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Exhibit 10(b)
CONFORMED COPY
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AGREEMENT AND PLAN OF DISTRIBUTION
dated as of December 6, 1996
among
ROCKWELL INTERNATIONAL CORPORATION,
NEW ROCKWELL INTERNATIONAL CORPORATION
ALLEN-BRADLEY COMPANY, INC.,
ROCKWELL COLLINS, INC.,
ROCKWELL SEMICONDUCTOR SYSTEMS, INC.,
ROCKWELL LIGHT VEHICLE SYSTEMS, INC.
and
ROCKWELL HEAVY VEHICLE SYSTEMS, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.......................... 2
1.1. Definitions.......................... 2
ARTICLE II CONTRIBUTION AND ASSUMPTION.......... 13
2.1. Contribution......................... 13
2.2. Assumption of Liabilities............ 17
2.3. Transfer and Assumption
Documentation..................... 20
2.4. Nonassignable Contracts.............. 20
2.5. Intercompany Arrangements............ 21
ARTICLE III RECAPITALIZATION OF NEWCO; MECHANICS
OF DISTRIBUTION...................... 22
3.1. Newco Capitalization................. 22
3.2. Recapitalization of Newco............ 22
3.3. Mechanics of Distribution............ 22
3.4. Timing of Distribution............... 23
ARTICLE IV OTHER AGREEMENTS..................... 23
4.1. Employment........................... 23
4.2. Cross-License of Intellectual
Property.......................... 25
4.3. Use of Names, Trademarks, etc........ 26
4.4. Further Assurances................... 29
4.5. Cooperation.......................... 29
ARTICLE V TAX MATTERS.......................... 30
5.1. Tax Allocation....................... 30
5.2. Tax Matters ......................... 30
5.3. Transfer Taxes....................... 30
ARTICLE VI MUTUAL RELEASE....................... 30
6.1. Mutual Release, etc.................. 30
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Page
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ARTICLE VII ACCESS TO INFORMATION....................... 32
7.1. Provision of Corporate Records....... 32
7.2. Access to Information................ 32
7.3. Production of Witnesses.............. 34
7.4. Retention of Records................. 35
7.5. Confidentiality...................... 35
ARTICLE VIII EMPLOYEE BENEFIT PLANS...................... 36
8.1. Employee Benefits Generally.......... 36
8.2. Retirement Plans..................... 36
8.3. Savings Plans........................ 43
8.4. Deferred Compensation Plans and
Nonqualified Retirement and
Savings Plans..................... 44
8.5. Employee Stock Options............... 46
8.6. Long-Term Incentive Plan............. 46
8.7. Welfare Benefit Plans................ 47
8.8. Retiree Medical and Life Insurance... 49
8.9. Retention and Severance
Obligations....................... 50
8.10. Free-Standing Plans ................ 51
8.11. Employment, Consulting and Severance
Agreements ...................... 51
8.12. Welfare Plan Funding................ 52
8.13. Indemnification..................... 54
8.14. Cooperation ........................ 55
8.15. Amendment, Modification or
Termination of Benefits Plan..... 55
ARTICLE IX CONDITIONS.................................. 55
9.1. Conditions to Obligations of the
Company........................... 55
ARTICLE X MISCELLANEOUS AND GENERAL................... 56
10.1. Modification or Amendment........... 56
10.2. Waiver; Remedies.................... 56
10.3. Counterparts........................ 57
10.4. Governing Law....................... 57
10.5. Notices............................. 57
10.6. Entire Agreement.................... 58
10.7. Certain Obligations................. 58
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Page
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10.8. Assignment........................... 58
10.9. Captions............................. 59
10.10. Specific Performance................. 59
10.11. Severability......................... 59
10.12. Third Party Beneficiaries............ 59
10.13. Schedules............................ 60
10.14. Consent to Jurisdiction.............. 60
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AGREEMENT AND PLAN OF DISTRIBUTION, dated as of December 6, 1996
(this "Agreement"), among ROCKWELL INTERNATIONAL CORPORATION, a Delaware
corporation (the "Company"), NEW ROCKWELL INTERNATIONAL CORPORATION, a Delaware
corporation ("Newco"), ALLEN-BRADLEY COMPANY, INC., a Wisconsin corporation
("A-B"), ROCKWELL COLLINS, INC., a Delaware corporation ("Collins"), ROCKWELL
SEMICONDUCTOR SYSTEMS, INC., a Delaware corporation ("RSS"), ROCKWELL LIGHT
VEHICLE SYSTEMS, INC., a Delaware corporation ("LVS"), and ROCKWELL HEAVY
VEHICLE SYSTEMS, INC., a Delaware corporation ("HVS"; and together with A-B,
Collins, RSS and LVS, the "Operating Subsidiaries").
W I T N E S S E T H :
WHEREAS, the Company, The Boeing Company, a Delaware corporation
("Acquiror"), and Boeing NA, Inc., a Delaware corporation and a wholly-owned
subsidiary of Acquiror ("Sub"), have entered into an Agreement and Plan of
Merger dated as of July 31, 1996 (the "Merger Agreement"), providing for the
Merger (as defined in the Merger Agreement) of Sub with and into the Company;
WHEREAS, immediately prior to the Conversion (as defined in the
recitals to the Merger Agreement), the Company's Board of Directors, subject to
the approval of the Company's stockholders, expects to distribute to the
holders of Common Stock, par value $1.00 per share, of the Company ("Company
Common Stock") and Class A Common Stock, par value $1.00 per share, of the
Company ("Company Class A Common Stock"), other than shares held in the
treasury of the Company, on a pro rata basis all of the issued and outstanding
shares of Common Stock, par value $1.00 per share, of Newco ("Newco Common
Stock") and Class A Common Stock, par value $1.00 per share, of Newco ("Newco
Class A Common Stock"), in each case with the associated Rights (as defined in
Section 1.1) (the "Distribution");
WHEREAS, immediately prior to the Distribution, the Company's Board
of Directors, subject to the approval of the Company's stockholders, expects to
cause (i) the Company to contribute certain assets to the Operating
Subsidiaries as a capital contribution or in exchange for shares of their
stock, (ii) the Company to contribute the stock of the Operating Subsidiaries
and certain other assets to Newco as a capital contribution and (iii) Newco and
the Operating Subsidiaries to assume certain liabilities of the Company,
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all as more specifically provided herein (the transactions described in clauses
(i), (ii) and (iii) are referred to collectively as the "Contribution");
WHEREAS, the purpose of the Distribution is to make possible the
Merger by divesting the Company of the businesses and operations to be
conducted by Newco and the Operating Subsidiaries, which Acquiror is unwilling
to acquire;
WHEREAS, it is the intention of the parties to this Agreement that
the Contribution and Distribution will qualify as transactions described in
Sections 351 and Section 355 of the Internal Revenue Code of 1986, as amended
(the "Code") and/or a "reorganization" within the meaning of Section
368(a)(1)(D) of the Code; and
WHEREAS, this Agreement sets forth or provides for certain agreements
by and among the Company, Newco and the Operating Subsidiaries in consideration
of the separation of the ownership of the Company and Newco;
NOW, THEREFORE, in consideration of the premises, and of the
respective covenants and agreements set forth herein, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings assigned to such terms in the
Merger Agreement. As used in this Agreement, the following terms shall have the
following respective meanings:
"A-B Business" shall mean the business heretofore and currently
engaged in by the Company and its Subsidiaries and their respective
predecessors of designing, building, selling, installing, modifying, repairing,
servicing and supporting automation products and systems, including, without
limitation, programmable controllers, human/machine interface devices,
communications networks, programming and application software, AC/DC drives and
drive systems, sensing and motion control devices, machine vision products,
computer numeric control systems, data acquisition products, standard and
engineered motors, mechanical power
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transmission equipment, and support services for all of the foregoing, and
activities related thereto, and shall include any former or discontinued
operations primarily related to the A-B Business as previously conducted.
"Accrued Interest" shall mean all accrued and unpaid interest on the
Company Debt to the Closing Date other than accretion on commercial paper to
the extent such accretion is included in Company Debt.
"Additional Retained Facilities" shall mean the Company's Seal Beach,
California world headquarters, the Company's Systems Development Center, the
Company's Information Systems Center and the Company's Government Affairs,
Marketing and International Offices located in Washington, D.C. (Arlington, VA)
and related international and field offices listed on Schedule 2.1(b)(i)(D).
"Aerospace Business" shall mean the business heretofore and currently
engaged in by the Company and its Subsidiaries and their respective
predecessors of designing, building, selling, installing, modifying, repairing,
servicing and supporting spacecraft, liquid-fueled rocket engines, military and
civilian aircraft, tactical weapons, unmanned missiles, applied energy
technologies (including, without limitation, solar, kinetic and laser), and
parts, components and materials for the foregoing, contract work for the
National Aeronautics and Space Administration and the Company's interest in
United Space Alliance, LLC, and activities related thereto, and shall include
any former or discontinued operations primarily related to the Aerospace
Business as previously conducted, including, without limitation, the former or
discontinued operations listed on Schedule 1.1(a)(i); provided, however, that
Aerospace Business does not include any part of the Collins Business, any
Contributed A&D Assets or any Divested Business of the Aerospace Business,
including, without limitation, the Divested Businesses listed on Schedule
1.1(a)(ii).
"Affiliate" shall mean, with respect to any specified Person, a
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person; provided, however, that for purposes of this Agreement and the
Post-Closing Covenants Agreement, from and after the Time of Contribution, no
member of either Group shall be deemed to be an Affiliate of any member of the
other Group.
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"Assets" shall mean any and all assets, properties and rights,
whether tangible or intangible, whether real, personal or mixed, whether fixed,
contingent or otherwise, and wherever located, including, without limitation,
the following:
(i) real property interests (including leases), land, plants,
buildings and improvements;
(ii) machinery, equipment, tooling, vehicles, furniture and fixtures,
leasehold improvements, repair parts, tools, plant, laboratory and office
equipment and other tangible personal property, together with any rights
or claims arising out of the breach of any express or implied warranty by
the manufacturers or sellers of any of such assets or any component part
thereof;
(iii) inventories, including raw materials, work-
in-process, finished goods, parts, accessories and supplies;
(iv) cash, bank accounts, notes, loans and accounts receivable
(whether current or not current), interests as beneficiary under letters
of credit, advances and performance and surety bonds;
(v) certificates of deposit, banker's acceptances, shares of stock,
bonds, debentures, evidences of indebtedness, certificates of interest or
participation in profit-sharing agreements, collateral-trust certificates,
preorganization certificates or subscriptions, transferable shares,
investment contracts, voting-trust certificates, puts, calls, straddles,
options, swaps, collars, caps and other securities or hedging arrangements
of any kind;
(vi) financial, accounting and operating data and records including,
without limitation, books, records, notes, sales and sales promotional
data, advertising materials, credit information, cost and pricing
information, customer and supplier lists, reference catalogs, payroll and
personnel records, minute books, stock ledgers, stock transfer records and
other similar property, rights and information;
(vii) patents, patent applications, trademarks, trademark
applications and registrations, trade names,
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service marks, service names, copyrights and copyright applications and
registrations, commercial and technical information including engineering,
production and other designs, drawings, specifications, formulae,
technology, computer and electronic data processing programs and software,
inventions, processes, trade secrets, know-how, confidential information
and other proprietary property, rights and interests;
(viii) agreements, leases, contracts, sale orders, purchase orders,
open bids and other commitments and all rights therein;
(ix) prepaid expenses, deposits and retentions held by third parties;
(x) claims, causes of action, choses in action, rights under
insurance policies, rights under express or implied warranties, rights of
recovery, rights of set-off, rights of subrogation and all other rights
of any kind;
(xi) licenses, franchises, permits, authorizations and approvals; and
(xii) goodwill and going concern value.
"Collins Business" shall mean the business heretofore and currently
engaged in by the Company and its Subsidiaries and their respective
predecessors of designing, building, selling, installing, modifying, repairing,
servicing and supporting avionics, communication and navigation products and
systems and parts, components and materials for the foregoing, including
without limitation: electronic equipment for flight control, cockpit display,
navigation, voice and data communication, cockpit management, radar, global
positioning and other systems for airlines, corporate aircraft, government and
military applications; call center products and systems; mobile communication
and information systems to the land transportation market (including the
Company's Automatic Vehicle Locating System and Vision Sensor Initiatives
Programs) and flat panel displays and other optical components, and activities
related thereto, and shall include the Collins Avionics and Communications
Division, Collins Commercial Avionics, the Communication Systems Division and
any former or discontinued operations primarily related to the Collins Business
as previously conducted;
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provided, however, that Collins Business does not include Collins International
Service Company located at 3200 East Renner Road, Richardson, Texas, Rockwell
Australia Limited and its Subsidiaries or any business thereof (which shall
constitute part of the Defense Business); provided, further, however, that the
Collins Business shall include the Tullamarine Service Center.
"Communication Systems Division" shall mean the business heretofore
and currently engaged in by the Company and its Subsidiaries and their
respective predecessors of designing, building, selling, installing, modifying,
repairing, servicing and supporting information message handling and
communication systems and products that support command, control and
communications for land, sea and air applications, including without
limitation: integrated command and control systems for military and civilian
agencies; fixed and airborne VLF communications; multispectrum tactical HF
through satellite communications for fixed and transportable applications;
satellite communications through the EHF band; airborne communication systems
including platform integration; avionics and special mission systems
integration and aircraft modification; medical information systems; global
private networks; satellite-based air traffic management and worldwide service
and support for operations and maintenance, construction and EF&I (engineer,
furnish and install), and activities related thereto, and shall include any
former or discontinued operations primarily related to the Communication
Systems Division as previously conducted; provided, however, that the
Communication Systems Division does not include Collins International Service
Company located at 3200 East Renner Road, Richardson, Texas, Rockwell Australia
Limited and its Subsidiaries or any business thereof (which shall constitute
part of the Defense Business).
"Company Debt" shall mean indebtedness of the Company in an aggregate
principal amount of $2,165,000,000, consisting of:
(i) Old Company Notes in the aggregate principal amount of
$1,600,000,000, as the same may be amended pursuant to the Consent
Solicitation;
(ii) commercial paper or other short-term borrowings in the aggregate
principal amount of $565,000,000 (with respect to commercial paper issued
at a discount, the accreted value at the Closing Date
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shall be deemed to be the principal amount thereof), less the aggregate
principal amount of any outstanding Rockwell Australia Debt (as defined
below), or any indebtedness issued in replacement thereof or in exchange
therefor; and
(iii) bank borrowings of Rockwell Australia Limited in the aggregate
principal amount of not more than a United States dollar equivalent of
$30,000,000 (the "Rockwell Australia Debt") (it being understood that it
is the current intention of the Company to repay the Rockwell Australia
Debt prior to the Time of Contribution);
provided that no short-term debt other than commercial paper shall constitute
"Company Debt" unless it is prepayable in full at any time without premium or
penalty and no commercial paper shall constitute "Company Debt" unless it
matures or is payable or prepayable in full within 60 days after the Effective
Time without premium or penalty.
For purposes of calculating the United States dollar equivalent of any Rockwell
Australia Debt, the New York foreign exchange selling rate applicable to
Australian dollars as published in The Wall Street Journal, Eastern Edition,
for the second business day preceding the Closing Date shall be used.
"Company Group" shall mean the Company and its Subsidiaries, other
than Newco and its Subsidiaries (determined after giving effect to the
transfers contemplated by Article II of this Agreement).
"Contributed A&D Assets" shall have the meaning set forth in Section
2.1(a)(vii).
"DOE" shall mean the United States Department of Energy or any
predecessor Governmental Entity.
"Defense Business" shall mean the business heretofore and currently
engaged in by the Company and its Subsidiaries (including, without limitation,
Collins International Service Company and Rockwell Australia Limited but
excluding the Tullamarine Service Center) and their respective predecessors of
designing, building, selling, installing, modifying, repairing, servicing and
supporting the following for defense markets: aircraft electronic upgrades and
modifications, tactical weapons, space defense
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sensors and electronics, navigation and guidance systems for strategic
missiles, tactical weapons, ships and submarines, naval combat systems for
ships and submarines, proprietary programs, and parts, components and materials
for the foregoing, and activities related thereto, and shall include any former
or discontinued operations primarily related to the Defense Business as
previously conducted, including, without limitation, the former or discontinued
operations listed on Schedule 1.1(b)(i); provided, however, that the Defense
Business does not include any part of the Collins Business (including the
Company's Automatic Vehicle Locating System and Vision Sensor Initiatives
Programs heretofore conducted by the Autonetics & Missile Systems Division of
the Company), any Contributed A&D Assets or any Divested Business of the
Defense Business, including, without limitation, the Divested Businesses listed
on Schedule 1.1(b)(ii).
"Divested Business" shall mean any corporation, division or other
business unit (including any Assets and Liabilities comprising the same) that
has been sold, conveyed, assigned, transferred or otherwise divested, in whole
or in part, by the Company or any of its Subsidiaries to any third party prior
to the Time of Contribution, but shall not include any corporation, division,
other business unit, product line or contract the operations or production of
which has been discontinued, completed or otherwise terminated by the Company
or any of its Subsidiaries, but not sold, conveyed, assigned, transferred or
otherwise divested to a third party.
"Environmental Law" shall mean any Federal, state, local or foreign
statute, law, regulation, rule or common law of, or any judgment, injunction,
order or decree of or settlement agreement with, any Governmental Entity,
relating to (x) the protection of the environment or (y) the use, storage,
treatment, generation, transportation, processing, handling, release or
disposal of Hazardous Substances, in each case as in effect on the date hereof
or in the future.
"Environmental Liabilities" shall mean all Liabilities relating to or
arising out of any Environmental Law or contract or agreement relating to
environmental, health or safety matters (including removal, remediation or
cleanup costs, investigatory costs, governmental response costs and
administrative oversight costs, environmental monitoring costs, natural
resources damages, property damages, personal injury damages, costs of medical
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monitoring, costs of compliance with any settlement, judgment or other
determination of Liability and indemnity, contribution or similar obligations)
irrespective of whether such Liabilities are asserted, in the first instance,
to be the responsibility of a Governmental Entity or any other Person.
"Group" shall mean the Company Group or the Newco Group.
"HVS Business" shall mean the business heretofore and currently
engaged in by the Company and its Subsidiaries and their respective
predecessors of designing, building, selling, installing, modifying, repairing,
servicing and supporting drivetrain components and systems for heavy- and
medium-duty commercial trucks, trailers, buses, off-highway commercial vehicles
and government heavy-duty wheeled vehicles, and activities related thereto, and
shall include any former or discontinued operations primarily related to the
HVS Business as previously conducted.
"Information" shall mean all records, books, contracts, instruments,
computer data and other data and information.
"Liabilities" shall mean any and all debts, liabilities, commitments
and obligations, whether fixed, contingent or absolute, matured or unmatured,
liquidated or unliquidated, accrued or not accrued, known or unknown, whenever
or however arising and whether or not the same would be required by generally
accepted accounting principles to be reflected in financial statements or
disclosed in the notes thereto.
"Litigation Matters" shall mean actual, threatened or future
litigations, investigations, proceedings (including arbitration proceedings),
claims or other legal matters that have been or may be asserted by or against,
or otherwise affect, the Company and/or Newco (or members of either Group).
"LVS Business" shall mean the business heretofore and currently
engaged in by the Company and its Subsidiaries and their respective
predecessors of designing, building, selling, installing, modifying, repairing,
servicing and supporting sunroof, door access control and seat adjusting
systems, suspensions and wheels, anti-squeeze windows, electronic controls and
automobile global positioning
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systems for passenger car and light truck industries, and activities related
thereto, and shall include any former or discontinued operations primarily
related to the LVS Business as previously conducted.
"Newco Group" shall mean Newco and its Subsidiaries, including the
Operating Subsidiaries (determined after giving effect to the transfers
contemplated by Article II of this Agreement).
"Paydown Amount" shall be the excess, if any, of $2.165 billion over
the aggregate principal amount of the Company Debt at the Effective Time
(calculated as set forth in the definition of Company Debt).
"Person" shall mean an individual, a partnership, a joint venture, a
corporation, a limited liability entity, a trust, an unincorporated
organization or other entity or a government or any department or agency
thereof.
"Preexisting Environmental Conditions" shall mean conditions of the
environment (including ambient air, the ocean, natural resources (including
flora and fauna), soil, surface water, groundwater (including potable water,
navigable water and wetlands), the land surface or subsurface strata or as
otherwise defined in any Environmental Law) existing at the Time of
Contribution relating to or arising from the presence, use, treatment, or
Release or threatened Release of any Hazardous Substance but does not include
any Special Liabilities. For purposes of the definition of the term
"Preexisting Environmental Condition", the term "Hazardous Substance" shall
include any waste, substance, material, pollutant or contaminant now, or in the
future, listed, defined, designated or classified as hazardous, toxic or
radioactive, or otherwise regulated, now or in the future, under any
Environmental Law, and any waste, material or substance contaminated by, or
alleged to be contaminated by, any Hazardous Substance.
"Privileged Information" shall mean, with respect to either Group,
Information regarding a member of such Group, or any of its operations,
employees, Assets or Liabilities (whether in documents or stored in any other
form or known to its employees or agents) that is or may be protected from
disclosure pursuant to the attorney-client privilege, the work product doctrine
or other applicable privileges, that a member of the other Group may come into
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possession of or obtain access to pursuant to this Agreement or
otherwise.
"Release" shall have the same meaning given such term in the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. ss. 9601(22).
"Representatives" shall mean directors, officers, employees, agents,
consultants, advisors, accountants, attorneys and representatives.
"Retained Facilities" shall mean the Company's facilities identified
on Schedule 2.1(b)(i)(A) and all buildings, improvements and fixtures at such
facilities.
"Right" shall mean a preferred share purchase right issued pursuant
to the Rights Agreement dated as of November 30, 1996 between Newco and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
"Science Center" shall mean the Company's Science Center located at
1049 Camino Dos Rios, Thousand Oaks, California and other related facilities
located at Suite 400, 444 High Street, Palo Alto, California and Building 241,
3370 Miraloma Avenue, Anaheim, California.
"Semiconductor Systems Business" shall mean the business heretofore
and currently engaged in by the Company and its Subsidiaries and their
respective predecessors of designing, building, selling, installing, modifying,
repairing, servicing and supporting semiconductors for fax, voice and data
modems for fax machines, personal computers and other uses, chipsets for
cellular and cordless phones, wireless modem devices for laptop computers and
modules for global positioning system receivers, and activities related
thereto, and shall include any former or discontinued operations primarily
related to the Semiconductor Systems Business as previously conducted.
"Special Liabilities" shall mean any Liabilities of the Company or
any of its Subsidiaries (including any Environmental Liability) arising out of
or relating to (i) the Rocky Flats Plant, Golden, Colorado, (ii) the Hanford
Nuclear Reservation, Hanford, Washington, (iii) the INEL complex in Idaho, (iv)
the Company's or any of its Subsidiaries decontamination and decommissioning
work at various atomic or nuclear facilities throughout the United
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States (excluding, for purposes of the definition of Special Liabilities only,
Santa Susana and Canoga Park, California) and (v) the Company's work relating
to Interatom (Internationale Atomreaktorbau GmbH), and any Liabilities of the
Company or any of its Subsidiaries (including any Environmental Liabilities),
arising out of or relating to any products manufactured or any services
provided by the Company or any of its Subsidiaries which involved the use,
storage, treatment, generation, transportation, processing, handling, release
or disposal of radioactive, fissionable or fusionable materials or any waste
products or by-products of any process involving radioactive, fissionable or
fusionable materials (other than activities of the Company and its Subsidiaries
at Santa Susana and Canoga Park, California).
"Tax" or "Taxes" shall have the meaning assigned to such term in the
Tax Allocation Agreement.
"Time of Contribution" shall mean the time immediately prior to the
Time of Distribution as of which the Contribution is effective.
"Time of Distribution" shall mean the time as of which the
Distribution is effective.
"Transfer Agent" shall mean ChaseMellon Shareholder Services, L.L.C.,
P.O. Box 444, Pittsburgh, Pennsylvania 15230-0444 or 120 Broadway, 33rd Floor,
New York, New York 10271, telephone (800) 204-7800, the transfer agent for the
Company Common Stock and Company Class A Common Stock.
ARTICLE II
CONTRIBUTION AND ASSUMPTION
2.1. Contribution.
(a) Subject to Section 2.1(b) and effective as of the Time of
Contribution, the Company hereby contributes, grants, conveys, assigns,
transfers and delivers to Newco and the Operating Subsidiaries all the
Company's right, title and interest in and to any and all Assets of the
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Company (collectively, the "Contributed Assets"), allocated as follows or as
Newco shall otherwise direct:
(i) all Assets of the Company that are used primarily or that are
held primarily for use in the A-B Business (other than the capital stock
of A-B) and all of the issued and outstanding shares of capital stock of
Reliance Electric Company, a Delaware corporation, are contributed to A-B
as a capital contribution;
(ii) all Assets of the Company that are used primarily or that are
held primarily for use in the Collins Business are contributed to Collins
in exchange for 1,000 shares of the Common Stock, par value $1.00 per
share, of Collins, constituting all of the outstanding shares of Collins;
(iii) all Assets of the Company that are used primarily or that are
held primarily for use in the Semiconductor Systems Business and all of
the issued and outstanding shares of capital stock of Brooktree
Corporation, a California corporation, are contributed to RSS in exchange
for 1,000 shares of the Common Stock, par value $1.00 per share, of RSS,
constituting all of the outstanding shares of RSS;
(iv) all Assets of the Company that are used primarily or that are
held primarily for use in the LVS Business are contributed to LVS in
exchange for 1,000 shares of the Common Stock, par value $1.00 per share,
of LVS, constituting all of the outstanding shares of LVS;
(v) all Assets of the Company that are used primarily or that are
held primarily for use in the HVS Business are contributed to HVS in
exchange for 1,000 shares of the Common Stock, par value $1.00 per share,
of HVS, constituting all of the outstanding shares of HVS;
(vi) [intentionally omitted];
(vii) the Company's properties at El Segundo, California, Lakewood,
California, and Building 37 at Canoga Park, California more specifically
identified on Schedule 2.1(a)(vii) (collectively, the "Contributed A&D
Assets") are contributed to A-B as a capital contribution;
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(viii) the Science Center (other than physical assets related to
extrinsic silicon detectors and MEMS gyros located at Building 241, 3370
Miraloma Avenue, Anaheim, California, which shall constitute Retained
Assets) is contributed to Newco as a capital contribution;
(ix) all issued and outstanding shares of Atomics
International, Inc., Narland Corporation and Rockwell Aerospace &
Electronics, Inc. are contributed to Newco as a capital contribution;
(x) the Health Care Claims (as defined in the Post-Closing Covenants
Agreement) are contributed to Newco as a capital contribution; and
(xi) immediately following the contributions referred to in clauses
(i) through (x) above, all of the issued and outstanding shares of Common
Stock of A-B, Collins, RSS, LVS, HVS and all other Assets of the Company
(other than the Retained Assets) not otherwise specifically contributed to
an Operating Subsidiary pursuant to this Section 2.1(a), including (x) all
cash and cash equivalents of the Company and its Subsidiaries (other than
as listed on Schedule 2.1(b)(i)(C) and other than cash (including for this
purpose cash held by Rockwell Australia Limited in an amount not to exceed
the aggregate outstanding principal amount of the Rockwell Australia Debt)
in an amount equal to the excess, if any, of (A) the sum of (1) $4,320,000
and (2) the Accrued Interest over (B) the Paydown Amount), and (y) the
Company's rights under Article II of the Merger Agreement, the last
sentence of Section 3.1 of the Merger Agreement, Section 4.2(j) of the
Merger Agreement, Section 4.2(d)(iii) of the Merger Agreement, the second
sentence of Section 5.9(a) of the Merger Agreement, Section 5.13(a) of the
Merger Agreement, Section 5.18 of the Merger Agreement and Section 8.17 of
the Merger Agreement, are contributed to Newco as a capital contribution.
If any Assets that are used primarily or that are held primarily for
use in the A-B Business, the Collins Business, the Semiconductor Systems
Business, the LVS Business or the HVS Business are held in a Subsidiary of the
Company that would not be owned directly or indirectly by A-B, Collins, RSS,
LVS or HVS, respectively, as a result of
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the foregoing allocation, then, notwithstanding the foregoing allocation, the
Company shall cause each such Subsidiary to contribute such Assets to the
appropriate Operating Subsidiary or a Subsidiary thereof or as Newco otherwise
directs.
(b) Notwithstanding Section 2.1(a), the Company hereby retains and
does not contribute to Newco or the Operating Subsidiaries all the Company's
right, title and interest in and to the following Assets (collectively, the
"Retained Assets"):
(i) all the Company's right, title and interest (including minority
interests) in and to (A) all Assets of the Company or any of its
Subsidiaries that are used primarily in or that are held primarily for use
in or that are otherwise necessary for the operation, as presently
conducted, of (1) the Aerospace Business and the Defense Business,
including, without limitation, in the Company's Autonetics and Missile
Systems Division, the Company's North American Aircraft Division, the
Company's North American Aircraft Modification Division, the Company's
Rocketdyne Division, the Company's Space Systems Division and the
Company's Airborne Laser Program (excluding the Communication Systems
Division, but including Collins International Service Company and Rockwell
Australia Limited), and including, without limitation, the Retained
Facilities, and (2) the Additional Retained Facilities (other than
miscellaneous furnishings, artwork, computers and other equipment and
personal property used by Company employees who will become Newco Group
Continuing Employees following the Time of Contribution), (B) an undivided
one-half interest in the helicopters and corporate jet aircraft included
on Schedule 2.1(b)(i)(B), and (C) whether or not included within the
Assets set forth in clause (A) above, all Assets (including, without
limitation, capital stock and partnership interests) reflected on the June
30 Balance Sheet, as such Assets may have been added to, sold in the
ordinary course of business or otherwise changed since such date;
provided, however, that cash or cash equivalents (other than as listed on
Schedule 2.1(b)(i)(C) and cash (including for this purpose cash held by
Rockwell Australia Limited in an amount not to exceed the aggregate
outstanding principal amount of the Rockwell Australia Debt) in an amount
equal to the excess, if any, of (D) the sum of
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(1)$4,320,000 and (2) the Accrued Interest over (E) the Paydown Amount),
the Contributed A&D Assets, the assets associated with services to be
provided by Newco pursuant to Schedule 3.4 of the Post-Closing Covenants
Agreement and the assets associated with the headquarters functions
described in the Retained Business Audited Financial Statements shall not
constitute Retained Assets;
(ii) all issued and outstanding shares of capital stock of the
Subsidiaries of the Company identified on Schedule 2.1(b)(ii) (the
"Retained Subsidiaries");
(iii) all rights in and use of the names "Autonetics",
"North American Aviation" and "Rocketdyne" and all derivatives thereof;
(iv) all rights of the Company under the Reorganization Agreements
(including the Merger Agreement), except as otherwise specifically
provided therein and except that the Company's rights under Section
2.1(a)(xi)(y) of this Agreement shall not constitute Retained Assets; and
(v) the Environmental Coverage Claims.
If any Assets that are used primarily or that are held primarily for use in or
that are otherwise necessary for the operation, as presently conducted, of the
Aerospace Business, the Defense Business or the Additional Retained Facilities
(other than miscellaneous furnishings, artwork, computers and other equipment
and personal property used by Company employees who will become Newco Group
Continuing Employees following the Time of Contribution and other than the
assets excluded from the definition of Retained Assets by the proviso to
Section 2.1(b)(i)) are held in a Subsidiary of the Company that is not a
Retained Subsidiary, then the Company shall cause each such Subsidiary to
contribute such Assets to the appropriate Retained Subsidiary.
2.2. Assumption of Liabilities.
(a) Subject to Section 2.2(b) and effective as of the Time of
Contribution, Newco and the Operating Subsidiaries, in partial consideration
for the Contribution, hereby unconditionally assume and undertake to pay,
satisfy and discharge when due in accordance with their terms the
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following Liabilities of the Company and any of its Subsidiaries (collectively,
the "Assumed Liabilities"), allocated as follows or as Newco shall otherwise
direct:
(i) all Liabilities relating primarily to or arising
primarily from the A-B Business are assumed by A-B and Newco;
(ii) all Liabilities relating primarily to or arising primarily from
the Collins Business are assumed by Collins and Newco;
(iii) all Liabilities relating primarily to or arising primarily from
the Semiconductor Systems Business are assumed by RSS and Newco;
(iv) all Liabilities relating primarily to or arising
primarily from the LVS Business are assumed by LVS and Newco;
(v) all Liabilities relating primarily to or arising
primarily from the HVS Business are assumed by HVS and Newco;
(vi) [intentionally omitted];
(vii) all Special Liabilities are assumed by Newco;
(viii) all Liabilities (including without limitation indemnification
obligations) relating primarily to or arising primarily from (A) the
reports, registration statements and other documents filed by the Company
with the SEC prior to the Time of Contribution (including the Company's
consolidated financial statements for periods prior to the Time of
Contribution included or incorporated by reference therein) and (B) any
breach or alleged breach by any director of the Company of his fiduciary
duties to the Company and its stockholders occurring at or prior to the
Time of Contribution, in each case referred to in the foregoing clauses
(A) and (B) notwithstanding the fact that such Liabilities may relate
primarily to or arise primarily from the Aerospace Business, the Defense
Business or the Additional Retained Facilities, are assumed by Newco, but
excluding any matter for which the Company would be required to provide
indemnification pursuant to Section 2.2(ii) of the Post-Closing Covenants
Agreement;
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(ix) all Liabilities relating primarily to or arising primarily from
any Divested Business of the Aerospace Business or the Defense Business,
including, without limitation, the Divested Businesses listed on Schedules
1.1(a)(ii) and 1.1(b)(ii), are assumed by Newco;
(x) all Liabilities relating primarily to or arising primarily from
Atomics International, Inc., Narland Corporation and Rockwell Aerospace &
Electronics, Inc. are assumed by Newco;
(xi) all Liabilities relating to the Contributed A&D Assets are
assumed by Newco;
(xii) all Liabilities in respect of indebtedness for borrowed money
(including any guarantees in respect of indebtedness for borrowed money of
any third party of the Company and any of its Subsidiaries) other than the
Company Debt are assumed by Newco;
(xiii) all Liabilities that are contemplated by the Reorganization
Agreements as Liabilities to be retained by any member of the Newco Group,
and any agreements, obligations and Liabilities of the Newco Group under
the Reorganization Agreements (including any Liabilities of the Company
described in Sections 4.1(p) and 5.13 of the Merger Agreement) are assumed
by Newco; and
(xiv) all other Liabilities, other than the Retained Liabilities, are
assumed by Newco.
The Liabilities referred to in clauses (i) - (xiii) above are referred to
collectively as the "Newco Liabilities". If any Liabilities relating primarily
to or arising primarily from the A-B Business, the Collins Business, the
Semiconductor Systems Business, the LVS Business or the HVS Business are
obligations of a Subsidiary of the Company other than A-B, Collins, RSS, LVS or
HVS, or a direct or indirect Subsidiary thereof, as a result of the allocation
of Assets of the Company set forth in Section 2.1, then, notwithstanding the
foregoing allocation or the allocation of Assets of the Company set forth in
Section 2.1, the appropriate Operating Subsidiary or a Subsidiary thereof shall
assume each such Liability.
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(b) Notwithstanding Section 2.2(a), the Company hereby retains, and
Newco and the Operating Subsidiaries do not assume and will have no liability
with respect to, the following Liabilities (collectively, the "Retained
Liabilities"):
(i) the Company Debt, together with the Accrued Interest;
(ii) all Liabilities (A) relating primarily to or arising primarily
from the Aerospace Business or the Defense Business as conducted at any
time prior to, on or after the Time of Contribution or any other Retained
Assets or (B) associated with the current and former operations of the
Additional Retained Facilities; provided, however, that the Retained
Liabilities shall not include any Newco Liabilities; and
(iii) all Liabilities that are contemplated by the Reorganization
Agreements (including the Schedules thereto) (other than the Merger
Agreement) as Liabilities to be retained by any member of the Company
Group, and any agreements, obligations and Liabilities of the Company
Group under the Reorganization Agreements (other than the Merger
Agreement), except as otherwise specifically provided herein or therein
and except for obligations which are required or contemplated to be
performed prior to the Effective Time.
If any Liabilities relating primarily to or arising primarily from the
Aerospace Business, the Defense Business or the Additional Retained Facilities
are obligations of a Subsidiary of the Company other than a Retained Subsidiary
as a result of the allocation of Assets of the Company set forth in Section
2.1, then, notwithstanding the foregoing allocation or the allocation of Assets
of the Company set forth in Section 2.1, the Company shall, or shall cause the
appropriate Retained Subsidiary to, assume each such Liability.
2.3. Transfer and Assumption Documentation. In furtherance of the
contribution, grant, conveyance, assignment, transfer and delivery of the
Contributed Assets and the assumption of the Assumed Liabilities set forth in
this Article II, at the Time of Contribution or as promptly as practicable
thereafter (i) the Company shall execute and deliver, and cause its
Subsidiaries to execute and deliver,
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such deeds, bills of sale, stock powers, certificates of title, assignments of
leases and contracts and other instruments of contribution, grant, conveyance,
assignment, transfer and delivery necessary to evidence such contribution,
grant, conveyance, assignment, transfer and delivery and (ii) Newco or the
appropriate member of the Newco Group shall execute and deliver such
instruments of assumption as and to the extent necessary to evidence such
assumption.
2.4 Nonassignable Contracts. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any lease, license agreement, contract, agreement, sales order, purchase
order, open bid or other commitment or Asset if an assignment or attempted
assignment of the same without the consent of the other party or parties
thereto would constitute a breach thereof or in any way impair the rights of
the Newco Group or the Company Group thereunder. The Company shall, prior to
the Time of Contribution, use reasonable best efforts (it being understood that
such efforts shall not include any requirement of the Company Group to expend
money or offer or grant any financial accommodation) as requested by Newco, and
Newco shall cooperate in all reasonable respects with the Company, to obtain
all consents and waivers and to resolve all impracticalities of assignments or
transfers necessary to convey to Newco and the Operating Subsidiaries the
Contributed Assets. If any such consent is not obtained or if an attempted
assignment would be ineffective or would impair either Group's rights under any
such lease, license agreement, contract, agreement, sales order, purchase
order, open bid or other commitment or Asset so that Newco or the Operating
Subsidiaries would not receive all such rights, then (x) the Company shall use
reasonable best efforts (it being understood that such efforts shall not
include any requirement of the Company Group to expend money or offer or grant
any financial accommodation) to provide or cause to be provided to Newco or the
appropriate Operating Subsidiary, to the extent permitted by law, the benefits
of any such lease, license agreement, contract, agreement, sales order,
purchase order, open bid or other commitment or Asset and the Company shall
promptly pay or cause to be paid to Newco or the appropriate Operating
Subsidiary when received all moneys received by the Company Group with respect
to any such lease, license agreement, contract, agreement, sales order,
purchase order, open bid or other commitment or Asset and (y) in consideration
thereof Newco or the appropriate Operating Subsidiary shall pay, perform and
discharge on
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behalf of the Company Group all of the Company Group's debts, liabilities,
obligations and commitments thereunder in a timely manner and in accordance
with the terms thereof. In addition, the Company shall take such other actions
(at Newco's expense) as may reasonably be requested by Newco in order to place
Newco, insofar as reasonably possible, in the same position as if such lease,
license agreement, contract, agreement, sales order, purchase order, open bid
or other commitment or Asset had been transferred as contemplated hereby and so
all the benefits and burdens relating thereto, including possession, use, risk
of loss, potential for gain and dominion, control and command, shall inure to
the Newco Group. If and when such consents and approvals are obtained, the
transfer of the applicable Asset shall be effected in accordance with the terms
of this Agreement.
2.5. Intercompany Arrangements. All agreements, contracts,
arrangements and commitments between the Retained Business or any operating
unit thereof, on the one hand, and the Company or any operating unit thereof
(other than the Retained Business or any operating unit thereof), on the other
hand, entered into prior to the Closing Date for the purchase or sale of goods
or services ("Intercompany Arrangements") including, without limitation,
Rockwell Internal Customer Agreements, shall remain in effect on and after the
Closing Date (subject to amendment as provided in the Transition Agreement).
All amounts under such Intercompany Arrangements which are unbilled and have
not been charged to the related prime contract as of the Closing Date shall be
billed and payable on and after the Closing Date in accordance with the terms
thereof. At or before the Closing, the Company shall cause all intercompany
indebtedness (which shall include payables and receivables but which shall not
include unbilled amounts under Intercompany Arrangements) between the Retained
Business or any operating unit thereof, on the one hand, and the Company or any
operating unit thereof (other than the Retained Business or any operating unit
thereof), on the other hand, to be settled or otherwise eliminated.
ARTICLE III
RECAPITALIZATION OF NEWCO; MECHANICS OF DISTRIBUTION
3.1. Newco Capitalization. The current equity capitalization of Newco
consists of 1,000 issued and outstanding shares of Newco Common Stock (the
"Existing
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Newco Common Stock"), all of which is outstanding and owned beneficially and of
record by the Company.
3.2. Recapitalization of Newco. Immediately prior to the Time of
Distribution, the Company shall cause Newco to amend its Certificate of
Incorporation to, among other things, (i) increase the authorized number of
shares of capital stock of Newco to 1,125,000,000 shares, consisting of
25,000,000 shares of Preferred Stock, without par value, 1,000,000,000 shares
of Newco Common Stock and 100,000,000 shares of Newco Class A Common Stock, and
(ii) exchange the Existing Newco Common Stock owned by the Company for a total
number of shares of Newco Common Stock and Newco Class A Common Stock, in each
case with the associated Rights, equal to the total number of shares of Company
Common Stock and Company Class A Common Stock, respectively (other than Company
Common Stock and Company Class A Common Stock held in the treasury of the
Company), outstanding as of the Record Date (as defined below).
3.3. Mechanics of Distribution. The Distribution shall be effected by
the distribution to each holder of record of Company Common Stock and Company
Class A Common Stock, as of the record date designated for the Distribution by
or pursuant to the authorization of the Board of Directors of the Company (the
"Record Date"), of certificates representing one share of Newco Common Stock
and one associated Right for each share of Company Common Stock and one share
of Newco Class A Common Stock and one associated Right for each share of
Company Class A Common Stock held by such holder.
3.4. Timing of Distribution. The Board of Directors of the Company
shall formally declare the Distribution and shall authorize the Company to pay
it immediately prior to the Effective Time, subject to the satisfaction or
waiver of the conditions set forth in Article IX, by delivery of certificates
for Newco Common Stock and Newco Class A Common Stock to the Transfer Agent for
delivery to the holders entitled thereto. The Distribution shall be deemed to
be effective upon notification by the Company to the Transfer Agent that the
Distribution has been declared and that the Transfer Agent is authorized to
proceed with the distribution of Newco Common Stock and Newco Class A Common
Stock.
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ARTICLE IV
OTHER AGREEMENTS
4.1. Employment. Newco or one of its Subsidiaries shall offer
employment or continued employment from the Time of Contribution (or such later
time as Newco Inactive Employees (as defined herein) first become eligible to
return to employment, it being understood that each Newco Inactive Employee
will continue to be eligible to receive from the Newco Group the same
compensation and benefits payable during the period prior to such Newco
Inactive Employee's return to employment that such Newco Inactive Employee is
entitled to receive during such Newco Inactive Employee's absence from
employment immediately prior to the Time of Contribution) to all employees of
the Company and its Subsidiaries (including employees not actively at work at
the Time of Contribution due to leave of absence, disability leave, military
leave or layoff with recall rights ("Newco Inactive Employees")), except those
to whom Acquiror or the Company Group has an obligation to offer employment or
continued employment pursuant to Section 5.12(a) of the Merger Agreement
(collectively "Company Group Continuing Employees"), on terms that are
substantially the same as the terms on which they were employed by the Company
or a Subsidiary of the Company immediately prior to the Time of Contribution;
provided, however, that nothing contained in this Section 4.1 is intended to
confer upon any employee who so continues to be employed or who accepts such an
offer of employment by Newco or any of its Subsidiaries ("Newco Group
Continuing Employees") any right to continued employment after the Time of
Contribution. The Company hereby consents to Newco or one of its Subsidiaries
making such offers. Newco shall recognize the service with the Company and its
Subsidiaries through the Time of Contribution of each Newco Group Continuing
Employee and, where applicable, each former employee of the businesses which,
at the Time of Contribution, comprise the Newco Group (a "Newco Group Former
Employee"), and shall credit, as of the Time of Contribution, such service with
Newco (i) for all plan purposes under any employee benefit plan, arrangement or
policy of the Newco Group in effect as of the Time of Contribution in which
they are then participating and (ii) for eligibility and vesting purposes only
under any employee benefit plan, arrangement or policy for which they become
eligible on or following the Time of Contribution; provided, however, that,
except as otherwise required by law or by the terms of any collective
bargaining agreement,
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service will be recognized under clause (i) or (ii) only to the extent such
service was recognized under the Company's comparable plan or program prior to
the Time of Contribution. Newco shall, or shall cause the applicable member of
the Newco Group to, assume or maintain (as applicable) as of the Time of
Contribution and perform the obligations of each of the Company and its
Subsidiaries under the collective bargaining agreements relating to Newco Group
Continuing Employees and Newco Group Former Employees and any and all
collateral agreements related thereto, including those affecting all terms and
conditions of employment, and to be bound by such agreements. The Company
shall, or shall cause the applicable member of the Company Group to, assume or
maintain (as applicable) as of the Time of Contribution and perform the
obligations of each of the Company and its Subsidiaries under the collective
bargaining agreements relating to Company Group Continuing Employees and former
employees of the businesses which, at the Time of Contribution, comprise the
Company Group ("Company Group Former Employees"), and any and all collateral
agreements related thereto, including those affecting all terms and conditions
of employment, and to be bound by such agreements.
4.2. Cross-License of Intellectual Property. (a) Effective as of the
Time of Distribution, the Company on behalf of itself and its Subsidiaries, in
consideration for the rights granted by Newco and its Subsidiaries pursuant to
Section 4.2(b), hereby grants to the Newco Group a royalty-free, world-wide,
irrevocable, non-exclusive license, under all intellectual property rights
(including, without limitation, patents, patent applications, trade secrets,
copyrights or other similar industrial property rights, except for trademarks,
trade names, service marks, trade dress or any other form of trade identity)
which are owned by the Company Group as Retained Assets immediately after the
Time of Contribution or under which the Company Group has a right to license as
Retained Assets immediately after the Time of Contribution, and which are used
in the conduct of the businesses of the Company other than the Aerospace
Business or the Defense Business (whether or not such rights are also used in
the conduct of the Aerospace Business or the Defense Business) at the Time of
Contribution to make, have made, use, import, sell or otherwise dispose of
products, or to practice any process in connection therewith, in the businesses
of the Newco Group as conducted by the Company at the Time of Contribution;
said non-exclusive license being transferable only in
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connection with the sale of all or any part of the Newco Group's business to
which such intellectual property rights relate. To the extent that the Newco
Group does not have copies of any information or materials relating to such
intellectual property rights, the Company shall upon reasonable request supply
to the Newco Group copies of any such information or materials relating to such
intellectual property rights. The Company makes no representations or
warranties of any kind with respect to the validity, scope or enforceability of
any such intellectual property rights licensed hereunder and the Company has no
obligation to file or prosecute any patent applications or maintain any patents
in force in connection therewith. The Company will, at no cost to Newco,
promptly execute or cause a member of the Company Group promptly to execute
such further documents as Newco may reasonably request as necessary or
desirable to carry out the terms of this Section 4.2(a).
(b) Effective as of the Time of Distribution, Newco on behalf of
itself and its Subsidiaries, in consideration for the rights granted by the
Company and its Subsidiaries pursuant to Section 4.2(a), hereby grants to the
Company Group a royalty-free, world-wide, irrevocable, non-exclusive license,
under all intellectual property rights (including, without limitation, patents,
patent applications, trade secrets, copyrights or other similar industrial
property rights, except for trademarks, trade names, service marks, trade dress
or any other form of trade identity), which are owned by the Newco Group as
Contributed Assets immediately after the Time of Contribution or under which
the Newco Group has a right to license as Contributed Assets immediately after
the Time of Contribution, and which are used in the conduct of the Aerospace
Business or the Defense Business (whether or not such rights are also used in
the conduct of the other businesses of the Company) at the Time of Contribution
to make, have made, use, import, sell or otherwise dispose of products, or to
practice any process in connection therewith, in the Aerospace Business and the
Defense Business as conducted by the Company at the Time of Contribution; said
non-exclusive license being transferable only in connection with the sale of
all or any part of the Company Group's business to which such intellectual
property rights relate. To the extent that the Company Group does not have
copies of any information or materials relating to such intellectual property
rights, Newco shall upon reasonable request supply to the Company Group copies
of any such information or materials relating to such intellectual property
rights. Newco makes no
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representations or warranties of any kind with respect to the validity, scope
or enforceability of any such intellectual property rights licensed hereunder
and Newco has no obligation to file or prosecute any patent applications or
maintain any patents in force in connection therewith. Newco will, at no cost
to the Company, promptly execute or cause a member of the Newco Group promptly
to execute such further documents as the Company may reasonably request as
necessary or desirable to carry out the terms of this Section 4.2(b).
(c) No provision in the Reorganization Agreements shall be construed
to permit any transfer of intellectual property relating to the Airborne Laser
Program from any member of the Company Group to Acquiror or any other
Subsidiary of Acquiror prior to award of a Government Contract for the Airborne
Laser Program.
4.3. Use of Names, Trademarks, etc. (a) From and after the Effective
Time, Newco shall have all rights in and, except as provided in Section 4.3(b),
use of the names "Rockwell", "Rockwell International", and "Collins" and all
other names, marks, scripts, type fonts, forms, styles, logos, designs,
devices, trade dress, symbols and other forms of trade identity constituting
Contributed Assets, and all derivatives thereof. From and after the Effective
Time, the Company shall have all rights in and, except as provided in Section
4.3(c), use of the names "Autonetics", "North American Aviation" and
"Rocketdyne" and all other names, marks, scripts, type fonts, forms, styles,
logos, designs, devices, trade dress, symbols and other forms of trade identity
constituting Retained Assets, and all derivatives thereof. Prior to or promptly
after the Effective Time, the Company shall change the name of any Subsidiary
or other Person under its control to eliminate therefrom the names "Rockwell",
"Rockwell International" and "Collins" and all derivatives thereof, and Newco
shall change the name of any Subsidiary or other Person under its control to
eliminate therefrom the names "Autonetics", "North American Aviation" and
"Rocketdyne" and all derivatives thereof.
(b) From and after the Effective Time, except as permitted in this
Section 4.3(b), the Company Group shall not use or have any rights to the names
"Rockwell", "Rockwell International" and "Collins" or any derivatives thereof
or any trademark, trade name, service mark or logo of the Newco Group
constituting a Contributed Asset, including the trademarks, trade names and
service marks
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"Rockwell", "Rockwell International" and "Collins", or any corporate symbol
related thereto or any thereof or any name or mark which includes the words
"Rockwell", "Rockwell International" or "Collins" or any other Contributed
Asset or any derivative thereof or name or mark confusingly similar thereto or
special script, type font, form, style, logo, design, device, trade dress, or
symbol used or possessed by the Company before the Effective Time or Newco
after the Effective Time which contains the trademark, trade name or service
mark "Rockwell", "Rockwell International" or "Collins" or any other Contributed
Asset or any derivative thereof or name or mark confusingly similar thereto and
the Company Group will not hold itself out as having any affiliation with the
Newco Group. However, the Company Group may utilize without obligation to pay
royalties to Newco the trademarks or trade names "Rockwell", "Rockwell
International" or "Collins" or any corporate symbol related thereto or any
thereof in connection with stationery, supplies, labels, catalogs, vehicles,
signs, finished goods inventory and work-in-process constituting Retained
Assets as of the Time of Contribution, subject to the terms and conditions of
this Section 4.3:
(i) All documents constituting Retained Assets as of the Time of
Contribution within the following categories may be used for the duration
of the periods following the Effective Time indicated below or until the
supply is exhausted, whichever is the first to occur:
Maximum Period of
Permitted Use
Following the
Category of Documents Effective Time
--------------------- -----------------
A. Stationery 4 months
B. Invoices, purchase orders,
debit and credit memos and
other similar documents of a
transactional nature 4 months
C. Business cards 3 months
D. Other outside forms such as
packing lists, labels,
packing materials and
cartons, etc. 4 months
E. Forms for internal use only 12 months
F. Product literature 12 months;
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provided, however, that no document within any of the above categories A,
B or F may be used by the Company Group for any purpose within the stated
period unless such document clearly and prominently displays a statement,
the form of which is approved by Newco, to the effect that the Aerospace
Business or the Defense Business, as the case may be, is no longer
affiliated with Newco.
(ii) All vehicles constituting Retained Assets as of the Time of
Contribution may continue to be used without re-marking (except as to
legally required permit numbers, license numbers, etc.) for a period not
to exceed six months following the Effective Time or the date of
disposition of the vehicle, whichever is the first to occur. The Company
shall cause all markings on such vehicles to be removed or permanently
obscured prior to disposition of such vehicles.
(iii) Within three months following the Effective Time, the Company
shall cause to be removed from display at all facilities constituting
Retained Assets as of the Time of Contribution all demountable displays
which contain the trademarks or trade names "Rockwell", "Rockwell
International" or "Collins" or any corporate symbol related thereto or any
thereof constituting Contributed Assets and the Company shall remove, or
shall cause the removal of all signs displaying any such trademark, trade
name or corporate symbol constituting Contributed Assets at all such
facilities no later than six months following the Effective Time.
(iv) Products in finished goods inventory and work-in-process
constituting Retained Assets as of the Time of Contribution may be
disposed of by the Company Group following the Effective Time without
re-marking.
(c) From and after the Effective Time, the Newco Group will not hold
itself out as having an affiliation with the Company Group. However, the Newco
Group shall have rights to use trademarks or trade names or corporate symbols
related thereto or any thereof constituting Retained Assets of the Company
Group in connection with stationery, supplies, labels, catalogs, vehicles,
signs and finished goods inventory constituting Contributed Assets as of the
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Time of Contribution on the same terms and subject to the same conditions as
are set forth in Section 4.3(b).
4.4. Further Assurances. Each of the parties hereto, at its own cost
and expense, promptly shall execute such documents and other instruments and
take such further actions as may be reasonably required or desirable to carry
out the provisions hereof and to consummate the transactions contemplated
hereby.
4.5. Cooperation. The parties shall cooperate with each other in all
reasonable respects to ensure the transfer to Newco or to one of the Operating
Subsidiaries of the Contributed Assets, the Assumed Liabilities and the
businesses related thereto, and the retention by the Company of the Retained
Business, including, without limitation, (i) allocating rights and obligations
under contracts, agreements and other arrangements, if any, of the Company that
relate to both the Retained Business and the businesses contributed to Newco or
the Operating Subsidiaries and (ii) determining whether to enter into any
service or other sharing agreements on a mutually acceptable arms-length basis
that may be necessary to assure a smooth and orderly transition.
ARTICLE V
TAX MATTERS
5.1. Tax Allocation. Prior to the Time of Distribution, Newco,
Acquiror and the Company shall enter into a Tax Allocation Agreement in
substantially the form attached as Annex B to the Merger Agreement.
5.2. Tax Matters. Notwithstanding anything to the contrary in this
Agreement, liabilities of the parties for Taxes are subject to the terms of the
Tax Allocation Agreement. All obligations of Newco under the Tax Allocation
Agreement shall be treated as Assumed Liabilities and not as Retained
Liabilities under this Agreement and all obligations of the Company under the
Tax Allocation Agreement shall be treated as Retained Liabilities and not as
Assumed Liabilities under this Agreement. The Contribution and Distribution are
intended to qualify as transactions described in Sections 351 and 355 of the
Code and/or a "reorganization" within the meaning of Section 368(a)(1)(D) of
the Code and the Merger is intended
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to qualify as a "reorganization" within the meaning of Section
368(a)(1)(B) of the Code.
5.3. Transfer Taxes. Newco (or, if actually paid prior to the
Effective Time, the Company) shall pay or cause to be paid any Transfer Taxes
(as defined in the Tax Allocation Agreement) imposed in connection with or as a
result of the Contribution or the Distribution.
ARTICLE VI
MUTUAL RELEASE
6.1. Mutual Release, etc. Effective as of the Time of Distribution
and except as otherwise specifically set forth in the Reorganization Agreements
or the Transition Agreement, each of Newco, on the one hand, and the Company,
on the other hand, on its own behalf and on behalf of each of its respective
Subsidiaries, releases and forever discharges the other and its Subsidiaries,
and its and their respective officers, directors, agents, Affiliates, record
and beneficial security holders (including, without limitation, trustees and
beneficiaries of trusts holding such securities), advisors and Representatives
(in their respective capacities as such) and their respective heirs, executors,
administrators, successors and assigns, of and from all debts, demands,
actions, causes of action, suits, accounts, covenants, contracts, agreements,
damages, claims and Liabilities whatsoever of every name and nature, both in
law and in equity, which the releasing party has or ever had, which arise out
of or relate to events, circumstances or actions taken by such other party
occurring or failing to occur or any conditions existing on or prior to the
Time of Distribution; provided, however, that the foregoing general release
shall not apply to (i) any Liabilities (including Liabilities with respect to
indemnification) under the Transition Agreement or assumed, transferred,
assigned, allocated or arising under any of the Reorganization Agreements and
shall not affect any party's right to enforce the Reorganization Agreements or
the Transition Agreement in accordance with their terms, (ii) any Liability
arising from or relating to Intercompany Arrangements to the extent such
Liabilities are not required pursuant to Section 2.5 to be settled or otherwise
eliminated at or before the Closing, (iii) any Liability the release of which
would result in the release of any Person other than a Person released pursuant
to this Section 6.1 (provided that the parties agree not to
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bring suit or permit any of their Subsidiaries to bring suit against any Person
with respect to any Liability to the extent such Person would be released with
respect to such Liabilities by this Section 6.1 but for the proviso to this
clause (iii)) or (iv) any matter set forth on Schedule 6.1. Each party
understands and agrees that, except as otherwise specifically provided in the
Reorganization Agreements, neither Group is, in the Reorganization Agreements
or otherwise, representing or warranting in any way as to the Assets, business
or Liabilities transferred, assumed or retained as contemplated hereby or as to
any consents or approvals required in connection with the consummation of the
transactions contemplated by the Reorganization Agreements, it being agreed and
understood that each party shall take or keep all of its Assets "as is" and
that it shall bear the economic and legal risk that conveyance of such Assets
shall prove to be insufficient or that the title to any Assets shall be other
than good and marketable and free from encumbrances of any nature whatsoever.
ARTICLE VII
ACCESS TO INFORMATION
7.1. Provision of Corporate Records. Prior to or as promptly as
practicable after the Time of Contribution the Company shall deliver to Newco
all minute books and other records of meetings of the Board of Directors,
committees of the Board of Directors, stockholders and security owners of the
Company and its predecessors, all stockholder and security owner records of the
Company and its predecessors, all corporate books and records of the Newco
Group in its possession and the relevant portions (or copies thereof) of all
corporate books and records of the Company Group relating directly and
primarily to the Contributed Assets or the Assumed Liabilities, including, in
each case, all active agreements, active litigation files and government
filings. From and after the Time of Contribution, all such books, records and
copies shall be the property of Newco. Prior to or as promptly as practicable
after the Time of Contribution, Newco shall deliver to the Company all
corporate books and records of the Retained Subsidiaries in Newco's possession
and the relevant portions (or copies thereof) of all corporate books and
records of the Newco Group relating directly and primarily to the Retained
Assets, the Aerospace Business, the Defense Business, the Additional Retained
Facilities
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(except to the extent relating primarily to the business of the Newco Companies)
or the Retained Liabilities, including, in each case, all active agreements,
active litigation files and government filings. From and after the Time of
Contribution, all such books, records and copies shall be the property of the
Company.
7.2. Access to Information. From and after the Time of Contribution,
each of the Company and Newco shall afford to the other and to the other's
Representatives reasonable access and duplicating rights (at the requesting
party's expense) during normal business hours and upon reasonable advance
notice to all Information within the possession or control of any member of the
Company Group or the Newco Group, as the case may be, relating to the business,
Assets or Liabilities as they existed prior to the Time of Contribution or
relating to or arising in connection with the relationship between the
constituent elements of the Groups on or prior to the Time of Contribution,
insofar as such access is reasonably required for a reasonable purpose, subject
to the provisions below regarding Privileged Information. Without limiting the
foregoing, Information may be requested under this Section 7.2 for audit,
accounting, claims, litigation and Tax purposes, as well as for purposes of
fulfilling disclosure and reporting obligations. In furtherance of the
foregoing:
(a) Each party hereto acknowledges that (i) each of the Company and
Newco (and the members of the Company Group and the Newco Group,
respectively) has or may obtain Privileged Information; (ii) there are a
number of Litigation Matters affecting each or all of the Company, Newco
and the Operating Subsidiaries; (iii) the Company, Newco and the Operating
Subsidiaries have a common legal interest in Litigation Matters, in the
Privileged Information, and in the preservation of the confidential status
of the Privileged Information, in each case relating to the business of
the Company Group or the Newco Group as it existed prior to the Time of
Contribution or relating to or arising in connection with the relationship
between the constituent elements of the Groups on or prior to the Time of
Contribution; and (iv) both the Company and Newco intend that the
transactions contemplated by the Reorganization Agreements and any
transfer of Privileged Information in connection therewith shall not
operate as a waiver of any potentially applicable privilege.
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(b) Each of the Company and Newco agrees, on behalf of itself and
each member of the Group of which it is a member, not to disclose or
otherwise waive any privilege attaching to any Privileged Information
relating to the business of the Newco Group or the Company Group as it
existed prior to the Time of Contribution, respectively, or relating to or
arising in connection with the relationship between the Groups on or prior
to the Time of Contribution, without providing prompt written notice to
and obtaining the prior written consent of the other, which consent shall
not be unreasonably withheld and shall not be withheld if the other party
certifies that such disclosure is to be made in response to a likely
threat of suspension or debarment or similar action; provided, however,
that the Company and Newco may make such disclosure or waiver with respect
to Privileged Information if such Privileged Information relates solely to
the business of the Company Group as it existed prior to the Time of
Contribution in the case of the Company or the business of the Newco Group
as it existed prior to the Time of Contribution in the case of Newco. In
the event of a disagreement between any member of the Company Group and
any member of the Newco Group concerning the reasonableness of withholding
such consent, no disclosure shall be made prior to a final, nonappealable
resolution of such disagreement by a court of competent jurisdiction.
(c) Upon any member of the Company Group or any member of the Newco
Group receiving any subpoena or other compulsory disclosure notice from a
court, other governmental agency or otherwise which requests disclosure of
Privileged Information, in each case relating to the business of the Newco
Group or the Company Group, respectively, as it existed prior to the Time
of Contribution or relating to or arising in connection with the
relationship between the constituent elements of the Groups on or prior to
the Time of Contribution, the recipient of the notice shall promptly
provide to the other Group (following the notice provisions set forth
herein) a copy of such notice, the intended response, and all materials or
information relating to the other Group that might be disclosed. In the
event of a disagreement as to the intended response or disclosure, unless
and until the disagreement is resolved as provided in subsection (b), the
parties shall cooperate to assert all defenses to
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disclosure claimed by either Group, at the cost and expense of the Group
claiming such defense to disclosure, and shall not disclose any disputed
documents or information until all legal defenses and claims of privilege
have been finally determined.
7.3. Production of Witnesses. Subject to Section 7.2, after the Time
of Contribution, each of the Company and Newco shall, and shall cause each
member of the Company Group and the Newco Group, respectively, to, make
available to Newco or any member of the Newco Group or to the Company or any
member of the Company Group, as the case may be, upon written request, such
Group's directors, officers, employees and agents as witnesses to the extent
that any such Person may reasonably be required in connection with any
Litigation Matters, administrative or other proceedings in which the requesting
party may from time to time be involved and relating to the business of the
Newco Group or the Company Group as it existed prior to the Time of
Contribution or relating to or in connection with the relationship between the
constituent elements of the Groups on or prior to the Time of Contribution,
provided that the same shall not unreasonably interfere with the conduct of
business by the Group of which the request is made. The Group requesting such
assistance shall reimburse the other Group for all reasonable out-of-pocket
expenses incurred by the other Group in complying with any such request.
7.4. Retention of Records. Except as provided in the Reorganization
Agreements or as otherwise agreed in writing, if any Information relating to
the business, Assets or Liabilities of a member of a Group as they existed
prior to the Time of Contribution is retained by a member of the other Group,
each of the Company and Newco shall, and shall cause the members of the Group
of which it is a member to, retain all such Information in such Group's
possession or under its control until such Information is at least ten years
old except that if, prior to the expiration of such period, any member of
either Group wishes to destroy or dispose of any such Information that is at
least three years old, prior to destroying or disposing of any of such
Information, (1) Newco or the Company, on behalf of the member of its Group
that is proposing to dispose of or destroy any such Information, shall provide
no less than 30 days' prior written notice to the other party, specifying the
Information proposed to be destroyed or disposed of, and (2) if, prior to the
scheduled date for such destruction or disposal, the other party requests in
writing that any of
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the Information proposed to be destroyed or disposed of be delivered to such
other party, the party whose Group is proposing to dispose of or destroy such
Information promptly shall arrange for the delivery of the requested
Information to a location specified by, and at the expense of, the requesting
party.
7.5. Confidentiality. Subject to Section 7.2, which shall govern
Privileged Information, from and after the Time of Contribution, each of the
Company and Newco shall hold, and shall use reasonable efforts to cause its
Affiliates and Representatives to hold, in strict confidence all Information
concerning the other party's Group obtained by it prior to the Time of
Contribution or furnished to it by such other party's Group pursuant to the
Reorganization Agreements and shall not release or disclose such Information to
any other Person, except its Affiliates and Representatives, who shall be bound
by the provisions of this Section 7.5, and each party shall be responsible for
a breach of this Section 7.5 by any of its Affiliates or Representatives;
provided, however, that any member of the Company Group or the Newco Group may
disclose such Information to the extent that (a) disclosure is compelled by
judicial or administrative process or, in the opinion of such Person's counsel,
by other requirements of law, or (b) such Person can show that such Information
was (i) available to such Person on a nonconfidential basis (other than from a
member of the other party's Group) prior to its disclosure by such Person, (ii)
in the public domain through no fault of such Person or (iii) lawfully acquired
by such Person from another source after the time that it was furnished to such
Person by the other party's Group, and not acquired from such source subject to
any confidentiality obligation on the part of such source, or on the part of
the acquiror, known to the acquiror. Notwithstanding the foregoing, each of the
Company and Newco shall be deemed to have satisfied its obligations under this
Section 7.5 with respect to any Information (other than Privileged Information)
if it exercises the same care with regard to such Information as it takes to
preserve confidentiality for its own similar Information.
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ARTICLE VIII
EMPLOYEE BENEFIT PLANS
8.1. Employee Benefits Generally. All obligations of the Newco Group
under this Article VIII with respect to employee benefit plans, arrangements or
policies for the benefit of employees and former employees (and their
beneficiaries) of the Company and its Subsidiaries in place immediately prior
to the Time of Contribution shall be treated as Assumed Liabilities and not as
Retained Liabilities under this Agreement. All obligations of the Company Group
under this Article VIII with respect to the employee benefit plans,
arrangements or policies for the benefit of employees and former employees (and
their beneficiaries) of the Company and its Subsidiaries in place immediately
prior to the Time of Contribution shall be treated as Retained Liabilities and
not as Assumed Liabilities under this Agreement.
8.2. Retirement Plans.
(a) Rockwell Retirement Plan for Eligible Employees.
(i) Prior to the Time of Contribution, the Company shall have
established a new group trust under the Rockwell Retirement Plan, which
shall be exempt from taxation under Section 501(a) of the Code (the "Newco
Group Trust") and the purpose of which shall be to hold, as provided
below, certain assets of the Rockwell Retirement Plan and assets
attributable to the liabilities under the defined benefit pension plans
set forth in Schedule 8.2(b) hereto (the "Reliance Retirement Plans").
Prior to the Time of Contribution, an amount of assets equal to the sum of
(A) the accumulated benefit obligation ("ABO") (as determined in the
following sentence) of the current and former employees of the Company and
its Subsidiaries who are expected to be, as of the Time of the
Contribution, Newco Group Transferred Participants (as defined in Section
8.2(a)(ii) hereof) and (B) $200,000,000 shall have been transferred from
the Rockwell Group Trust to the Newco Group Trust in the amounts, form and
manner described in Section 8.2(c) below. Such ABO shall have been
determined as of December 31, 1995 in accordance with the Statement of
Financial Accounting Standards No. 87 ("FAS 87") utilizing a discount rate
of 7% and
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actuarial assumptions (other than such discount rate) specified in the
actuarial valuation for the Rockwell Retirement Plan prepared as of
January 1, 1996 (the "January 1, 1996 Actuarial Valuation"). Such ABO
shall have been determined by an enrolled actuary appointed by Newco (the
"Newco Actuary") and shall be binding and conclusive upon Newco, the
Company and Acquiror other than as provided in Sections 8.2(a)(iv) and
8.2(a)(v) hereof.
(ii) Prior to the Time of Contribution, the Company or Newco shall
have established a defined benefit pension plan which shall be qualified
under Section 401(a) of the Code (the "Newco Retirement Plan") effective
as of the Time of Contribution covering (A) Newco Group Continuing
Employees and (B) former employees of the Company and its Subsidiaries who
terminated employment on or after January 1, 1996 (other than Company
Group Former Employees) (such Newco Group Continuing Employees and such
former employees are hereinafter referred to as "Newco Group Transferred
Participants"). The Newco Retirement Plan shall contain provisions
comparable in all material respects to and no less favorable in the
aggregate than those of the Rockwell Retirement Plan immediately prior to
the time of adoption of the Newco Retirement Plan. As soon as practicable
following the establishment of the Newco Retirement Plan, but in no event
later than 30 days prior to the Time of Contribution, the Company and
Newco shall have filed with the IRS proper notice on IRS Forms 5310-A
regarding the transfer of assets and liabilities from the Rockwell
Retirement Plan to the Newco Retirement Plan.
(iii) Effective as of the Time of Contribution, Newco shall sponsor
the Newco Retirement Plan and assume the Newco Group Trust. Effective as
of the Time of Contribution, the Company shall continue to sponsor the
Rockwell Retirement Plan and Rockwell Group Trust, and shall change the
name of the Rockwell Retirement Plan and Rockwell Group Trust to eliminate
any reference to "Rockwell". The Company and Newco shall take such further
actions as may be necessary or appropriate to (A) establish Newco as the
sponsor of the Newco Retirement Plan and provide for the assumption of the
Newco Group Trust by Newco and (B) provide for the continued sponsorship
of the
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Rockwell Retirement Plan and the Rockwell Group Trust by the Company. As
soon as practicable following the latest of (A) the Time of Contribution,
(B) the expiration of the applicable waiting period without receiving an
adverse response from the appropriate government agencies and (C) receipt
by the Company of an opinion of Newco's counsel, in a form reasonably
satisfactory to the Company, that the form of the Newco Retirement Plan
meets the requirements of Section 401(a) of the Code, the Rockwell
Retirement Plan shall transfer to the Newco Retirement Plan (1) all
accrued benefits and other liabilities attributable to Newco Group
Transferred Participants (collectively, the "Transferred Benefits") and
(2) the assets attributable thereto (the "Transferred Amount") in the
amounts, form and manner described in this Section 8.2(a) and Section
8.2(c) below. Following the transfers of the Transferred Amount and the
Transferred Benefits from the Rockwell Retirement Plan and Rockwell Group
Trust to the Newco Retirement Plan and Newco Group Trust as provided
herein, the Company Group shall have no further liability whatsoever
(either under this Agreement or otherwise) with respect to the Newco Group
Transferred Participants for benefits under the Rockwell Retirement Plan
and, except as otherwise provided in Section 8.2(a)(vi), the Newco Group
shall have no further liability whatsoever (either under this Agreement or
otherwise) with respect to the participants under the Rockwell Retirement
Plan. The Rockwell Retirement Plan shall retain liability for the Newco
Group Former Employees who were participants in the Rockwell Retirement
Plan and who terminated employment with the Company or any of its
Subsidiaries prior to January 1, 1996.
(iv) Within 150 days following the Time of Contribution, Newco shall
cause the Newco Actuary to prepare and deliver to Newco an actuarial
valuation (the "Actuarial Valuation") which shall: (A) certify the ABO for
Newco Group Transferred Participants and the ABO for all other
participants in the Rockwell Retirement Plan and the Newco Retirement Plan
as of the Time of Contribution, each of which ABO shall be determined in
accordance with FAS 87, utilizing a discount rate of 8% and actuarial
assumptions (other than such discount rate) specified in the January 1,
1996 Actuarial Valuation; (B) set forth the fair market value of the
assets for the Rockwell Retirement Plan
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and the Newco Retirement Plan as of the Time of Contribution and (C) set
forth the calculation of the Transferred Amount (equal to the product of
(A) multiplied by (B) as defined in Section 8.2(a)(v)), which amount shall
be calculated in accordance with Section 414(l) of the Code, the Treasury
Regulations thereunder and this Section 8.2(a)(iv). Newco shall deliver to
the Company the Actuarial Valuation. Within 60 days of receipt of the
Actuarial Valuation, the Company shall (A) cause an enrolled actuary
selected by the Company (the "Company Actuary") to confirm the accuracy
(based upon the assumptions referred to in clause (A) of this Section
8.2(a)(iv)) of the Actuarial Valuation (including the underlying data used
by the Newco Actuary to prepare such Actuarial Valuation) and (B) provide
to Newco a written statement of whether the Company Actuary has confirmed
the accuracy of such Actuarial Valuation. In the event that the Company
Actuary disputes the accuracy of the Actuarial Valuation within such
60-day period, Newco and the Company shall, within 30 days following the
end of the 60-day period described in the preceding sentence, make all
reasonable efforts to cause the Newco Actuary and the Company Actuary to
resolve the dispute or, if such dispute cannot be resolved, select an
actuarial firm of national repute (the "Third Actuary") to determine the
amounts referred to in clauses (A), (B) and (C) of the first sentence of
this Section 8.2(a)(iv), which determination shall be final and binding
upon Newco, the Company and the Acquiror. In the event that Newco and the
Company are unable to select a Third Actuary within such 30-day period, an
arbitrator shall appoint such Third Actuary, which determination shall be
final and binding upon Newco, the Company and the Acquiror. Such
arbitrator shall be appointed in accordance with the rules of the New
York, New York office of the American Arbitration Association. The Company
shall pay the cost of the Company Actuary, Newco shall pay the cost of the
Newco Actuary and, to the extent necessary, the cost of the Third Actuary
and arbitrator shall be shared equally by the Company and Newco. The use
of a Third Actuary and arbitrator and the allocation of the costs thereof
shall be referred to as the "Actuarial Dispute Resolution Process".
(v) As soon as practicable following the satisfaction of the
conditions set forth in Section 8.2(a)(iv), an amount determined in
accordance with
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this Section 8.2(a)(v) shall be transferred from the Rockwell Retirement
Plan to the Newco Retirement Plan (or from the Newco Retirement Plan to
the Rockwell Retirement Plan, as the case may be). For purposes of this
Section 8.2(a)(v), (A) is the fraction, the numerator of which is the ABO
for the Newco Group Transferred Participants as of the Time of
Contribution, and the denominator of which is the total ABO for all
participants covered under the Rockwell Retirement Plan and Newco
Retirement Plan as of the Time of Contribution, (B) is the total combined
fair market value of the assets of the Rockwell Retirement Plan and Newco
Retirement Plan as of the Time of Contribution, (C) is the fair market
value of the assets in the Newco Retirement Plan as of the Time of
Contribution and (D) is an amount equal to the product of (A) multiplied
by (B). For all purposes of this Section 8.2(a)(v), the amount of ABO
shall be determined in accordance with Section 8.2(a)(iv). If (D) is
greater than (C), then an amount equal to the excess of (D) over (C) shall
be transferred from the Rockwell Retirement Plan to the Newco Retirement
Plan. If (D) is less than (C), then an amount equal to the excess of (C)
over (D) shall be transferred from the Newco Retirement Plan to the
Rockwell Retirement Plan. Any amount to be transferred pursuant to this
Section 8.2(a)(v) shall bear interest from the Time of Contribution to the
date of payment (calculated based on actual days elapsed in a 365-day
year) at a rate of 8% per annum and, to the extent applicable, shall be
decreased by the amount of any benefit payments and normal expenses of
administration not attributable to participants in the plan from which the
amount is transferable.
(vi) Newco shall reimburse the Company, on an annual plan-year basis,
for any additional amounts paid to or in respect of Newco Group Former
Employees who are not Newco Group Transferred Participants and their
beneficiaries under the Rockwell Retirement Plan as a result of any
increase in the benefits provided to such Newco Group Former Employees and
their beneficiaries over the benefits payable to such persons at the Time
of Contribution which increase is implemented by the Company upon the
written request of Newco. Such increase for each year shall be the
aggregate amount actually paid under the Rockwell Retirement Plan to or in
respect of the Newco Group Former Employees who are
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not Newco Group Transferred Participants and their beneficiaries during
such plan year over the aggregate amount payable to such persons under the
Rockwell Retirement Plan as in effect at the Time of Contribution. The
determination of the amount to be reimbursed to the Company by Newco shall
be made by the Company Actuary and shall be subject to review by the Newco
Actuary. If the Company Actuary and the Newco Actuary shall disagree as to
the amount to be reimbursed, the Company and Newco shall use the Actuarial
Dispute Resolution Process to determine the amount of reimbursement.
(b) Reliance Retirement Plans.
(i) Prior to the Time of Contribution, the assets attributable to the
liabilities under the Reliance Retirement Plans shall have been
transferred from the Rockwell Group Trust to the Newco Group Trust. The
assets transferred from the Rockwell Group Trust to the Newco Group Trust
to fund the liabilities under the Reliance Retirement Plans shall have
been determined in the manner set forth in Section 8.2(c).
(ii) Effective as of the Time of Contribution, Newco shall cause the
appropriate member or members of the Newco Group to continue sponsorship
of the Reliance Retirement Plans. Prior to, on and after the Time of
Contribution, the Company and Newco and the appropriate member of the
Newco Group each shall have taken and shall take such actions as may be
necessary or appropriate to establish the appropriate member of the Newco
Group to continue the sponsorship of the Reliance Retirement Plans.
(c) Selection of Assets.
(i) The assets that shall have been transferred from the Rockwell
Group Trust to the Newco Group Trust pursuant to Sections 8.2(a)(i) and
8.2(b) shall have been selected as hereinafter set forth in this Section
8.2(c)(i). First, assets invested in insurance and annuity contracts that
were attributable specifically to the subplans and groups of Newco Group
Transferred Participants or participants in the Reliance Retirement Plans
(the "Earmarked Investments") shall have been transferred to the Newco
Group Trust. Second, the remaining assets transferred from the
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Rockwell Group Trust to the Newco Group Trust shall have been comprised
of assets invested by each such investment manager set forth on
Schedule 8.2(c) (each, an "Investment Manager"). The amount of assets
managed by each Investment Manager that shall have been allocated to the
Newco Group Trust from the Rockwell Group Trust shall be an amount equal to
the product of (A) multiplied by (B), where (A) equals a fraction, the
numerator of which is the fair market value of the assets managed by such
individual Investment Manager as of the close of business on the day
immediately preceding the date of transfer and the denominator of which is
the aggregate fair market value of the assets as of the close of business
on the day immediately preceding the date of transfer managed by all of the
Investment Managers, and where (B) equals the amount of assets transferred
to the Newco Group Trust pursuant to Section 8.2(a)(i) and 8.2(b) minus the
amount of Earmarked Assets. The selection of specific assets managed by
each Investment Manager transferred to the Newco Group Trust or liquidated
to fund such transfer, in the amount determined in accordance with the
immediately preceding sentence, shall have been made on a pro rata basis
among the assets managed by such Investment Manager. Notwithstanding the
foregoing, if the total fair market value of the assets managed by the
Investment Managers as of the close of business on the day immediately
preceding the date of the transfer was less than the amount set forth in
clause (B) of the preceding sentence, then the remaining assets that shall
have been transferred to the Newco Group Trust shall have been determined
on a basis mutually agreed upon by the Company and Newco.
(ii) The assets to be transferred from the Rockwell Group Trust to
the Newco Group Trust or from the Newco Group Trust to the Rockwell Group
Trust, as the case may be, pursuant to Section 8.2(a)(v) shall be in cash
and marketable securities as mutually agreed upon by the Company and
Newco.
(d) The Company and Newco shall use and shall have used their
reasonable best efforts to effectuate the actions contemplated under this
Section 8.2 on a timely basis as provided herein.
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8.3. Savings Plans.
(a) Rockwell International Corporation Savings Plan. Effective as of
the Time of Contribution, Newco shall assume sponsorship of the Rockwell
International Corporation Savings Plan (the "Rockwell Savings Plan") and trust
related thereto and shall cause each Company Group Continuing Employee to have
a fully nonforfeitable right to such Continuing Employee's account balances, if
any, under the Rockwell Savings Plan. The account balances of each Company
Group Continuing Employee shall be maintained under the Rockwell Savings Plan
until distributed in accordance with the terms of the Rockwell Savings Plan and
applicable law.
(b) Rockwell Hourly Savings Plans. Effective as of the Time of
Contribution, Newco shall, or shall cause one or more of its Subsidiaries to,
assume sponsorship of the Rockwell Retirement Savings Plan for Certain
Employees (the "Rockwell Hourly Savings Plan") and the trust related thereto
and shall cause each Company Group Continuing Employee to have a fully
nonforfeitable right to such Company Group Continuing Employee's account
balances, if any, under the Rockwell Hourly Savings Plan. The account balances
of each Company Group Continuing Employee shall be maintained under the
Rockwell Hourly Savings Plan until distributed in accordance with the terms of
the Rockwell Hourly Savings Plan and applicable law.
(c) Plant Savings Plans. Effective as of the Time of Contribution,
Newco shall, or shall cause one or more of its Subsidiaries to, assume
sponsorship of the Asheville Employees Retirement Savings Plan Truck Axle
Division, the Rockwell International Corporation Gordonsville, Tennessee
Employees Savings Plan, the Rockwell International Corporation Retirement Plan
for Hourly Employees, Gordonsville, Tennessee and the York Employees Retirement
Savings Plan Truck Axle Division and the respective trusts related thereto.
(d) Rockwell Savings Plan for Certain Eligible Employees. If the
Rockwell Savings Plan for Certain Eligible Employees has not been merged into
and with the Rockwell International Corporation Savings Plan as of the Time of
Contribution, then effective as of the Time of Contribution, the Company shall,
or shall cause a member of the Company Group to, assume sponsorship of the
Rockwell Savings Plan for Certain Eligible Employees and the trust related
thereto and shall cause each Newco Group Continuing
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Employee to have a fully nonforfeitable right to such Newco Group Continuing
Employee's account balances, if any, under the Rockwell Savings Plan for
Certain Eligible Employees. The account balances of each Newco Group Continuing
Employee shall be maintained under the Rockwell Savings Plan for Certain
Eligible Employees until distributed in accordance with the terms thereof and
applicable law.
8.4. Deferred Compensation Plans and Nonqualified Retirement and
Savings Plans.
(a) Deferred Compensation Plans. Effective as of the Time of
Contribution, Newco shall assume liability for and shall pay when due all
benefits accrued as of the Time of Contribution (including, in the case of
Company Group Continuing Employees and, if any, Company Group Former Employees,
such individuals' vested and nonvested benefits which are accrued as of the
Time of Contribution) by, and attributable to, all employees and former
employees of the Company and its Subsidiaries and all present and former
non-employee directors of the Company under the Rockwell International
Corporation Deferred Compensation Plan as amended and restated effective
July 1, 1995, the Rockwell International Corporation Annual Incentive
Compensation Plan for Senior Executive Officers effective as of October 1, 1995
and the Rockwell International Corporation Deferred Compensation Policy for
Non-Employee Directors (the "Deferred Compensation Plans"), and shall perform,
pay and discharge fully all of the Company's and its Subsidiaries' duties,
liabilities or obligations thereunder with respect to such employees, former
employees and present and former non-employee directors of the Company and its
Subsidiaries. Effective as of the Time of Contribution, Newco shall cause each
Company Group Continuing Employee and Company Group Former Employee to have a
fully nonforfeitable right to such individual's entire account balance, if any,
under the Deferred Compensation Plans.
(b) Nonqualified Retirement Plans. Effective as of the Time of
Contribution, Newco shall assume liability for and shall pay when due all
benefits accrued as of the Time of Contribution by, and attributable to,
employees and former employees of the Company and its Subsidiaries (other than
Company Group Continuing Employees and Company Group Former Employees) under
the Rockwell International Corporation Supplemental Retirement Plan for Highly
Compensated Employees, the Rockwell International Corporation Excess Benefit
Retirement Plan and the Rockwell
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International Corporation Excess Benefit Plan (the "Nonqualified Retirement
Plans"), and shall perform, pay and discharge fully all of the Company's and
its Subsidiaries' duties, liabilities or obligations thereunder with respect to
such employees and former employees. Effective as of the Time of Contribution,
the Company shall assume liability for and shall pay when due all benefits
accrued as of the Time of Contribution by, and attributable to, Company Group
Continuing Employees and Company Group Former Employees (including such
individual's vested and nonvested benefits which are accrued as of the Time of
Contribution) under the Nonqualified Retirement Plans and shall perform, pay
and discharge fully all of the Company's and its Subsidiaries' duties,
liabilities or obligations with respect thereto.
(c) Nonqualified Savings Plans. Effective as of the Time of
Contribution, Newco shall assume liability for and shall pay when due all
benefits accrued as of the Time of Contribution (including, in the case of
Company Group Continuing Employees and, if any, Company Group Former Employees,
such individuals' vested and nonvested benefits which are accrued as of the
Time of Contribution) by, and attributable to, all employees and former
employees of the Company and its Subsidiaries under the Rockwell International
Corporation Supplemental Savings Plan for Highly Compensated Employees and the
Rockwell International Corporation Excess Benefit Savings Plan (the
"Nonqualified Savings Plans"), and shall perform, pay and discharge fully all
of the Company's and its Subsidiaries' duties, liabilities or obligations
thereunder with respect thereto. Effective as of the Time of Contribution,
Newco shall cause each Company Group Continuing Employee and Company Group
Former Employee to have a fully nonforfeitable right to such individual's
entire account balance, if any, under the Nonqualified Savings Plans.
8.5. Employee Stock Options. Effective as of the Time of
Contribution, Newco shall assume the Company Stock Plans. The Board of
Directors of the Company shall amend the Company Stock Plans, make adjustments
and take actions (and Newco shall take such actions as are reasonably required
to implement the same) with respect to options to acquire shares of Company
Common Stock or Company Class A Common Stock, as the case may be, pursuant to
any Company Stock Plan ("Company Options") which are outstanding immediately
prior to the Time of Distribution to provide that, pursuant to the equitable
adjustment provisions of the
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applicable Company Stock Plan under which such Company Options were granted,
effective as of the Time of Distribution such Company Options will be converted
into and represent the right to acquire shares of Newco Common Stock and Newco
Class A Common Stock, in each case with the associated Rights, with such other
amendments and adjustments as are reasonable and appropriate, including such
amendments as are reasonable and appropriate to ensure that any optionholder
who becomes a Company Group Continuing Employee or a Company Group Former
Employee as of the Time of Contribution will not forfeit any such converted
options on such date under the termination of employment provisions of such
plans as a result of not becoming a Newco Group Continuing Employee or a Newco
Group Former Employee, and will be entitled to vesting and exercisability
rights comparable to those that such optionholder has immediately prior to the
Time of Contribution to the extent that such optionholder remains in continuous
employment with any member of the Company Group.
8.6. Long-Term Incentive Plan. Effective as of the Time of
Contribution, (i) the Company shall retain liability for all amounts due under
the Rockwell International Business Unit Long-Term Incentive Plan (the "LTIP")
with respect to the Company Group Continuing Employees and Company Group Former
Employees and (ii) Newco shall assume liability for all amounts due under the
LTIP with respect to the Newco Group Continuing Employees and Newco Group
Former Employees. The amounts payable under clause (i) of the preceding
sentence shall be determined by the Company on the basis that (x) the target
award for each uncompleted cycle will be prorated to reflect the portion of
such cycle completed as of the Time of Contribution and (y) where payment is
based, in whole or in part, on the trading price of the Company Common Stock,
such price shall be the average closing price per share of Company Common Stock
reported on the NYSE for each full trading day during the months of August and
September immediately preceding the Time of Contribution. The amount due each
participant under the LTIP who is a Company Group Continuing Employee shall be
paid by the Company within 90 days following the Time of Contribution. Newco
shall promptly reimburse the Company, upon written request from the Company
therefor, for any amount paid by the Company under the LTIP as a result of this
Section 8.6 the expense of which is not reimbursed by the United States of
America under applicable Government Contracts, provided, however, that Newco
shall have the opportunity to participate in any negotiations with the
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applicable Governmental Entity with respect to such reimbursement or to
designate counsel or a representative reasonably satisfactory to the Company to
so participate on Newco's behalf unless such participation by Newco (or its
counsel or representative) is barred by such agency, in which case, the Company
shall consult with Newco and keep Newco apprised of any developments with
respect to such negotiations. The Company shall not establish, or cause to be
established, any new performance cycles under the LTIP with respect to Company
Group Continuing Employees and Company Group Former Employees prior to the Time
of Contribution.
8.7. Welfare Benefit Plans.
(a) Effective as of the Time of Contribution, the Company shall, or
shall cause a member of the Company Group to, maintain each "employee welfare
benefit plan", as defined in Section 3(1) of ERISA, and each other employee
welfare benefit or fringe benefit arrangement (collectively, "Company Group
Welfare Benefit Plans") sponsored or maintained by the Company or any of its
Subsidiaries immediately prior to the Time of Contribution for the benefit of
Company Group Continuing Employees and Company Group Former Employees
(including but not limited to those plans set forth on Schedule 8.7(a)). The
Company shall credit the dollar amount of all expenses incurred by Company
Group Continuing Employees and Company Group Former Employees and their
respective eligible dependents during the applicable plan year in which occurs
the Time of Contribution for purposes of satisfying such plan year's deductible
and co-payment limitations and shall credit service with the Company and its
Subsidiaries earned prior to the Time of Contribution under the relevant
welfare benefit plans of the Company Group. The Company shall credit each
Company Group Continuing Employee with the unused vacation days and any
personal and sickness days accrued in accordance with the vacation and
personnel policies and labor agreements of the Company and its Subsidiaries
applicable to such employees in effect as of the Time of Contribution.
(b) Effective as of the Time of Contribution, Newco shall, or shall
cause a member of the Newco Group to, establish or maintain "employee welfare
benefit plans", as defined in Section 3(1) of ERISA, and other employee welfare
benefit or fringe benefit arrangements (collectively, "Newco Group Welfare
Benefit Plans") which are comparable in the
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aggregate to the "employee welfare benefit plans" and other employee benefit
welfare or fringe benefit arrangements which had been maintained by the Company
and its Subsidiaries immediately prior to the Time of Contribution for the
benefit of Newco Group Continuing Employees and Newco Group Former Employees.
Newco shall credit the dollar amount of all expenses incurred by Newco Group
Continuing Employees and Newco Group Former Employees and their respective
eligible dependents during the applicable plan year in which occurs the Time of
Contribution for purposes of satisfying such plan year's deductible and
co-payment limitations and shall credit service with the Company and its
Subsidiaries earned prior to the Time of Contribution under the relevant
welfare benefit plans of the Newco Group. Newco shall credit each Newco Group
Continuing Employee with the unused vacation days and any personal and sickness
days accrued in accordance with the vacation and personnel policies and labor
agreements of the Company and its Subsidiaries applicable to such employees in
effect as of the Time of Contribution.
(c) As of the Time of Contribution, the Company shall retain and
continue to be responsible for all welfare benefit programs (including, but not
limited to, medical, dental, life, travel accident, short- and long-term
disability, hospitalization and other insurance benefits) under which claims
have been incurred for expenses prior to the Time of Contribution by Company
Group Continuing Employees, Company Group Former Employees and their dependents
and such reimbursement for such medical and dental expenses associated with
such claims (including claims submitted on behalf of disabled employees and
their dependents) shall be determined in accordance with the terms of the
welfare benefit programs of the Company Group as in effect immediately prior to
the Time of Contribution. As of the Time of Contribution, Newco shall assume
and be responsible for all welfare benefit programs (including, but not limited
to, medical, dental, life, travel accident, short- and long-term disability,
hospitalization and other insurance benefits) under which claims have been
incurred for expenses incurred prior to the Time of Contribution by Newco Group
Continuing Employees, Newco Group Former Employees and their dependents and
such reimbursement for such medical and dental expenses associated with such
claims (including claims submitted on behalf of disabled employees and their
dependents) shall be determined in accordance with the terms of the welfare
benefit programs of the Company
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Group as in effect immediately prior to the Time of Contribution.
8.8. Retiree Health and Life Insurance.
(a) The Company and the Company Group, or where appropriate, the
Company Group Welfare Benefit Plans, shall retain liability for all retiree
health benefits and retiree life insurance which were payable prior to the Time
of Contribution and/or are payable on or after the Time of Contribution to
(i) all eligible Company Group Continuing Employees (and their beneficiaries)
and (ii) all eligible Company Group Former Employees (and their beneficiaries).
The Company shall credit the dollar amount of all expenses incurred by Company
Group Continuing Employees and Company Group Former Employees and their
respective eligible dependents during the applicable plan year in which occurs
the Time of Contribution for purposes of satisfying such plan year's deductible
and co-payment limitations and shall credit service with the Company and its
Subsidiaries earned prior to the Time of Contribution under the relevant retiree
welfare benefit plans of the Company Group.
(b) Newco and the Newco Group, or where appropriate, the Newco Group
Welfare Benefit Plans, shall assume liability for all retiree health benefits
and retiree life insurance benefits which were payable prior to the Time of
Contribution and/or are payable on or after the Time of Contribution to
(i) all eligible Newco Group Continuing Employees (and their beneficiaries) and
(ii) all eligible Newco Group Former Employees (and their beneficiaries). Newco
shall credit the dollar amount of all expenses incurred by Newco Group
Continuing Employees and Newco Group Former Employees and their respective
eligible dependents during the applicable plan year in which occurs the Time
of Contribution for purposes of satisfying such plan year's deductible and
co-payment limitations and shall credit service with the Company and its
Subsidiaries earned prior to the Time of Contribution under the relevant retiree
welfare benefit plans of the Newco Group.
(c) As of the Time of Contribution, the Company shall retain and
continue to be responsible for all retiree welfare benefit programs (including,
but not limited to, medical, dental, life, travel accident, short- and
long-term disability, hospitalization and other insurance benefits) under which
claims have been incurred for expenses prior to the Time of Contribution by
Company Group Continuing
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Employees, Company Group Former Employees and their dependents and such
reimbursement for such medical and dental expenses associated with such claims
(including claims submitted on behalf of disabled employees and their
dependents) shall be determined in accordance with the terms of the welfare
benefit programs of the Company and its Subsidiaries as in effect immediately
prior to the Time of Contribution. As of the Time of Contribution, Newco shall
assume and be responsible for all retiree welfare benefit programs (including,
but not limited to, medical, dental, life, travel accident, short- and
long-term disability, hospitalization and other insurance benefits) under which
claims have been incurred for expenses incurred prior to the Time of
Contribution by Newco Group Continuing Employees, Newco Group Former Employees
and their dependents and such reimbursement for such medical and dental
expenses associated with such claims (including claims submitted on behalf of
disabled employees and their dependents) shall be determined in accordance with
the term of the retiree welfare benefit programs of the Company and its
Subsidiaries as in effect immediately prior to the Time of Contribution.
8.9. Retention and Severance Obligations. The Company and Newco agree
that the transactions contemplated by this Agreement shall not constitute a
severance of employment of any Company Group Continuing Employee and Newco
Group Continuing Employee prior to or as a result of the consummation of the
transactions contemplated hereby, and that such employees will have continuous
and uninterrupted employment with the Company Group or Newco Group, as
applicable, before and immediately after the Time of Contribution. Without
limiting the generality of Section 8.9, effective as of the Time of
Contribution, the Company shall retain liability for and shall pay when due all
amounts which may become payable under the Rockwell Retention and Severance
Arrangement.
8.10. Free-Standing Plans. Effective as of the Time of Contribution,
Newco shall assume, or shall cause the Newco Group to assume, all liabilities
and obligations under each employee benefit plan, arrangement or policy which,
prior to the Time of Contribution, is exclusively for the benefit of Newco
Group Continuing Employees, Newco Group Former Employees, and their eligible
beneficiaries (the "Newco Group Free-Standing Plans"). Effective as of the Time
of Contribution, the Company shall retain, or shall cause the Company Group to
retain, all liabilities and obligations under each employee benefit plan,
arrangement or
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policy which, prior to the Time of Contribution, is exclusively for the benefit
of Company Group Continuing Employees, Company Group Former Employees, and
their eligible beneficiaries (the "Company Group Free-Standing Plans"). The
Company and Newco shall take, or cause to be taken, all such action as may be
necessary or appropriate to establish the Newco Group as successor to the
Company or its Subsidiaries as to all rights, assets, duties, liabilities and
obligations under, or with respect to, the Newco Group Free-Standing Plans and
to establish the Company Group as successor to the Company or its Subsidiaries
as to all rights, assets, duties, liabilities and obligations with respect to
the Company Group Free-Standing Plans.
8.11. Employment, Consulting and Severance Agreements. Effective as
of the Time of Contribution, Newco shall assume, or cause the Newco Group to
assume, all liabilities and obligations attributable to Newco Group Continuing
Employees and Newco Group Former Employees under their respective employment,
consulting and severance agreements with the Company or its Subsidiaries, as
the same are in effect immediately prior to the Time of Contribution. Effective
as of the Time of Contribution, the Company shall retain, or cause the Company
Group to retain, all liabilities and obligations attributable to Company Group
Continuing Employees and Company Group Former Employees under their respective
employment, consulting and severance agreements with the Company or its
Subsidiaries, as the same are in effect immediately prior to the Time of
Contribution.
8.12. Welfare Plan Funding.
(a) Non-Collectively Bargained Voluntary Employees' Beneficiary
Association. Prior to the Time of Contribution, Newco shall have established a
voluntary employees' beneficiary association (the "Newco VEBA") under Section
501(c)(9) of the Code covering Newco Group Continuing Employees and Newco Group
Former Employees who are covered under the Trust for Employee Welfare Benefit
Programs of Rockwell International Corporation (the "Rockwell VEBA"). The Newco
VEBA shall contain provisions comparable in all material respects to and no
less favorable in the aggregate to its participants than those of the Rockwell
VEBA. Prior to the Time of Contribution, the Rockwell VEBA shall have
transferred to the Newco VEBA assets attributable to the Newco Group Continuing
Employees and Newco Group Former Employees covered under the Rockwell VEBA. The
amount of assets transferred from the Rockwell
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VEBA to the Newco VEBA pursuant to this Section 8.12(a) shall have been based
upon the value of the assets in the applicable employee group insurance plan as
of the date of the transfer multiplied by the ratio that the costs allocated
for the Newco Group Continuing Employees and Newco Group Former Employees bear
to the total costs allocated under the Rockwell VEBA for the Company's
government accounting fiscal year in which such transfer occurs to the date of
the transfer. The Company and Newco agree to adjust the initial asset
allocation set forth in the preceding sentence, based upon actual claims cost
experience at such time as the actual experience is known pursuant to the
Company's practices existing on the date hereof. Effective as of the Time of
Contribution, Newco shall continue to sponsor the Newco VEBA. Effective as of
the Time of Contribution, the Company shall continue to sponsor the Rockwell
VEBA and shall change the name of the Rockwell VEBA to eliminate any reference
to "Rockwell".
(b) Collectively Bargained Voluntary Employees' Beneficiary
Association. Prior to the Time of Contribution, Newco shall have established a
voluntary employees' beneficiary association (the "Newco Collectively Bargained
VEBA") under Section 501(c)(9) covering Newco Group Continuing Employees and
Newco Group Former Employees who are covered under the Agreement of Trust for
Certain Collectively Bargained Welfare Benefit Plans of Rockwell International
Corporation (the "Rockwell Collectively Bargained VEBA"). The Newco
Collectively Bargained VEBA shall contain provisions comparable in all material
respects to and no less favorable in the aggregate to its participants than
those of the Rockwell Collectively Bargained VEBA. Prior to the Time of
Contribution, the Rockwell Collectively Bargained VEBA shall have transferred
to the Newco Collectively Bargained VEBA assets attributable to the Newco Group
Continuing Employees and Newco Group Former Employees covered under the
Rockwell Collectively Bargained VEBA. The amount of assets transferred from the
Rockwell Collectively Bargained VEBA to the Newco Collectively Bargained VEBA
pursuant to this Section 8.12(b) shall have been based upon the value of the
assets in the Rockwell Collectively Bargained VEBA as of the date of the
transfer multiplied by the ratio that the costs allocated for the Newco Group
Continuing Employees and Newco Group Former Employees bear to the total costs
allocated under the applicable employee group insurance plan for the Company's
government accounting fiscal year in which such transfer occurs to the date of
the transfer. Effective as of the
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Time of Contribution, Newco shall continue to sponsor the Newco Collectively
Bargained VEBA. Effective as of the Time of Contribution, the Company shall
continue to sponsor the Rockwell Collectively Bargained VEBA and shall change
the name of the Rockwell Collectively Bargained VEBA to eliminate any reference
to "Rockwell".
(c) Continued Life Insurance Reserve Fund. Prior to the Time of
Contribution, Newco shall have established a continued life insurance reserve
fund (the "Newco CLIR Fund") covering Newco Group Continuing Employees and
Newco Group Former Employees who are covered under the Continued Life Insurance
Reserve Fund (the "Rockwell CLIR Fund"). The Newco CLIR Fund shall contain
provisions comparable in all material respects to and no less favorable in the
aggregate to its participants than those of the Rockwell CLIR Fund. Prior to
the Time of Contribution, the Rockwell CLIR Fund shall have transferred to the
Newco CLIR Fund assets attributable to the Newco Group Continuing Employees and
Newco Group Former Employees covered under the Rockwell CLIR Fund. The amount
of assets transferred from the Rockwell CLIR Fund to the Newco CLIR Fund
pursuant to this Section 8.12(c) shall have been based upon the proportionate
values of the assets in the Rockwell CLIR Fund attributable to Newco Group
Continuing Employees and Newco Group Former Employees as of the most recent
actuarial valuation for the Rockwell CLIR Fund prepared by the Newco Actuary,
subject to review by the Company Actuary. In the event of a dispute between the
Newco Actuary and the Company Actuary, the Actuarial Dispute Resolution Process
shall be used to determine the amount of assets to be transferred. Effective as
of the Time of Contribution, Newco shall continue to sponsor the Newco CLIR
Fund. Effective as of the Time of Contribution, the Company shall continue to
sponsor the Rockwell CLIR Fund and shall change the name of the Rockwell CLIR
Fund to eliminate any reference to "Rockwell".
(d) Additional Action. Prior to, on and after the Time of
Contribution, the Company and Newco each shall take and shall have taken such
further actions as may be necessary or appropriate to (i) establish Newco as
the sponsor of the Newco VEBA, Newco Collectively Bargained VEBA and Newco CLIR
Fund, (ii) provide for the continued sponsorship by the Company of the Rockwell
VEBA, Rockwell Collectively Bargained VEBA and Rockwell CLIR Fund and
(iii) cause the transfers described in this Section 8.12 to be made in
accordance with applicable law and the terms of any applicable collective
bargaining agreement.
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8.13. Indemnification. Except as otherwise provided in this Article
VIII, Newco shall indemnify, defend and hold harmless the Company Group from
and against, and pay or reimburse the Company Group for, any claims made by any
Newco Group Continuing Employee or Newco Group Former Employee for severance or
other separation benefits, any claims based on breach of contract and any other
claims arising out of or in connection with the employment or the failure to
offer employment to, or the termination of employment of, any Newco Group
Continuing Employee or Newco Group Former Employee. The Company shall
indemnify, defend and hold harmless the Newco Group from and against, and pay
or reimburse the Newco Group for, any claims made by any Company Group
Continuing Employee or Company Group Former Employee for severance or other
separation benefits, any claims based on breach of contract and any other
claims arising out of or in connection with the employment or the failure to
offer employment to, or the termination of employment of, any Company Group
Continuing Employee or Company Group Former Employee. Newco shall indemnify,
defend and hold harmless the Company Group from and against, and pay or
reimburse the Company Group for, all liabilities resulting from any failure to
file a determination letter request with the IRS within the remedial amendment
period prescribed under Section 401(b) of the Code with respect to compliance
with the Tax Reform Act of 1986 for any Company Pension Plan that is intended
to be tax-qualified under Section 401(a) of the Code.
8.14. Cooperation. Without limiting the generality of Article VII
hereof, the Company Group and Newco Group agree to promptly furnish each other
with such information concerning employees and employee benefit plans,
arrangements or policies as is necessary and appropriate to effect the
transactions contemplated by this Article VIII.
8.15. Amendment, Modification or Termination of Benefit Plans. From
and after the Time of Contribution, (i) the Company Group expressly reserves
the right, in accordance with applicable law and the terms of any applicable
collective bargaining agreement, to amend, modify or terminate any Benefit Plan
it sponsors or maintains for Company Group Continuing Employees and Company
Group Former Employees and (ii) the Newco Group expressly reserves the right,
in accordance with applicable law and the terms of any applicable collective
bargaining agreement, to amend, modify or terminate any Benefit Plan it
sponsors or
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maintains for Newco Group Continuing Employees or Newco Group Former Employees.
ARTICLE IX
CONDITIONS
9.1. Conditions to Obligations of the Company. The obligations of the
Company to consummate the Distribution hereunder shall be subject to the
fulfillment of each of the following conditions:
(a) All of the transactions contemplated by Article II shall have
been consummated.
(b) The recapitalization of Newco in accordance with Section 3.2
shall have been consummated.
(c) Each condition to the Closing of the Merger Agreement set
forth in Article VI thereof, other than (i) the condition set forth in
Sections 6.1(f) thereof as to the consummation of the Contribution and the
Distribution and (ii) the condition to the Acquiror's obligations set forth in
Section 6.3(d) thereof as to the satisfaction of conditions contained in this
Agreement, shall have been fulfilled or waived by the party for whose benefit
such condition exists.
(d) The Board of Directors of the Company shall be reasonably
satisfied that, after giving effect to the Contribution, (i) the Company will
not be insolvent and will not have unreasonably small capital with which to
engage in its businesses and (ii) the Company's surplus would be sufficient to
permit, without violation of Section 170 of the DGCL, the Distribution.
(e) Acquiror, the Company and Newco shall each have received, in form
and substance reasonably satisfactory to each, the advance agreements and
approvals of Governmental Entities concerning the matters described on
Schedule 9.1(e).
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ARTICLE X
MISCELLANEOUS AND GENERAL
10.1. Modification or Amendment. The parties hereto may modify or
amend this Agreement only by written agreement executed and delivered by duly
authorized officers of the respective parties.
10.2. Waiver; Remedies. The conditions to the Company's obligation to
consummate the Distribution are for the sole benefit of the Company and may be
waived in writing by the Company in whole or in part to the extent permitted by
applicable law. No delay on the part of any party hereto in exercising any
right, power or privilege hereunder will operate as a waiver thereof, nor will
any waiver on the part of any party hereto of any right, power or privilege
hereunder operate as a waiver of any other right, power or privilege hereunder,
nor will any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder. Unless otherwise provided, the
rights and remedies herein provided are cumulative and are not exclusive of any
rights or remedies which the parties may otherwise have at law or in equity.
10.3. Counterparts. For the convenience of the parties, this
Agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.
10.4. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
10.5. Notices. Any notice, request, instruction or other
communication to be given hereunder by any party to any other party shall be in
writing and shall be deemed to have been duly given (i) on the date of delivery
if delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (ii) on the first business day following the date of dispatch if
delivered by Federal Express or other nationally reputable next-day courier
service, or (iii) on the third business day following the date of mailing if
delivered by registered or certified
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mail, return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) If to Newco or the Operating Subsidiaries:
New Rockwell International Corporation
2201 Seal Beach Boulevard
Seal Beach, California 90740-8250
Attention: William J. Calise, Jr., Esq.
Senior Vice President, General
Counsel and Secretary
Telecopy: (310) 797-5687
with copies to:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Peter R. Kolyer, Esq.
Telecopy: (212) 541-5369
and
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Eric S. Robinson, Esq.
Telecopy: (212) 403-2000
(b) If to the Company:
Boeing NA, Inc.
c/o The Boeing Company
P.O. Box 3707
M/S 13-08
Seattle, Washington 98124-2207
Attention: Theodore J. Collins, Esq.
Vice President & General Counsel
Telecopy: (206) 544-4900
and
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Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Allen Finkelson, Esq.
Telecopy: (212) 474-3700
10.6. Entire Agreement. The Reorganization Agreements (including the
Annexes and Schedules thereto), the Transition Agreement and the
Confidentiality Agreement constitute the entire agreement, and supersede all
other prior agreements, understandings, representations and warranties, both
written and oral, among the parties, with respect to the subject matter hereof
and thereof.
10.7. Certain Obligations. Whenever this Agreement requires any of
the Subsidiaries of any party to take any action, this Agreement will be deemed
to include an undertaking on the part of such party to cause such Subsidiary to
take such action.
10.8. Assignment. No party to this Agreement shall convey, assign or
otherwise transfer any of its rights or obligations under this Agreement
without the express written consent of the other parties hereto in their sole
and absolute discretion, except that any party hereto may assign any of its
rights hereunder to a successor to all or any part of its business. Except as
aforesaid, any such conveyance, assignment or transfer without the express
written consent of the other parties shall be void ab initio. No assignment of
this Agreement shall relieve the assigning party of its obligations hereunder.
10.9. Captions. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
10.10. Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement, the party or parties who are or are to be thereby aggrieved shall
have the right of specific performance and injunctive relief giving effect to
its or their rights under this Agreement, in addition to any and all other
rights and remedies at law or in equity, and all such rights and
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remedies shall be cumulative. The parties agree that the remedies at law for
any breach or threatened breach, including monetary damages, are inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived.
10.11. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon any such determination, the parties shall negotiate
in good faith in an effort to agree upon a suitable and equitable substitute
provision to effect the original intent of the parties.
10.12. Third Party Beneficiaries. Acquiror shall be a third party
beneficiary of this Agreement. Nothing contained in this Agreement is intended
to confer upon any Person or entity other than the parties hereto and their
respective successors and permitted assigns (other than Acquiror), any benefit,
right or remedies under or by reason of this Agreement, except that the
provisions of Sections 6.1 and 8.13 hereof shall inure to the benefit of the
persons referred to therein.
10.13. Schedules. All Schedules attached hereto or referred to herein
are hereby incorporated in and made a part of this Agreement as if set forth in
full herein. Matters reflected on the Schedules are not necessarily limited to
matters required by this Agreement to be reflected on such Schedules. Such
additional matters are set forth for informational purposes only and do not
necessarily include other matters of a similar nature. Capitalized terms used
in any Schedule but not otherwise defined therein shall have the respective
meanings assigned to such terms in this Agreement.
10.14. Consent to Jurisdiction. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of (i) the Superior Court of
the State of
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California, San Francisco County and (ii) the United States District Court for
the Northern District of California for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby (and agrees not to commence any action, suit or proceeding relating
hereto except in such courts). Each of the parties hereto further agrees that
service of any process, summons, notice or document hand delivered or sent by
registered mail to such party's respective address set forth in Section 10.5
will be effective service of process for any action, suit or proceeding in
California with respect to any matters to which it has submitted to
jurisdiction as set forth in the immediately preceding sentence. Each of the
parties hereto irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (i) the Superior Court of the State
of California, San Francisco County or (ii) the United States District Court
for the Northern District of California, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first hereinabove written.
ROCKWELL INTERNATIONAL CORPORATION
By: /s/ WILLIAM J. CALISE, JR.
--------------------------------
Name: William J. Calise, Jr.
Title: Senior Vice President
NEW ROCKWELL INTERNATIONAL CORPORATION
By: /s/ WILLIAM J. CALISE, JR.
--------------------------------
Name: William J. Calise, Jr.
Title: Senior Vice President
ALLEN-BRADLEY COMPANY, INC.
By: /s/ WILLIAM J. CALISE, JR.
--------------------------------
Name: William J. Calise, Jr.
Title: Vice President
ROCKWELL COLLINS, INC.
By: /s/ WILLIAM J. CALISE, JR.
--------------------------------
Name: William J. Calise, Jr.
Title: Vice President
ROCKWELL SEMICONDUCTOR SYSTEMS, INC.
By: /s/ WILLIAM J. CALISE, JR.
--------------------------------
Name: William J. Calise, Jr.
Title: Vice President
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ROCKWELL LIGHT VEHICLE SYSTEMS, INC.
By: /s/ WILLIAM J. CALISE, JR.
--------------------------------
Name: William J. Calise, Jr.
Title: Vice President
ROCKWELL HEAVY VEHICLE SYSTEMS, INC.
By: /s/ WILLIAM J. CALISE, JR.
--------------------------------
Name: William J. Calise, Jr.
Title: Vice President