify Seller and hold it harmless from
all Covered Liabilities (as defined below), other than Seller's
obligations assumed under this Section 5.13(a) and Section 10.2 with
respect to breaches of representations and warranties made by Seller
in this Agreement, resulting from or in connection with any other
Product Recall or any other warranty obligations or commitments for
the Company's products (whether shipped prior to or after the
Closing). Seller's obligation to reimburse Buyer for any Product
Recall Costs shall be also conditioned on Buyer's or the Company's
seeking reimbursement for such Product Recall Costs in accordance with
the insurance policies of Buyer and the Company.
(b) Buyer shall provide to Seller prompt written notice of and a
complete description of any circumstances giving rise to a potential
Product Recall, and shall permit Seller or its designee to participate
in the determination of whether such Product Recall and the Company's
recall procedures are necessary and appropriate.
(c) In the event Buyer and Seller agree that a Product Recall
and the recall procedures incident thereto are necessary and
appropriate, Seller shall reimburse the Company within thirty (30)
days of demand therefor for its portion of the Product Recall Costs as
determined in accordance with Section 5.13(a), subject, however, to
its prior receipt of documentation evidencing such Product Recall
Costs in reasonable detail (it being understood that in the event
Buyer and Seller do not so agree, Buyer and the Company may proceed
with such Product Recall as they deem appropriate). Any failure of
Buyer and Seller to agree on the necessity or appropriateness of a
Product Recall, the Company's recall procedures or the Product Recall
Costs shall be submitted to arbitration in Boston, Massachusetts under
the rules of the American Arbitration Association.
Section 5.14. Confidentiality Obligations. Seller acknowledges
that, after the Closing, Seller and other members of the Raytheon
Group may continue to have access to certain proprietary information
relating solely to the Company's operations. After the Closing,
Seller shall, and shall cause all members of the Raytheon Group to,
maintain the confidentiality of any such proprietary information
relating solely to the Company and not, directly or indirectly,
disclose or permit the disclosure of any such information except as
may be required by applicable law, or make use of or permit the use of
such information, for its own benefit or the benefit of others.
Effective as of the Closing, Seller shall, to the extent possible,
assign to Buyer all of its rights under any confidentiality or
nondisclosure agreements executed by third parties in connection with
such third parties' receipt of the Confidential Offering Memorandum
dated September 17, 1998 prepared by Morgan Stanley Dean Witter.
Section 5.15. Communications with Boeing. From the date hereof
until the Closing Date, without the prior written consent of Seller
(which shall not be unreasonably be withheld), Buyer agrees that none
of Buyer or any of Buyer's Affiliates shall communicate with
representatives of Boeing with respect to the Company's contractual
relations with Boeing.
Section 5.16. Update of Schedules. From time to time on or prior
to the Closing Date, Seller shall be entitled to supplement or amend
its Schedules delivered in connection herewith with respect to any
matter arising after the date hereof, which, if arising prior to the
date of this Agreement, would have been required to be set forth or
described in such Schedule or which is necessary to correct any
information in such Disclosure Schedule which has been rendered
inaccurate as a result of a matter arising after the date hereof;
provided, however, that the aggregate effect of such supplements and
amendments to the Schedules shall not reflect an Adverse Effect on the
Company.
Section 5.17. Phase I Environmental Assessment Report. From the
date hereof until the Closing Date, Seller shall cause the Company to
reasonably cooperate with Buyer in the preparation of a Phase I
Environmental Assessment Report with respect to the Owned Premises.
The cost of the preparation of such Phase I Environmental Assessment
Report shall be borne solely by Buyer.
Section 5.18. RAPID Program. Seller agrees to use commercially
reasonable efforts to permit the Company after the Closing to procure
Hawker 125 piece parts to support the repair/overhaul of Dunlop
Limited components currently installed on the Hawker 125 aircraft at
the discounted purchase prices presently made available to the
Company; provided, however, Seller shall not be required to expend
monies or suffer other adverse conditions (such as minimum purchase
requirements, etc.) in conjunction with the extension of this discount
pricing.
Section 5.19. Owned Premises. Seller agrees, on or prior to the
Closing Date, to cause Raytheon E-Systems, Inc. to transfer all of its
right, title and interest in the Owned Premises to the Company
consistent with Section 3.20.
Section 5.20. NLS Program. Seller will cause the Company, on or
prior to the Closing Date, to (i) deliver and assign to the Navigation
and Landing Systems business unit of Raytheon ("NLS") all rights and
obligations under those contracts exclusively associated with the
business of NLS to which the Company is presently a party and (ii)
transfer to NLS inventory carried on the Company's books at zero value
and those drawings used exclusively in the business of NLS. Seller
agrees to indemnify and hold harmless Buyer and the Company from and
against any Covered Liabilities arising out of such contracts and
assets.
Section 5.21. Hawker Horizon and Premier Contracts.
(a) Buyer and Seller agree that on or prior to the Closing Date
Seller and the Company shall enter into a Hawker Horizon (Model 4000)
Purchase Agreement substantially in the form attached hereto as
Schedule 5.21(a); provided, however, that the recurring price for
Goods (as defined in such agreement) set forth in Section 4 of such
agreement shall be as set forth on Schedule 5.21(a) hereto and the
other terms set forth on Schedule 5.21(a) shall be included in the
executed Contract.
(b) Seller agrees to reimburse the Company in an amount not to
exceed $394,000 for costs incurred by the Company after the Closing
Date relating to the matters described in the document attached hereto
as Schedule 5.21(b), subject, however, to its prior receipt of
documentation evidencing the payment of such costs in reasonable
detail.
(c) Seller shall reimburse the Company in respect of the first
$300,000 paid by the Company to the Control Systems Division of Parker
Hanifan Corporation ("Parker") and 50% of amounts in excess of such
$300,000 threshold paid to Parker, in each case with respect to those
nonrecurring costs identified by Parker in its letter dated October 2,
1998 (a copy of which is attached hereto as Schedule 5.21(c)),
subject, however, to Seller's prior receipt of documentation
evidencing the payment of such costs in reasonable detail; provided,
however, that Seller's reimbursement obligation under this Section
5.21(c) shall be limited to $900,000.
(d) Seller agrees to reimburse the Company in an amount not to
exceed $200,000 for costs incurred by the Company after the Closing
Date relating to the matters described in the document attached hereto
as Schedule 5.21(d), subject, however, to its prior receipt of
documentation evidencing the payment of such costs in reasonable
detail.
Article VI.
Employees, Employee Benefits and Other Transitional Matters
Section 6.1. Continuation of Employment and Benefits.
(a) Buyer agrees, during the Benefits Maintenance Period, to
provide all Company Employees with base compensation while employed by
Buyer or its Affiliates no less favorable than provided to them
immediately before the Effective Time. Buyer further agrees: (i) to
permit participation by the Company Employees (and, if appropriate,
their dependents) in the Buyer Employee Benefit Plans maintained by
the Buyer or one or more of its United States Affiliates on behalf of
employees as of the Effective Time, each of which is listed on
Schedule 6.1(a) (provided, however, that to the extent certain
employees of Buyer or its United States Affiliates have more generous
compensation or benefit arrangements, Company Employees in similar
positions with similar job responsibilities, as reasonably determined
by Buyer, shall be provided similar compensation or benefit
arrangements during the Benefits Maintenance Period; and provided,
further, that during the Benefits Maintenance Period, Buyer or its
Affiliates may amend or terminate the provisions of any Buyer Employee
Benefit Plan applicable to Company Employees (and, if appropriate,
their dependents) so long as no adverse change in benefits under the
plan is made with respect to Company Employees (and, if appropriate,
their dependents) unless the change is made with respect to employees
employed in similar positions with similar job responsibilities (and,
if appropriate, their dependents) of Buyer and all of its United
States Affiliates (including, without limitation, the Company); (ii)
to waive any limitations regarding pre-existing conditions as of the
Effective Time under the Buyer Employee Benefit Plans for Company
Employees (and, if appropriate, their dependents); and (iii) for all
purposes (other than for benefit accrual under a defined benefit
pension plan sponsored by Buyer or its Affiliates) under the Buyer
Employee Benefit Plans, to treat all service before the Closing Date
by Company Employees with the Seller and any of its Affiliates,
including the Company, as service with Buyer and its Affiliates.
(b) During the Benefits Maintenance Period, Buyer will make
severance payments to any Company Employee terminated (other than for
cause) by Buyer or any of its Affiliates (including, without
limitation, the Company) in the amount set forth below in lieu of any
cash severance payments otherwise payable under the Buyer Employee
Benefit Plans.
(i) Every Company Employee described in Section 6.1(b) shall
receive the following severance pay.
Service (with Company, Buyer, Severance
Seller or any Affiliate thereof) Pay
0 - 5 Years 1 week of pay
6 - 10 Years 2 weeks of pay
11 - 15 Years 3 weeks of pay
16 - 20 Years 4 weeks of pay
21 or more Years 5 weeks of pay
(ii) The following additional payments will be made if a Company
Employee described in Section 6.1(b) agrees to execute a release
waiving all claims the employee may have against the Company, Buyer,
Seller or any Affiliate thereof: one week of pay for each year of
service minus the number of weeks of severance pay received pursuant
to Section 6.1(b)(i), but in no event less than a one week additional
payment and in no event shall a Company Employee receive more than 26
weeks of payments pursuant to the provisions of this Section 6.1(b).
The release will not be a waiver of entitlement to benefits, other
than cash severance pay, the employee may have under Buyer's Employee
Benefit Plans.
(iii) Length of service will be based on employment records and
shall include all years of service with the Company, Seller, Buyer and
any Affiliates thereof. If the total length of service contains a
fractional year of 6 months or more, such will be considered a
complete year. For purposes of this Section 6.1(b), "pay" shall mean
the employee's base compensation. All payments are subject to
deductions for payroll taxes and other required deductions.
(c) Buyer or one of its Affiliates (including, without
limitation, the Company) shall continue to employ each Company
Employee on the terms and conditions described in Section 6.1(a)
above; provided, however, that nothing contained herein shall restrict
Buyer and its Affiliates (including, without limitation, the Company)
from terminating the employment of any Company Employee after the
Closing Date.
(d) The Company shall terminate its sponsorship of or status as
a participating employer in the Employee Benefit Plans prior to the
Effective Time. Buyer or one of its Affiliates (including, without
limitation, the Company) shall be responsible for: (i) any payment of
accrued but unpaid wages, vacation pay and holiday pay of Company
Employees as of the Effective Time, which amounts shall be accrued in
accordance with past practice; and (ii) any liability, cost or expense
associated with incurred but not reported medical and dental expenses
covered by an Employee Benefit Plan of Company Employees (and, if
appropriate, their dependents) as of the Effective Time; provided,
however, that Buyer's obligation under this clause (ii) shall be
limited to amounts accrued in accordance with past practice on the
Company's financial statements as of the Closing Date. Buyer shall
reimburse Seller up to $190,000 for any liability, cost or expense
incurred by Seller or its Affiliates, net of any insurance recovery
available to Seller or its Affiliates, pursuant to any retiree death
benefit arrangement for former employees of the Company as of the
Effective Time.
(e) Buyer shall reimburse Seller in an amount equal to $97,000
for a contribution to the Raytheon Stock Ownership Plan on behalf of
the Company Employees with respect to compensation earned by the
Company Employees from January 1, 1998 through the Balance Sheet Date.
(f) Except as set forth in Section 6.1(d)(ii), neither the
Company nor Buyer shall be responsible for any liability, cost or
expense with respect to any employee or former employee of the
Company or any other member of the Controlled Group who is not a
Company Employee. Neither the Buyer nor any of its Affiliates
(including, without limitation, the Company) shall be responsible for
any liability, cost or expense with respect to any Employee Benefit
Plan, and Seller shall indemnify and hold harmless the Buyer
Indemnified Parties from and against any Covered Liabilities with
respect to any such plan; provided, however, that this sentence shall
not apply with respect to the items set forth in the second sentence
of Section 6.1(d) and Section 6.1(e).
(g) Seller or its Affiliates shall satisfy and be fully
responsible for any and all COBRA obligations that arise with respect
to any "qualifying event" that occurs prior to the Effective Time.
Buyer or its Affiliates (including, without limitation, the Company)
shall satisfy and be fully responsible for any and all COBRA
obligations that arise with respect to any "qualifying event" that
occurs at or after the Effective Time with respect to any Company
Employee (and, if appropriate, their dependents).
(h) Seller shall, as soon as practicable after the Closing Date,
take all reasonable actions as may be necessary or appropriate to
permit Company Employees to elect to receive a distribution of their
account balance, including any loan receivable, in the E-Systems Inc.
Employee Savings Plan, which distribution, including any loan
receivable, may be rolled over to a defined contribution plan
maintained by Buyer or its Affiliates; provided, however, that any
distribution from the E-Systems Inc. Employee Savings Plan shall meet
the requirements of Section 401(k)(10) of the Code and the regulations
thereunder; and provided, further, that the administrator, as defined
in Section 3(16) of ERISA, of the E-Systems, Inc. Employee Savings
Plan executes a certification substantially in the form attached as
Schedule 6.1(h).
(i) Buyer or one of its Affiliates (including, without
limitation, the Company) shall offer employment to each employee of
the Company who prior to the Effective Time was on long-term
disability leave upon the employee's notification to the Company (with
such medical certification as is appropriate and as required on a
basis consistent with the treatment of similarly situated employees of
the Buyer and its Affiliates (including, without limitation, the
Company)) that the employee is ready to return to active employment.
Pending such notification, Seller shall remain responsible for
compensation and benefits otherwise due the employee.
Section 6.2. WARN Act. Buyer agrees to pay and be responsible
for all liability, cost, expense and sanctions resulting from the
failure to comply with the Worker Adjustment and Retraining
Notification Act ("WARN Act"), and the regulations thereunder, in
connection with the consummation of the transactions described in or
contemplated by this Agreement or resulting from the actions of Buyer
following the Closing Date that cause WARN to apply.
Section 6.3. Retention Plans. Attached as Schedule 6.3 is a
description of the Company's employee retention plans (the "Retention
Plans"). Effective upon the Closing, Buyer shall cause the Company to
continue to maintain the Retention Plans for those Company Employees
(and former Company Employees) covered thereby at the Closing Date and
to cause the Company to pay all amounts to which any such individuals
may become entitled thereunder after the Closing Date, provided,
however, Seller will retain responsibility for (i) all Portion 1
payments under the Retention Plans which are due and payable within
twenty (20) days of the Closing and (ii) up to $500,000 of any
additional Portion 2 payments under the Retention Plans which are
earned and paid after the Closing Date (all such payments referred to
in clauses (i) and (ii), "Seller Retention Payments"). It is
acknowledged by the parties that Buyer will pay any costs associated
with the Seller Retention Payments and will be reimbursed promptly by
Seller for those costs (including the employer portion of any Federal
Insurance Contributions Act liability) after such payments have been
made.
Article VII
Tax Matters
Section 7.1. Tax Indemnification by Seller. Seller shall be
liable for, and shall hold Buyer and the Company and any successor
corporations thereto or Affiliates thereof harmless from and against,
the following Taxes with respect to the Company:
(a) any and all Income Taxes for any taxable period ending (or
deemed, pursuant to Section 7.3 hereof, to end) on or before the
Closing Date due or payable by the Company;
(b) any Other Taxes for any taxable period ending (or deemed,
pursuant to Section 7.3 hereof, to end) on or before the Closing Date
due or payable by the Company; and
(c) any and all Taxes arising from the Section 338(h)(10)
election described in Section 7.9 hereto.
Seller shall also be liable for, and shall hold Buyer and the
Company and any successor corporations thereto or Affiliates thereof
harmless from and against, all Taxes with respect to the operations of
Seller and its Affiliates, other than those operations conducted by
the Company, including any several liability of the Company or its
Affiliates under Treasury Regulations section 1.1502-6 or under any
comparable or similar provision under state, local or foreign laws or
regulations, and from and against any liability for Taxes with respect
to any gain realized by Seller upon the sale of the Company.
Section 7.2. Tax Indemnity by Buyer. Buyer shall be liable for,
and shall hold Seller harmless from and against, any and all Taxes for
any taxable period beginning (or deemed, pursuant to Section 7.3
hereof, to begin) on or after the Closing Date with respect to the
Company and its Affiliates.
Section 7.3. Allocation of Certain Taxes.
(a) Buyer and Seller agree that if the Company is permitted but
not required under applicable state or local Income Tax laws to treat
the day before the Closing Date or the Closing Date as the last day of
a taxable period, Buyer and Seller shall treat such day as the last
day of a taxable period.
(b) Any Taxes for a taxable period beginning before the Closing
Date and ending after the Closing Date with respect to the Company or
its Affiliates shall be apportioned for purposes of Section 7.1 and
Section 7.2 between Seller and Buyer based on the actual operations of
the Company and/or its Affiliates, as the case may be, during the
portion of such period ending on the Closing Date and the portion of
such period beginning on the date following the Closing Date, and for
purposes of the provisions of Sections 7.1, 7.2, 7.3 and 7.5, each
portion of such period shall be deemed to be a taxable period (whether
or not it is in fact a taxable period); provided, however, that to the
extent estimated Income Taxes of the Company have been paid prior to
the Closing Date with respect to a taxable period beginning before the
Closing Date and ending after the Closing Date, Seller's liability
with respect thereto shall be reduced by that amount; provided
further, that if such payment of estimated Income Taxes exceeds
Seller's liability as calculated pursuant to this Section 7.3, Buyer
shall promptly pay Seller the amount of such excess when the Company
is entitled to the benefit of such excess payment. Upon timely notice
from Buyer, Seller shall pay to Buyer at least ten (10) days prior to
the date any payment for Income Taxes as described in this Section 7.3
is due, Seller's share of such Income Taxes as described in this
Section 7.3.
Section 7.4. Filing Responsibility.
(a) Seller shall prepare and file or shall cause the Company to
prepare and file all Returns with respect to Taxes for periods ending
on or before the Closing Date.
(b) Buyer shall prepare and file, or shall cause the Company and
its Affiliates to prepare and file, subject to Seller's review and
approval (which approval shall not be unreasonably withheld or
delayed) with respect to those Returns which affect the tax liability
of the Seller or other Non-Montek Affiliate, all Returns for taxable
periods beginning before the Closing Date and ending after the Closing
Date, and all other Returns for which Seller does not have filing
responsibility pursuant to Section 7.4(a).
(c) Buyer, the Company and their respective Affiliates agree
that, except to the extent contrary to law or applicable regulation,
they will take no position in the Returns referred to in clause (b)
above inconsistent with that taken in a Return for which Seller has
filing responsibility pursuant to this Article VII.
Section 7.5. Refunds and Carrybacks.
(a) Any refunds or credits of Taxes shall be for the account of
the party responsible for the payment of such Taxes under this
Agreement. If either party becomes aware of any pending or threatened
assessment, official inquiry, examination or proceeding that could
result in an official determination with respect to Taxes due or
payable the responsibility for which rests with the other party
hereto, such party shall promptly so notify the other party in
writing.
(b) Seller shall be entitled to any refunds or credits of Other
Taxes for which Seller is liable pursuant to Section 7.1(b). Buyer,
the Company and its Affiliates, as the case may be, shall be entitled
to any refunds or credits of Other Taxes not referred to in the
preceding sentence attributable to or arising in any taxable period
(whether beginning before or after the Closing Date).
(c) Buyer agrees that if as the result of any audit adjustment
made by any taxing authority with respect to a taxable period ending
on or prior to the Closing Date, Buyer, the Company
or any of its Affiliates receives a Tax Benefit, then Buyer shall pay
to Seller the amount of such Tax Benefit (on an after-tax basis)
within 15 days of the date on which such Tax Benefit is actually
realized or utilized by Buyer or the Company.
(d) Buyer shall cause the Company and its Affiliates promptly to
forward to Seller or to reimburse Seller for any refunds or credits
due Seller (pursuant to the terms of this Article VII) after receipt
thereof, and Seller shall promptly forward to Buyer (pursuant to the
terms of this Article VII) or reimburse Buyer for any refunds or
credits due Buyer after receipt thereof.
(e) Buyer, the Company and their respective Affiliates agree
that, with respect to any Income Tax, the Company shall not carry back
any item of loss, deduction or credit which arises in any taxable
period ending after the Closing Date ("Subsequent Loss") into any Tax
return of Raytheon or its Affiliates for any taxable period ending on
or before the Closing Date. If a Subsequent Loss with respect to any
Tax return of Raytheon or its Affiliates for any Income Tax is carried
back into any taxable period ending on or before the Closing Date,
Seller shall be entitled to any refund or credit of Taxes realized as
a result thereof.
Section 7.6. Cooperation and Exchange of Information.
(a) Seller shall prepare and submit to Buyer, no later than
three months after the Closing Date, 1998 blank tax return workpaper
packages. Buyer shall, and shall cause the Company to, prepare
completely and accurately and submit to Seller within three months of
receipt, all such information as Seller shall reasonably request in
such tax return workpaper packages.
(b) As soon as practicable, but in any event within thirty (30)
days after Seller's request, from and after the Closing Date, Buyer
shall provide Seller with such reasonable cooperation and shall
deliver to Seller such information and data concerning the pre-Closing
operations of the Company and its Affiliates and make available such
knowledgeable employees of the Company and its Affiliates as Seller
may reasonably request, including providing the information and data
required by Seller's customary tax and accounting questionnaires, in
order to enable Seller to complete and file all Returns which it may
be required to file with respect to the operations and business of the
Company and its Affiliates through the Closing Date or to respond to
audits by any Taxing Authorities with respect to such operations and
to otherwise enable Seller to reasonably satisfy its internal
accounting, tax and other legitimate requirements. Such cooperation
and information shall include provision of powers of attorney for the
purpose of signing Returns and defending audits and promptly
forwarding copies of appropriate notices and forms or other
communications received from or sent to any Taxing Authority which
relate to the Company and its Affiliates, and providing copies of all
relevant Returns, together with accompanying schedules and related
workpapers, documents relating to rulings or other determinations by
any Taxing Authority and records concerning the ownership and tax
basis of property, which Buyer, the Company and its Affiliates may
possess. Each of Buyer and the Company and its Affiliates shall make
its respective employees and facilities available on a mutually
convenient basis to provide explanation of any documents or
information provided hereunder.
(c) Buyer and Seller shall cooperate in the preparation of all
Returns relating in whole or in part to taxable periods ending on or
before the Closing Date that are required to be filed after such date;
provided, however, that Seller shall have the sole authority to
determine the manner in which such returns are prepared to the extent
such determination affects the amount of Taxes for which Seller is
liable.
(d) Whenever any Taxing Authority asserts a claim, makes an
assessment, or otherwise disputes the amount of Taxes for which Seller
is liable, Buyer shall promptly inform Seller, and Seller shall have
the right to control any resulting meetings, conferences or
proceedings and to determine whether and when to settle any such
claim, assessment or dispute to the extent such proceedings or
determinations affect the amount of Taxes for which Seller is liable.
Section 7.7. Purchase Price. Buyer and Seller agree that the
consideration provided for pursuant to this Agreement is being paid
solely to acquire the Shares and, except to the extent required
pursuant to an election under Section 338(h)(10) of the Code, neither
party will (or will permit any Affiliate to) report or treat any part
of such consideration as allocable to anything other than payment for
the Shares.
Section 7.8. Tax Sharing Agreements. Any Tax Sharing Agreement
between any member of the Raytheon Group and the Company is terminated
as of the Closing Date and shall have no further effect for any
taxable year (whether a current year, a future year or a past year).
Section 7.9. Elections and Forms.
(a) With respect to Seller's sale of the Shares hereunder,
Seller and Buyer shall, at the election of Buyer, jointly make all
available Section 338(h)(10) Elections in accordance with applicable
Tax Laws and as set forth herein. Buyer and Seller agree to report
the transfers under this Agreement consistent with the
Section 338(h)(10) Elections, and shall take no position contrary
thereto unless required to do so by applicable Tax Laws pursuant to a
Determination.
(b) Buyer shall be responsible for the preparation and filing of
all Section 338 Forms in accordance with applicable Tax Laws and the
terms of this Agreement. Seller shall execute and deliver to Buyer
such documents or forms as are reasonably requested and are required
by any Tax Laws properly to complete the Section 338 Forms, at least
twenty (20) days prior to the date such Section 338 Forms are required
to be filed.
(c) Buyer and Seller agree that they shall use their best
efforts to enter into an agreement (the "Allocation Agreement")
concerning the computation of the Aggregate Deemed Sale Price (as
defined under applicable Treasury Regulations) of the assets of the
Company and its subsidiaries and the allocation of such Aggregate
Deemed Sale Price among such assets not later than ninety (90) days
before the last day on which the Section 338(h)(10) election may be
filed. If, ninety (90) days before the last date on which the Section
338(h)(10) Election may be filed, Buyer and Seller have not adopted
the Allocation Agreement as described above, any disputed aspects of
the Allocation Agreement shall be resolved before the last date on
which the Section 338(h)(10) Election may be filed by a "big five"
accounting firm mutually agreed upon by Buyer and Seller having no
material relationship with either Buyer or Seller. The costs,
expenses and fees of such accounting firm shall be borne equally by
Buyer and Seller. Buyer and Seller agree to act in accordance with
the allocations contained in the Allocation Agreement in any relevant
Returns or similar filings.
Article VIII.
Conditions of Buyer's Obligation to Close
Buyer's obligation to consummate the Stock Purchase shall be
subject to the satisfaction on or prior to the Closing Date of all of
the following conditions:
Section 8.1. Representations, Warranties and Covenants of Seller.
(a) The representations and warranties of Seller contained in this
Agreement (without giving effect to any supplements or amendments
delivered in accordance with Section 5.16 hereof) shall be true and
correct on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such
date (except for representations and warranties that speak as of a
specific date or time, which need only be true and correct as of such
date or time), except, in the case of any representations or
warranties other than those that contain a qualification as to
"Adverse Affect, Change or Effect," for such inaccuracies which have
not had or would not reasonably be expected to have an Adverse Effect
on the Company. The aggregate effect of all amendments and
supplements to the Schedules delivered in accordance with Section 5.16
shall not reflect an Adverse Effect in respect of the Company.
(b) Seller shall have performed in all material respects each
obligation and agreement and shall have complied in all material
respects with each covenant to be performed and complied with by them
hereunder at or prior to the Closing (other than Seller's covenants
pursuant to Section 2.2(a) with respect to delivery of documents of
transfer of the Shares at the Closing, which shall be performed in all
respects).
(c) Buyer shall receive at or prior to the Closing a certificate
as to the matters set forth in paragraphs (a) and (b), dated the
Closing Date, and validly executed by an authorized officer of Seller.
Section 8.2. Filings; Consents; Waiting Periods. All waiting
periods applicable under the HSR Act shall have expired or been
terminated, and all registrations, filings, applications, notices,
consents, approvals, orders, qualifications and waivers required to be
obtained or made as of the Closing Date shall have been filed, made or
obtained, except for such registrations, filings, notices, consents,
approvals, orders, qualifications and waivers the lack of which would
not reasonably be expected to have an Adverse Effect on the Company or
as are set forth on Schedule 8.2.
Section 8.3. No Injunction. At the Closing Date, there shall be
no Order of any nature of any Governmental Authority of competent
Jurisdiction that is in effect that restrains or prohibits the
consummation of all or any portion of the Stock Purchase, and no Law
shall have been enacted by any Governmental Authority which prevents
consummation of the Stock Purchase.
Section 8.4. Transitional Services Agreement; Lease; Intellectual
Property License. Buyer and Seller shall have entered into the IP
License Agreement and the Company and Raytheon shall have entered into
a Transitional Services Agreement substantially in the form of Exhibit
8.4A hereto (the "Transitional Services Agreement") and a Lease
Agreement substantially in the form of Exhibit 8.4B hereto (the
"Lease").
Section 8.5. Additional Deliveries. At the Closing, Seller shall
deliver or cause to be delivered to Buyer: (i) an opinion from in
house counsel of Seller or Raytheon addressing the matters set forth
on Schedule 8.5(a) hereto and in form reasonably acceptable to Buyer;
(ii) an opinion from Sullivan & Worcester LLP addressing the matters
set forth on Schedule 8.5(b) hereto and in form reasonably acceptable
to Buyer; and (iii) duly executed written resignations of all
directors of the Company and revocations of banking authorizations and
powers of attorney in favor of the officers and directors of the
Company as Buyer shall have theretofore reasonably requested.
Section 8.6. Financial Statements. Buyer or the Company shall
have received an opinion from PWC as to the Audited Financial
Statements that will not be qualified as to (i) scope or (ii) the
Audited Financial Statements being in accordance with GAAP.
Article IX.
Conditions to Seller's Obligation to Close
Seller's obligation to consummate the Stock Purchase is subject
to the satisfaction on or prior to the Closing Date of all of the
following conditions:
Section 9.1. Representations, Warranties and Covenants of Buyer.
(a) The representations and warranties of Buyer contained in this
Agreement shall be true and correct on and as of the Closing Date with
the same effect as though such representations and warranties had been
made on and as of such date (except for representations and warranties
that speak as of a specific date or time, which need only be true and
correct as of such date or time), except, in the case of any
representations or warranties other than those that contain a
qualification as to "Adverse Effect," for such inaccuracies which have
not had or would not reasonably be expected to have an Adverse Effect
on Buyer or Buyer and its subsidiaries, taken as a whole.
(b) Buyer shall have performed in all material respects each
obligation and agreement and shall have complied in all material
respects with each covenant to be performed and complied with by it
hereunder at or prior to the Closing.
(c) Seller shall receive at or prior to the Closing certificates
as to the matters set forth in paragraphs (a) and (b), dated the
Closing Date, and validly executed by executive officers of Buyer on
behalf of Buyer.
Section 9.2. Filings: Consents: Waiting Periods. All waiting
periods applicable under the HSR Act shall have expired or been
terminated, and all registrations, filings, applications, notices,
consents, approvals, orders, qualifications and waivers required to be
obtained or made as of the Closing Date shall have been filed, made or
obtained, except for such registrations, filings, notices, consents,
approvals, orders, qualifications and waivers the lack of which would
not reasonably be expected to have an Adverse Effect on Buyer or Buyer
and its subsidiaries, taken as a whole.
Section 9.3. No Injunction. At the Closing Date, there shall be
no Order of any nature of any Governmental Authority of competent
jurisdiction that is in effect that restrains or prohibits the
consummation of all or any portion of the Stock Purchase, and no Law
shall have been enacted by any Governmental Authority which prevents
consummation of the Stock Purchase.
Section 9.4. Transitional Services Agreement and Lease. The
Company and Raytheon shall have entered into the Transitional Services
Agreement and the Lease.
Section 9.5. Additional Deliveries. At the Closing, Buyer shall
deliver or cause to be delivered to Seller an opinion from Phillips
Lytle Hitchcock Blaine & Huber LLP addressing the matters set forth on
Schedule 9.5 hereto and in form reasonably acceptable to Buyer.
Article X.
Survival: Indemnification
Section 10.1. Survival Periods. All covenants and agreements
contained or made in, or in connection with, this Agreement, any
Schedule, or any certificate, document or other instrument delivered
in connection herewith will survive the Closing. All representations
and warranties contained or made in, or in connection with, this
Agreement or in any Schedule, or any certificate, document or other
instrument delivered in connection herewith shall survive for a period
of eighteen (18) months following the Closing; provided, however, (i)
that the representations and warranties made in Sections 3.1(c),
3.1(d), 3.4 (with respect to title to the Company's assets), 3.5 (with
respect to title to the Company Intellectual Property), 3.14 and
3.20(b) (with respect to title to the Owned Premises) shall survive
indefinitely and (ii) the representations or warranties made in
Section 3.16 shall survive for a period of five (5) years following
the Closing. No claim for indemnification may be asserted after the
expiration of the applicable indemnity period (other than a claim
under 3.1(c), 3.1(d), 3.4 (with respect to title to the Company's
assets), 3.5 (with respect to title to the Company Intellectual
Property) and 3.20(b) (with respect to title to the Owned Premises)).
Notwithstanding anything herein to the contrary, any representation or
warranty which is the subject of a claim which is asserted in writing
prior to the expiration of the applicable indemnity period shall
survive with respect to such claim or any dispute with respect thereto
until the final resolution thereof.
Section 10.2. Indemnification by Seller. From and after the
Closing Date, Seller shall indemnify and hold harmless Buyer, its
Affiliates, each of their respective directors, officers, employees
and agents, and each of the heirs, executors, successors and assigns
of any of the foregoing (collectively, the "Buyer Indemnified
Parties") from and against any and all damages, claims, losses,
expenses, costs, obligations and liabilities, including without
limitation liabilities for all reasonable attorneys', accountants',
and experts' fees and expenses (collectively, "Covered Liabilities")
including those incurred to enforce the terms of this Agreement,
suffered, directly or indirectly, by Buyer by reason of, or arising
out of any breach of any representation or warranty (after giving
effect to any disclosure delivered in accordance with Section 5.16
that relate to events or circumstance that occurred between the date
hereof and the Closing Date), covenant or agreement of Seller or any
Affiliate of Seller contained herein or in any Collateral Document.
Notwithstanding the foregoing, Seller shall not be required to
indemnify the Buyer Indemnified Parties with respect to any claim for
indemnification pursuant to this Section 10.2 with respect to (x) a
breach of a representation or warranty, other than claims made under
Sections 3.1(c), 3.1(d), 3.14, 3.16(a), 3.16(b), 3.16(c), 3.16(d) and
3.16(e) and in Sections 3.2 and 3.3 (if such claim related to a breach
of Section 3.2 or 3.3 which would also constitute a breach of the
representations or warranties set forth in Section 3.16 (other than
Section 3.16(f), unless the aggregate amount of all Covered
Liabilities incurred by the Buyer Indemnified Parties as a result of
such breaches of representations and warranties is in excess of one
million two hundred thousand dollars ($1,200,000) or (y) breaches of
the representations or warranties set forth in Section 3.16 (other
than Section 3.16(f) and in Sections 3.2 and 3.3 (if such breach would
also constitute a breach of the representations or warranties set
forth in Section 3.16 (other than Section 3.16(f)), unless the
aggregate amount of all Covered Liabilities incurred by the Buyer
Indemnified Parties as a result of such breaches of representations
and warranties is in excess of one million six hundred thousand
dollars ($1,600,000) and then, in the case of both clauses (x) and
(y), only to the extent such aggregate amount exceeds such amounts,
and provided, further, that in no event shall Seller be required to
pay or otherwise be liable for an amount in excess of fifty million
dollars ($50,000,000) with respect to claims made under this Section.
For purposes of determining the existence of and calculating the
amount of any liability arising under this Section 10.2, any and all
"materiality," "Adverse Affect, Change or Effect" or similar
qualifiers included in any representation or warranty herein and the
knowledge qualifiers included in Section 3.16(e) shall be ignored.
Anything in this Section to the contrary notwithstanding, in the
event Buyer (i) has actual knowledge of on or prior to the date hereof
of any breach, untruth, inaccuracy of, or error in, any representation
and warranty of Seller or (ii) obtains actual knowledge between the
date hereof and the Closing Date of any breach, untruth, inaccuracy
of, or error in, any representation and warranty of Seller which would
reasonably be expected to have an Adverse Effect on the Company and it
elects to proceed with the Closing, it shall be deemed to have waived
any right thereafter to assert any claim with respect to any such
breach, untruth, inaccuracy or error so known. For the purpose of the
preceding sentence, Buyer shall have actual knowledge of a breach,
untruth, inaccuracy or error only if actual knowledge is possessed by
one of the following individuals: Robert T. Brady, Robert R. Banta,
Robert H. Maskrey, Joe C. Green, Donald Fishback, R. Eric Burghardt
and David Bauchat.
Section 10.3. Indemnification by Buyer. From and after the
Closing Date, Buyer shall indemnify and hold harmless Seller, its
Affiliates, each of their respective directors, officers,
employees and agents, and each of the heirs, executors, successors and
assigns of any of the foregoing (collectively, the "Raytheon
Indemnified Parties") from and against any and all Covered Liabilities
incurred by or asserted against any of the Raytheon Indemnified
Parties in connection with or arising from (i) any breach of any
representation or warranty, covenant or agreement of Buyer or any
Affiliate of Buyer contained herein or in any Collateral Document or
(ii) any liability of the Company other than any liability the
existence of which constitutes a breach of a representation or
warranty by Seller under this Agreement or with respect to which
Seller or any member of the Raytheon Group has agreed to retain,
reimburse, indemnify or hold harmless Buyer or the Company.
Notwithstanding the foregoing, Buyer shall not be required to
indemnify the Raytheon Indemnified Parties with respect to any claim
for indemnification with respect to a breach of a representation or
warranty pursuant to this Section 10.3 unless the aggregate amount of
all Covered Liabilities incurred by the Raytheon Indemnified Parties
as a result of such breaches of representations and warranties is in
excess of one million two hundred thousand dollars ($1,200,000) and
then only to the extent such aggregate amount exceeds such amount, and
provided, further, that in no event shall Buyer be required to pay or
otherwise be liable for an amount in excess of fifty million dollars
($50,000,000) with respect to claims made under this Section. For
purposes of determining the existence of and calculating the amount of
any liability arising under this Section 10.3, any and all
"materiality," "Adverse Affect, Change or Effect" or similar
qualifiers included in any representation or warranty herein shall be
ignored for purposes of determining whether any breach of such
representation or warranty has occurred.
Anything in this Section to the contrary notwithstanding, in the
event Seller (i) has actual knowledge of on or prior to the date
hereof of any breach, untruth, inaccuracy of, or error in, any
representation and warranty of Buyer or (ii) obtains actual knowledge
between the date hereof and the Closing Date of any breach, untruth,
inaccuracy of, or error in, any representation and warranty of Seller
which would reasonably be expected to have an Adverse Effect on Buyer
and it elects to proceed with the Closing, it shall be deemed to have
waived any right thereafter to assert any claim with respect to any
such breach, untruth, inaccuracy or error so known. For the purpose
of the preceding sentence, Seller shall have actual knowledge of a
breach, untruth, inaccuracy or error only if actual knowledge is
possessed by one of the following individuals: Paul D. Bailey and
Ronald Sullivan.
Section 10.4. Indemnification Procedures. (a) If any indemnified
party receives notice of the assertion of any Third-Party Claim with
respect to which an indemnifying party is obligated under this
Agreement to provide indemnification, such indemnified party shall
give such indemnifying party written notice thereof (together with a
copy of such Third-Party Claim, process or other legal pleading)
promptly after becoming aware of such Third-Party Claim; provided,
however, that the failure of any indemnified party to give notice as
provided in this Section 10.4 shall not relieve any indemnifying party
of its obligations under this Article X, except to the extent that
such indemnifying party is actually prejudiced by such failure to give
notice. Such notice shall describe such Third-Party Claim in
reasonable detail.
(b) An indemnifying party, at such indemnifying party's own
expense and through counsel chosen by such indemnifying party (which
counsel shall be reasonably acceptable to the indemnified party), may
elect to defend any Third-Party Claim. If an indemnifying party
elects to defend a Third-Party Claim, then, within ten (10) business
days after receiving notice of such Third-Party Claim (or sooner, if
the nature of such Third-Party claim so requires), such indemnifying
party shall notify the indemnified party of its intent to do so, and
such indemnified party shall cooperate in the defense of such Third-
Party Claim (and pending such notice and assumption of defense, an
indemnified party may take such steps to defend against such Third-
Party Claim as, in such indemnified party's good-faith judgment, are
appropriate to protect its interests). Such indemnifying party shall
pay such indemnified party's reasonable out-of-pocket expenses
incurred in connection with such cooperation. Such indemnifying party
shall keep the indemnified party reasonably informed as to the status
of the defense of such Third-Party Claim. After notice from an
indemnifying party to an indemnified party of its election to assume
the defense of a Third-Party Claim, such indemnifying party shall not
be liable to such indemnified party under this Section 10.4 for any
legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than those expenses
referred to in the preceding sentence; provided, however, that such
indemnified party shall have the right to employ one law firm as
counsel, together with a separate local law firm in each applicable
jurisdiction ("Separate Counsel"), to represent such indemnified party
in any action or group of related actions (which firm or firms shall
be reasonably acceptable to the indemnifying party) if, in such
indemnified party's reasonable judgment at any time, either a conflict
of interest between such indemnified party and such indemnifying party
exists in respect of such claim, or there may be defenses available to
such indemnified party which are different from or in addition to
those available to such indemnifying party and the representation of
both parties by the same counsel would be inappropriate, and in that
event (i) the reasonable fees and expenses of such Separate Counsel
shall be paid by such indemnifying party (it being understood,
however, that the indemnifying party shall not be liable for the
expenses of more than one Separate Counsel (excluding local counsel)
with respect to any Third-Party Claim (even if against multiple
indemnified parties)), and (ii) each of such indemnifying party and
such indemnified party shall have the right to conduct its own defense
in respect of such claim. If an indemnifying party elects not to
defend against a Third-Party Claim, or fails to notify an indemnified
party of its election as provided in this Section 10.4 within the
period of ten (10) business days described above, the indemnified
party may defend, compromise, and settle such Third-Party Claim and
shall be entitled to indemnification hereunder (to the extent
permitted hereunder); provided, however, that no such indemnified
party may compromise or settle any such Third-Party claim without the
prior written consent of the indemnifying party, which consent shall
not be unreasonably withheld or delayed. Notwithstanding the
foregoing, the indemnifying party shall not, without the prior written
consent of the indemnified party, (i) settle or compromise any Third-
Party Claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the delivery by the claimant
or plaintiff to the indemnified party of a written release from all
liability in respect of such Third-Party Claim, or (ii) settle or
compromise any Third-Party Claim in any manner that would reasonably
be expected to have a material adverse effect on the indemnified
party.
Section 10.5. Certain Limitations. (a) The amount of any Covered
Liabilities for which indemnification is provided under this Agreement
shall be net of any amounts actually recovered by the indemnified
party from third parties (including amounts actually recovered under
insurance policies) with respect to such Covered Liabilities. Any
indemnifying party hereunder shall be subrogated to the rights of the
indemnified party upon payment in full of the amount of the relevant
indemnifiable loss. An insurer who would otherwise be obligated to
pay any claim shall not be relieved of the responsibility with respect
thereto or, solely by virtue of the indemnification provision hereof,
have any subrogation rights with respect thereto. If any indemnified
party recovers an amount from a third party in respect of an
indemnifiable loss for which indemnification is provided in this
Agreement after the full amount of such indemnifiable loss has been
paid by an indemnifying party or after an indemnifying party has made
a partial payment of such indemnifiable loss and the amount received
from the third party exceeds the remaining unpaid balance of such
indemnifiable loss, then the indemnified party shall promptly remit to
the indemnifying party the excess of (A) the sum of the amount
theretofore paid by such indemnifying party in respect of such
indemnifiable loss plus the amount received from the third party in
respect thereof, less (B) the full amount of such Covered Liabilities.
(b) The amount of any Covered Liabilities for which
indemnification is provided under this Agreement shall be (i)
increased to take account of any net Tax cost incurred by the
indemnified party arising from the receipt or accrual of an
indemnification payment hereunder (grossed up for such increase), and
(ii) reduced to take account of any net Tax benefit realized by the
indemnified party arising from incurring or paying such loss or other
liability. In computing the amount of any such Tax cost or Tax
benefit, the indemnified party shall be deemed to recognize all other
items of income, gain, loss, deduction or credit before recognizing
any item arising from the receipt or accrual of any indemnification
payment hereunder or incurring or paying any indemnified loss. Any
indemnification payment hereunder shall initially be made without
regard to this Section 10.5(b) and shall be increased or reduced to
reflect any such net Tax cost (including gross-up) or net Tax benefit
only after the indemnified party has actually realized such cost or
benefit. For purposes of this Agreement, an indemnified party shall
be deemed to have "actually realized" a net Tax cost or a net Tax
benefit to the extent that, and at such time as, the amount of Taxes
payable by such indemnified party is increased above or reduced below,
as the case may be, the amount of Taxes that such indemnified party
would be required to pay but for the receipt or accrual of the
indemnification payment or the incurrence or payment of such Loss, as
the case may be. The amount of any increase or reduction hereunder
shall be adjusted to reflect any Final Determination with respect to
the indemnified party's liability for Taxes, and payments between such
indemnified parties to reflect such adjustment shall be made if
necessary.
(c) The amount of any other liability for which indemnification
is provided under this Agreement shall be treated by Buyer and Seller
as an adjustment to the total Purchase Price, and Seller and Buyer
agree not to take any position inconsistent therewith for any purpose.
Article XI.
Termination
Section 11.1. Termination. This Agreement may be terminated at
any time prior to the Closing by:
(a) The mutual written consent of Seller and Buyer; or
(b) Either Seller or Buyer if the Closing has not occurred by
the close of business on January 31, 1999, and if the failure to
consummate the Stock Purchase on or before such date did not result
from the failure by the party seeking termination of this Agreement to
fulfill any undertaking or commitment provided for herein that is
required to be fulfilled prior to Closing.
(c) Seller, provided it is not then in breach of any of its
obligations hereunder, if Buyer fails to perform in any material
respect any covenant in this Agreement when performance thereof is due
or Buyer shall have breached in any material respect any of the
representations or warranties contained in this Agreement and does not
cure the failure or breach within thirty (30) business days after
Seller delivers written notice thereof; or
(d) Buyer, provided it is not then in breach of any of its
obligations hereunder, if Seller fails to perform in any material
respect any covenant in this Agreement when performance thereof is due
or Seller shall have breached in any material respect any of the
representations and warranties contained in this Agreement and does
not cure the failure or breach within thirty (30) business days after
Buyer delivers written notice thereof.
Section 11.2. Procedure and Effect of Termination. In the event
of termination of this Agreement by either or both of Seller and Buyer
pursuant to Section 11.1, written notice thereof shall forthwith be
given by the terminating party to the other party hereto, and this
Agreement shall thereupon terminate and become void and have no
effect, and the transactions contemplated hereby shall be abandoned
without further action by the parties hereto, except that the
provisions of Sections 5.1(b) and 12.4 shall survive the termination
of this Agreement; provided, however, that such termination shall not
relieve any party hereto of any liability for any breach of this
Agreement. If this Agreement is terminated as provided herein, all
filings, applications and other submissions made pursuant to Section
5.2 shall, to the extent practicable, be withdrawn from the agency or
other persons to which they were made.
Article XII.
Miscellaneous
Section 12.1. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the
same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to
the other party.
Section 12.2. Governing Law; Consent to Jurisdiction. This
Agreement shall be governed by and construed in accordance with the
laws of the State of New York without reference to the choice of law
principles thereof
Section 12.3. Entire Agreement. This Agreement (including
agreements incorporated herein), the Collateral Documents and the
Schedules hereto contain the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements,
understandings, representations or warranties between the parties
other than those set forth or referred to herein.
Section 12.4. Expenses. Except as set forth in this Agreement,
whether the Stock Purchase is or is not consummated, all legal and
other costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
Section 12.5. Notices. All notices hereunder shall be
sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service
or, to the extent receipt is confirmed, telecopy, telefax or other
electronic transmission service to the appropriate address or number
as set forth below. Notices to Seller shall be addressed to:
Raytheon Company
141 Spring Street
Lexington, Massachusetts 02173
Attention: General Counsel
Telecopy No: (617) 860-2924
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: William J. Curry, Esq.
Telecopy No: (617) 338-2880
or at such other address and to the attention of such other Person as
Seller may designate by written notice to Buyer. Notices to Buyer
shall be addressed to:
Moog Inc.
Corporate Offices
Plant 24
East Aurora, New York 14052
Attention: President and Chief Executive Officer Telecopy No:
(716) 687-4457
with a copy to:
Phillips Lytle Hitchcock Blaine & Huber LLP
3400 Marine Midland Center
Buffalo, New York 14203
Attention: John B. Drenning, Esq.
Telecopy No: (716) 852-6100
or at such other address and to the attention of such other Person as
Buyer may designate by written notice to Seller.
Section 12.6. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no party
hereto will assign its rights or delegate its obligations under this
Agreement without the express prior written consent of each other
party hereto, except that Seller may assign this Agreement to any
Entity that succeeds to substantially all of Seller's assets and
liabilities and Buyer may assign this Agreement to a wholly owned
subsidiary of Buyer, provided that any such assignment shall not
relieve Buyer of its obligations under the Agreement.
Section 12.7. Headings: Definitions. The section and article
headings contained in this Agreement are inserted for convenience of
reference only and will not affect the meaning or interpretation of
this Agreement. All references to Sections or Articles contained
herein mean Sections or Articles of this Agreement unless otherwise
stated.
Section 12.8. Amendment. This Agreement may not be amended,
modified, superseded, cancelled, renewed or extended except by a
written instrument making specific reference to this Agreement signed
by Seller and Buyer.
Section 12.9. Waiver; Effect of Waiver. No provision of this
Agreement may be waived except by a written instrument signed by the
party waiving compliance. No waiver by any party hereto of any of the
requirements hereof or of any of such party's rights hereunder shall
release the other parties from full performance of their remaining
obligations stated herein. No failure to exercise or delay in
exercising on the part of any party hereto any right, power or
privilege of such party shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege by such party.
Section 12.10. Interpretation; Absence of Presumption. (a) For
the purposes hereof (i) the terms "hereof", "herein," and "herewith"
and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the
Schedules hereto) and not to any particular provision of this
Agreement, and Article, Section, paragraph and Schedule references are
to the Articles, Sections, paragraphs and Schedules to this Agreement
unless otherwise specified, (ii) the word "including" and words of
similar import when used in this Agreement means "including, without
limitation," unless the context otherwise requires or unless otherwise
specified, (iii) the word "or" shall not be exclusive, (iv) provisions
shall apply, when appropriate, to successive events and transactions,
and (v) all references to any period of days shall be deemed to be to
the relevant number of calendar days.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against
the party drafting or causing any instrument to be drafted.
(c) For the purposes of this Agreement, a "subsidiary" of a
Person shall mean any entity a majority of the capital stock
ordinarily entitled to vote for the election of directors of which, or
if no such voting stock is outstanding, a majority of the equity
interests of which, is owned directly or indirectly, legally or
beneficially, by such Person or any other Person controlled by such
Person.
Section 12.11. Specific Performance. The parties hereto each
acknowledge that, in view of the uniqueness of the subject matter
hereof, the parties hereto would not have an adequate remedy at law
for money damages in the event that this Agreement were not performed
in accordance with its terms, and therefore agree that the parties
hereto shall be entitled to specific enforcement of the terms hereof
in addition to any other remedy to which the parties hereto may be
entitled at law or in equity.
Section 12.12. Remedies Cumulative. Except as otherwise provided
in Article 11, all rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning
of the exercise of any thereof by any party shall not preclude the
simultaneous or later exercise of any other such right, power or
remedy by such party. Notwithstanding the foregoing, however, no
remedy under this Agreement or at law or in equity shall include,
provide for or permit the payment of multiple, exemplary, punitive or
consequential damages or any equitable equivalent thereof or
substitute therefor, and the burden shall be on the party claiming
loss to show actual loss in the amount claimed.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered, as an instrument under seal, in their
names and on their behalf by their respective officers, thereunto duly
authorized, on and as of the date first set forth above.
SELLER:
RAYTHEON AIRCRAFT COMPANY
By:/s/James E. Gray
Name: James E. Gray
Title: Vice President and
Chief Financial Officer
BUYER:
MOOG INC.
By:/s/Robert R. Banta
Name: Robert R. Banta
Title: Executive Vice President
and Chief Financial
Officer