SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 21, 1995
REFLECTONE, INC.
(Exact name of registrant as specified in its charter)
Florida 0-14059 06-0663546
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
4908 Tampa West Boulevard, Tampa, Florida 33634-2481
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (813) 885-7481
Not Applicable.
(Former name or former address, if changed since last report.)
Page 1 of 21
The Exhibit Index is on Page 4
PAGE
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Item 2. Other Events
On December 21, 1995, Reflectone, Inc. (the "Company") sold to British
Aerospace Holdings, Inc. ("BAHI") a Company-manufactured Jetstream 41 Full
Flight Simulator (the "Simulator") which Reflectone Training Systems, Inc.
("RTS"), a wholly owned subsidiary of the Company, had previously operated
as part of the management of the Reflectone Training Center located in
Sterling, Virginia near the Dulles International Airport ("RTC-Dulles").
The sale price for the Simulator and related courseware was Eight Million
Six Hundred Twenty Thousand Two Hundred Forty-One Dollars
(U.S.$8,620,241), which was paid in cash. No significant gain or loss
resulted from the sale.
The sale of the Simulator was made concurrently with the Company's
revision, effective January 1, 1996, of its management agreement with BAHI
relating to RTC-Dulles. Under the terms of the revised management
agreement with BAHI, RTS will receive a fixed fee of Five Hundred Thousand
Dollars annually for the management of RTC-Dulles and will be reimbursed
by BAHI for RTS's out-of-pocket costs associated with its management of
RTC-Dulles. Prior to this revision, the terms of the Company's management
agreement for RTC-Dulles provided for a revenue sharing arrangement
between the parties.
RTC-Dulles is a division of the Company's Training Services Segment. For
the nine months ended September 29, 1995, RTC-Dulles generated revenues of
$5,249,000 and operating income of $238,000. As a result of the above
described transaction, the Company anticipates a reduction in future
revenues of approximately $2,900,000 per annum, and operating income
generated by RTC-Dulles will be equal to the fixed fee of $500,000.
The Company has various relationships, contracts and agreements with BAHI
and its parent British Aerospace, Plc ("BAe") and BAe's other subsidiaries
and affiliates. British Aerospace, Inc., a wholly owned subsidiary of
BAe, owns approximately 52.6% of the Company's issued and outstanding
common stock and 100% of the Company's issued and outstanding preferred
stock. Syd Gillibrand, a director of the Company, was Vice Chairman of
the Board of Directors of BAe, a position from which he retired in June
1995. David R. Fish, another director of the Company, currently serves as
Finance Director of the Systems and Services Division of British Aerospace
Defence Ltd., a wholly owned subsidiary of BAe.
Item 7. Financial Statements and Exhibits
(A) Exhibits
Exhibit 10.1 Purchase Agreement between British Aerospace Holdings, Inc.
and Reflectone, Inc., dated December 21, 1995.
Exhibit 10.2 Flight Training Center Management Agreement between
British Aerospace Holdings, Inc. and Reflectone Training
Systems, Inc., dated January 1, 1996.
PAGE
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REFLECTONE, INC.
(Registrant)
Date: January 5, 1996 By: /s/Richard W. Welshhans
Richard W. Welshhans
Vice President and Chief Financial Officer
PAGE
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REFLECTONE, INC.
Form 8-K
December 21, 1995
EXHIBIT INDEX
Exhibit Page
Number Number
10.1 Purchase Agreement between British Aerospace Holdings, Inc. 5
and Reflectone, Inc., dated December 21, 1995.
10.2 Flight Training Center Management Agreement between British 12
Aerospace Holdings, Inc. and Reflectone Training Systems, Inc.,
dated January 1, 1996.
PAGE
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PURCHASE AGREEMENT
BETWEEN
BRITISH AEROSPACE HOLDINGS, INC.
AND
REFLECTONE, INC.
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<PAGE>
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement"), made and executed as of this
21st day of December, 1995, is by and between BRITISH AEROSPACE
HOLDINGS, INC., a Virginia corporation ("Buyer"), and REFLECTONE,
INC., a Florida corporation ("Seller").
RECITALS
A. Seller is the owner of that certain Reflectone, Inc. -
manufactured Jetstream 41 Full Flight Simulator featuring an IVEX
Visual System as more particularly described in Exhibit A attached
hereto (the "J-41 Simulator"), and related spare parts as more
particularly described in Exhibit B attached hereto (the "Spare
Parts"). (The J-41 Simulator and the Spare Parts are hereinafter
collectively referred to as the ("Equipment").
B. Seller is the owner of certain computer software programs
and source code information prepared by Seller and used in the
operation of the J-41 Simulator, including but not limited to the
software and source code information described on Exhibit C
attached hereto (the "Software").
C. Seller, through its subsidiary Reflectone Training
Systems, Inc. ("RTS"), is the developer and owner of certain
training courseware related to the J-41 Simulator, as more
particularly described on Exhibit D attached hereto (the
"Courseware").
D. Seller desires to sell the Equipment to Buyer and Buyer
is willing to purchase the Equipment pursuant to the terms and
conditions of this Agreement.
E. Seller desires to grant to the Buyer and the Buyer
desires to receive from the Seller a perpetual, royalty-free
license to use the Software, pursuant to the terms of the Software
License Agreement attached hereto as Exhibit E.
F. Seller desires to sell the Courseware to Buyer and Buyer
is willing to purchase the Courseware pursuant to the terms and
conditions of this Agreement.
G. All Exhibits hereto are incorporated into and form a part
of this Agreement.
1. SUBJECT MATTER OF SALE
(a) Pursuant to the terms and conditions of this
Agreement, Seller does hereby sell the Equipment and the Courseware
to Buyer and Buyer hereby purchases the Equipment and the
Courseware from Seller. Notwithstanding the foregoing, Buyer
acknowledges and agrees that the sale of the Courseware by Seller
to Buyer pursuant to this Agreement shall not preclude Seller from
developing and selling other simulator or training courseware
(including courseware that contains proprietary information,
techniques, or methods similar to or derived from those contained
in the Courseware).
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(b) In addition, Seller shall assign to Buyer certain of
Seller's right, title and interest under the purchase agreement for
the visual system for the J-41 Simulator between Seller and IVEX
Corporation ("IVEX").
2. PURCHASE PRICE
The purchase price for the Equipment and the Courseware
(the "Purchase Price") shall be Eight Million Six Hundred Twenty
Thousand Two Hundred Forty-One Dollars (U.S. $8,620,241.00).
3. PAYMENT
(a) The Purchase Price shall be paid to Seller by Buyer
on the date hereof (the "Closing Date").
(b) The Purchase Price shall be paid in United States
currency, in immediately available funds, by Buyer remitting the
entirety of the Purchase Price to Seller by wire transfer to a
depository in the United States to be designated in writing by
Seller.
4. DELIVERY
Delivery of the Equipment and the Courseware shall be made on the
Closing Date at the current location of the Equipment at the
Reflectone Training Center - Dulles at 22070 Broderick Drive,
Sterling, Virginia. Title to the Equipment and the Courseware shall
pass from Seller to Buyer by Seller delivering to Buyer on the
Closing Date a duly executed Bill of Sale in substantially the form
attached hereto as Exhibit F (the "Bill of Sale").
5. LICENSES
(a) On the Closing Date and as a condition to the
obligations of the Buyer under this Agreement, Seller and Buyer
shall execute and deliver a Software License Agreement in
substantially the form attached hereto as Exhibit E (the "Software
License Agreement"), pursuant to which Seller will grant to Buyer
a perpetual nonexclusive license to use the Software solely in
connection with the operation, calibration, maintenance, overhaul,
upgrade and repair of the J-41 Simulator, subject to the terms and
conditions set forth therein.
(b) On or prior to the Closing Date and as a condition
to the obligations of the Buyer under this Agreement, IVEX and
Buyer shall execute and deliver a Software License Agreement in
substantially the form attached hereto as Exhibit G (the "IVEX
License Agreement"), pursuant to which IVEX will grant to Buyer a
perpetual nonexclusive license to use certain software related to
the visual system of the J-41 Simulator solely in connection with
the operation, calibration, maintenance, overhaul, upgrade and
repair of the J-41 Simulator, subject to the terms and conditions
set forth therein.
6. TAXES
The Buyer agrees to pay all taxes, duties and similar obligations
that result from the sale of the Equipment and the Courseware
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hereunder including, but not limited to, sales, use, value added,
gross receipt and excise taxes imposed upon Buyer or Seller or
asserted as a lien or encumbrance against the Equipment or the
Courseware as a result of the sale of the Equipment and the
Courseware, and Buyer agrees to indemnify, defend and hold Seller
harmless from and against any such taxes, duties or similar
obligations.
7. WARRANTIES.
Upon delivery of the Equipment, Seller shall provide and shall
cause IVEX and other J41 Simulator vendors and suppliers to provide
to Buyer, limited warranties for the Equipment as set forth on
Exhibit H hereof.
8. REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer that, at the time of
delivery of the Equipment and the Courseware under this Agreement:
(a) Seller shall have the lawful right to sell the
Equipment and the Courseware in accordance with the terms hereof
(b) Seller shall have good and marketable legal title to
the Equipment and the Courseware free and clear of any and all
liens, claims, charges or encumbrances.
(c) As of the date of the Closing, the J-41 Simulator
has been maintained in accordance with the manufacturer's
recommended maintenance procedures and has been certified to Level
C by the United States Federal Aviation Administration.
(d) Seller is a duly organized and validly existing
corporation in good standing under the laws of its state of
incorporation.
(e) Seller has the power and authority to enter into,
execute, deliver and perform under this Agreement, the Bill of
Sale, and the Software License Agreement (collectively the "Sale
Documents"), and the Sale Documents will constitute, when executed
and delivered by Seller, the valid and binding obligations of
Seller, enforceable in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general principles of equity.
(f) The execution and delivery by Seller of the Sale
Documents and the performance by Seller of its obligations
thereunder have been duly authorized by all necessary action on the
part of Seller and do not violate, conflict with, constitute a
breach of or result in any default under or require any consent or
approval by any third party under (i) any provision of Seller's
Articles of Incorporation or By-Laws, or (ii) any law or any order,
writ, injunction, restriction, decree, rule or regulation of any
court, administrative agency or any other governmental authority
applicable to Seller or (iii) any material agreement to which
Seller is a party or by which Seller is bound.
(g) No consent, approval, authorization, order,
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registration or qualification of or with any court or regulatory
authority or other governmental body having jurisdiction over
Seller or any other person or entity, the absence of which would
adversely affect the legal and valid execution, delivery and
performance by Seller of this Agreement, is required.
(h) There is no litigation, investigation or proceeding
of or before any arbitrator or governmental authority pending or
threatened by or against Seller or against any of its properties or
revenues which, if adversely determined, would have a material
adverse effect on the ability of Seller to perform its obligations
hereunder.
(i) EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH HEREIN,
SELLER MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WARRANTIES AS TO MERCHANTABILITY OR AS TO THE FITNESS OF THE
EQUIPMENT OR THE COURSEWARE FOR ANY PARTICULAR USE OR PURPOSE, AND
SHALL NOT BE LIABLE FOR ANY LOSS OR DAMAGE, DIRECTLY OR INDIRECTLY,
ARISING FROM THE USE OF SUCH EQUIPMENT OR COURSEWARE OR FOR
CONSEQUENTIAL DAMAGES.
9. INDEMNIFICATION
(a) Seller shall indemnify, protect, defend and hold
Buyer and its directors, officers, agents and employees harmless
from and against any and all loss, liability, damage, claim, suit,
cost or expense (including, without limitation, court costs and
reasonable attorney's fees) which may arise out of, or result from
any breach by Seller of any of its representations and warranties
set forth in Section 8(a) above.
(b) In the event any claim for indemnification hereunder
arises on account of a claim or action made or instituted by a
third person against an indemnified party, the indemnified party
shall notify the indemnifying party promptly after receipt of
notice that such a claim or action is being made or was instituted.
The indemnifying party shall be entitled to control the defense of
any such claim or action by counsel of its own choosing. If the
indemnifying party shall control the defense of such claim or
action, the same shall not be settled without prior written consent
of the indemnified party.
10. APPLICABLE LAW
This Agreement shall in all respect be governed by and
construed in accordance with the laws of the Commonwealth of
Virginia without regard to its conflicts laws.
11. NOTICES
All notices and requests required or authorized shall be
given in writing and submitted by personal delivery or by
registered or certified mail, return receipt requested, or by
overnight delivery service (i.e., Federal Express) or telecopier.
The date upon which any such notice or request is received by the
addressee shall be deemed to be the effective date of such notice
or request. Notices and requests addressed by Buyer shall be as
follows:
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British Aerospace Holdings, Inc.
22070 Broderick Drive
Sterling, Virginia 20166
Attention: General Counsel
Telecopier: (703) 406-1250
Notices and requests addressed by Seller shall be as follows:
Reflectone, Inc.
4908 Tampa West Blvd.
Tampa, Florida 33684
Attention: Chief Financial Officer
Telecopier: (813) 887-3964
12. FEES AND EXPENSES
With respect to the transaction contemplated by this
Agreement, each party shall be responsible for its own fees and
costs, including but not limited to, the fees and costs of its own
respective legal counsel. In any action or proceeding between the
parties, or any of them, to enforce any of the provisions of this
Agreement, to prevent the breach hereof, to seek damages on account
of a breach, to seek a declaration of the rights and obligations of
the parties hereunder or in which the provisions of this Agreement
are asserted as a defense, regardless of whether the action or
proceeding is prosecuted to judgment and in addition to any other
remedy, the unsuccessful party shall pay the successful party all
costs and expenses, including reasonable attorneys' fees, incurred
therein by the successful party.
13. MISCELLANEOUS
(a) Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(b) CounterParts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same
instrument.
(c) Assignment: Successors and Assigns. Neither this
Agreement nor any of the rights and obligations hereunder may be
assigned by either party without the prior written consent of the
other. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns, and no other person shall have
any right, benefit or obligations hereunder.
(d) Waiver: Amendment. No term or provision of this
Agreement may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by the party or other
person against whom enforcement of the change, waiver, discharge or
termination is sought; and any waiver of the terms thereof shall be
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effective only in the specific instance and for the specific
purpose given. This Agreement may be amended only by written
agreement executed by the parties hereto.
(e) Headings. The headings of the various Sections
herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof
(f) Entire Agreement. This Agreement embodies the
entire agreement and understanding of the parties with respect to
the subject matter hereof and, as of its effective date, terminates
and supersedes all prior and independent agreement or
understandings between the parties covering the same subject
matter.
(g) Survival. The representations, warranties,
indemnities, covenants and disclaimers made herein and the rights
and obligations of the parties set forth herein, shall survive the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby.
(h) Further Assurances. Each party hereto shall execute
and deliver all such further instruments and documents as may
reasonably be requested by the other party in order to fully carry
out the intent and accomplish the purposes of the Sale Documents
and the transactions contemplated thereby, including without
limitation, any reasonable instruments or documents required by the
Buyer.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written by
their officers or agents thereunto duly authorized.
BRITISH AEROSPACE HOLDINGS, INC.
By: Paul L. Harris
____________________________
Its: Senior Vice President and
General Manager
REFLECTONE, INC.
By: Richard W. Welshhans
____________________________
Its: Vice President & Chief
Financial Officer
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FLIGHT TRAINING CENTER MANAGEMENT AGREEMENT
FLIGHT TRAINING CENTER MANAGEMENT AGREEMENT ("Agreement"),
dated January 1, 1996, by and between BRITISH AEROSPACE HOLDINGS,
INC., a Delaware corporation ("BAHI"), and REFLECTONE TRAINING
SYSTEMS, INC., a Delaware corporation ("RTS").
WITNESSETH:
WHEREAS, BAHI is the owner of a flight training center located
at 22070 Broderick Drive, Sterling, Virginia 20166; and
WHEREAS, BAHI wishes to engage RTS to manage the Center and
RTS wishes to accept such engagement upon the terms of this
Agreement.
WHEREAS, British Aerospace, Inc., a predecessor of BAHI, and
RTS entered into a Flight Training Center Management Agreement,
dated as of April 1, 1993, which agreement, the parties hereto
agree, is superseded by this Agreement and terminated by the
execution of this Agreement.
NOW THEREFORE, in consideration of the foregoing, of the
mutual covenants herein contained, and of other good and valuable
consideration, the receipt, adequacy, and sufficiency of which is
hereby acknowledged, the parties, intending legally to be bound
hereby, agree as follows:
1. DEFINITIONS.
For the purposes of this Agreement, the following definitions
shall apply:
(a) "Center", shall mean the business known as "Reflectone
Training Center-Dulles" currently operated by RTS at the Center
Facility utilizing the Center Assets.
(b) "Center Assets" shall mean all of the machinery,
equipment (including, but not limited to FTD's and mock-up training
equipment), furniture, fixtures, courseware, training materials,
data, and other documentation used by RTS in the operation of the
Center immediately prior to the effective date of this Agreement,
including, but not limited to the Existing Simulators.
(c) "Center Facility" shall mean the real property and
improvements thereto (and common areas associated, directly or
indirectly therewith, including, but not limited to, hallways,
walkways, lobbies, elevators, parking lots and similar areas)
located at 22070 Broderick Drive, Sterling, Virginia 20166, used
for the Center (including both the training center and the office
and classroom facilities located in the BAHI corporate office
building) and more fully described on Exhibit A hereto.
(d) "Direct Operating Expenses" shall mean direct operating
expenses of RTS incurred in the operation of the Center by RTS
employees located at the Center Facility. In no event shall Direct
Operating Expenses include the general and administration or
overhead expenses incurred by RTS or any of its affiliates
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supporting the operation of the Center.
(e) "Existing Simulators" shall mean the aircraft flight
simulators described on Exhibit B hereto.
(f) "New Simulators" shall mean any and all aircraft flight
simulators utilized in the Center at any time during the term of
this Agreement other than the Existing Simulators.
2. ENGAGEMENT OF RTS.
BAHI hereby engages RTS to operate and manage the Center, and
RTS hereby accepts such engagement, upon the terms and conditions
set forth below.
3. DUTIES AND OBLIGATIONS OF BAHI.
(a) Except as otherwise provided in Section 8(b) hereof, at
all times during the term of this Agreement, BAHI, at BAHI's cost
and expense (except as otherwise stated in this Agreement), shall
make the Center Facility and the Center Assets exclusively
available to RTS for the conduct of the business operations of the
Center. Anything to the contrary herein notwithstanding, nothing
herein shall be construed as a sublease or other assignment of any
lease relating to any Existing Simulator.
(b) BAHI, in its sole discretion may require RTS to occupy
alterative office and/or classroom facilities during the Term. In
the event BAHI requires RTS to occupy alterative facilities such
alternative facilities shall then constitute a part of the "Center
Facility".
(c) BAHI shall cooperate with RTS, if necessary, in the
maintenance of all licenses and permits necessary or required to
operate the Center in compliance with applicable laws, including
without limitation, all licenses and permits required by the FAA.
4. DUTIES AND OBLIGATIONS OF RTS.
During the term of this Agreement:
(a) RTS shall operate and manage the Center.
(b) RTS shall provide, at its expense, all of the employees
deemed necessary by RTS for the operation of the Center.
(c) RTS shall, during the term of this Agreement, maintain
the same casualty and liability insurance (including but not
limited to using its best efforts to maintain the same type of
coverage, limits and deductibles) covering the operations of the
Center as were carried by RTS immediately prior to the date of this
Agreement. Such insurance shall name BAHI as an additional insured.
(d) RTS shall maintain all licenses and permits necessary or
required to operate the Center in compliance with applicable laws,
including, without limitation, all licenses and permits required by
the FAA.
(e) RTS shall invoice and collect payments from the Center's
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customers for services performed by the Center. Such payments shall
be solely for the account of BAHI and remitted monthly by RTS as
instructed by BAHI from time to time. Amounts not collected within
twelve (12) months of providing services shall be turned over to
BAHI for collection or other disposition.
5. CENTER OPERATIONS.
During the term of this Agreement, RTS may make such
additions, deletions and alterations to the operations of the
Center as RTS shall, in its sole discretion, deem necessary;
provided, however, except as otherwise agreed in writing by BAHI,
RTS shall, continue to utilize the Existing Simulators at the
Center throughout the current term of any lease through which the
device is being provided to the Center and shall not alter the
overall general nature of the business of the Center.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BAHI.
BAHI hereby represents, warrants and covenants to RTS as
follows:
(a) Authority. BAHI has full power, right, and authority to
execute and perform this Agreement in accordance with the terms
hereof
(b) Validity. This Agreement has been duly and validly
executed by BAHI and, upon delivery thereof by BAHI, will
constitute a legal, valid, and binding obligation of BAHI
enforceable against BAHI in accordance with its terms.
(c) Compliance With Laws and Contracts. The execution,
delivery, and performance of this Agreement by BAHI in compliance
with the terms and provisions hereto does not conflict with, or
result in a breach of, any of the terms, conditions, or provisions
of any mortgage, lien, or other security arrangement or any
agreement, instrument, order, judgment, decree, or any other
restriction of similar kind or character to which BAHI is a party
or is otherwise bound which will result in any material adverse
effect upon the Center Facility or the Center Assets.
(d) No Violation. BAHI is not in violation of, or, to the
knowledge of BAHI, under investigation with respect to or
threatened to be charged or given notice with respect to, any
statute, rule, regulation, order, judgment, injunction, decree, or
other law, of any court or governmental authority relating directly
or indirectly to the business of the Center which would have a
material adverse effect on the business of the Center.
(e) Legal Proceedings. There are no claims, actions, suits,
inquiries, investigations, or other proceedings, pending or, to the
best knowledge of BAHI, threatened or imminent, relating to the
Center before any court or governmental body; nor is there any
reasonable basis for any such proceedings. BAHI is not subject to
any judgment, order, decree, or any governmental restriction which
is likely to result in any change in or effect on the Center that
is materially adverse to the business, properties, earnings,
prospects, or condition (financial or otherwise) of the Center.
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7. REPRESENTATIONS AND WARRANTIES OF RTS.
RTS hereby represents and warrants to BAHI as follows:
(a) Authority. RTS has full power, right and authority to
execute and perform this Agreement in accordance with the terms
hereof
(b) Validity. This Agreement has been duly and validly
executed by RTS and, upon delivery thereof by RTS, will constitute
a legal, valid, and binding obligation of RTS enforceable against
in accordance with its terms.
(c) Compliance with Law and Contracts. The execution,
delivery, and performance of this Agreement by RTS in compliance
with the terms and provisions hereof does not conflict with, or
result in a breach of, any of the terms, conditions, or provisions
of any mortgage, lien, or other security arrangement or any
agreement, instrument, order, judgment, decree, or any other
restriction of similar kind or character to which RTS is a party or
is otherwise bound and will not result in the declaration of
imposition of any lien, charge, or other encumbrance of any nature
whatsoever upon the Center Facility or the Center Assets.
(d) No Violation. RTS is not in violation of or to the best
in knowledge of RTS, under investigation with respect to or
threatened to be charged or given notice with respect to, any
statute, rule, regulation, order, judgment, injunction, decree, or
other law, of any court or governmental authority which would have
a material adverse effect upon the business of the center.
(e) Legal Proceedings. There are no claims, actions, suits,
inquiries, investigations or other proceedings, pending or, to the
best knowledge of RTS, threatened or imminent relating to the
Center before any court or government body, nor is there any
reasonable basis for any such proceedings. RTS is not subject to
any judgment, order, decree, or any governmental restriction which
is likely to result in any change in or effect on the Center that
is materially adverse to the business, properties, earnings,
prospects, or condition (financial or otherwise) of the Center.
8. TERM; EVENTS OF Termination.
(a) Term. The term of this Agreement shall commence on the
date of this Agreement and, subject to early termination pursuant
to the terms of this Agreement, terminate on the three (3) year
anniversary of such date.
(b) Events of Termination. The obligations of the parties
under this Agreement shall terminate upon the earliest to occur of
the following:
(i) the delivery of a written termination notice by
either party six (6) months prior to the effective
date thereof;
(ii) either party's delivery of notice to the other to
the effect that an Event of Cause (as hereinafter
defined) has occurred;
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(iii)either party's delivery of notice to the other
to the effect that a Force Majeure Event (as
hereinafter defined) has occurred; or
(iv) the mutual written agreement of the parties.
(c) For purposes of this Section 8, the following terms shall
have the following meanings:
(i) "Event of Cause" shall mean the commission by
either party hereto of a material breach of any
representation, warranty, agreement, covenant,
provision, term, condition, or undertaking set
forth in this Agreement and such material breach is
not cured within sixty (60) days after receipt of
written notice from the non-breaching party.
(ii) "Force Majeure Event" shall mean any event not
within either party's reasonable control which has
the effect of rendering the performance by the
affected party of its obligations under this
Agreement impossible, impracticable or which
substantially frustrates the purpose of this
Agreement, including, without limitation, accident,
fire, casualty, riot, war, medical epidemic, civil
disturbance, strike, lockout or other labor
dispute, act of God, order, rule, regulation, or
other act of any governmental body or authority or
absence of power or essential utility or other
essential services, in each case in respect of the
Center or operation or management hereof
9. COMPENSATION.
(a) Direct Operating Expenses. RTS's budget for Direct
Operating Expenses for the first twelve (12) months of the Term of
this Agreement has been approved by BAHI and is listed in Exhibit
C. During the term of this Agreement, revisions to the operating
budget may be made for unbudgeted scope changes with the prior
approval of BAHI. Thereafter during the Term of this Agreement, RTS
shall submit a budget for RTS's Direct Operating Expenses and a
business plan for the Center for the upcoming year by November 1 of
the current year. Such budget for Direct Operating Expenses and
business plan for the Center must be approved in writing by BAHI
prior to December 30 of such current year. No RTS Direct Operating
Expenses shall be reimbursed by BAHI to RTS until such budget and
business plan are approved, in writing by BAHI. BAHI shall
reimburse RTS for the Direct Operating Expenses that have been
budgeted, incurred and approved by BAHI, monthly, in arrears, after
submission of such Direct Operating Expenses to BAHI by RTS. RTS
shall, upon the request of BAHI, supply BAHI with all information
requested by BAHI concerning the Direct Operating Expenses.
(b) Annual Fee. In addition to payment referred to in Section
9(a), BAHI shall pay to RTS an annual fee of five hundred thousand
dollars ($500,000), payable in advance, in equal quarterly
installments.
(c) Revenues. All revenues earned by the operation of the
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Center shall be for the account of BAHI and the resulting cash
collections from customers shall be remitted monthly by RTS as
instructed by BAHI from time to time. RTS shall use its best
efforts to collect such amounts from customers. Accounts which are
over ninety (90) days overdue will be reviewed jointly by BAHI and
RTS with BAHI ultimately determining the disposition of accounts.
10. CENTER FACILITY.
(a) Use. RTS shall use and occupy the Center Facility for the
operation of the Center and for no other purpose. BAHI represents
that the premises may lawfully be used for such purpose.
(b) Care of Premises. RTS shall commit no act of waste and
shall take good care of the Center Facility and the fixtures and
appurtenances therein, and shall, in the use and occupancy of the
Center Facility, conform to all laws, orders, and regulations of
the federal, state, and municipal governments or any of their
departments. Except where the repair has been made necessary by
misuse or neglect by RTS or RTS's agents, employees, visitors, or
licensees, BAHI shall maintain and repair the Center Facility at
BAHI's sole expense.
All improvements made by RTS to the Center Facility which are
so attached to the Center Facility such that they cannot be removed
without material injury to the Center Facility, shall become the
property of BAHI upon installation. The above notwithstanding, all
training equipment, including any simulators owned by RTS shall at
all times remain the property of RTS, absent specific written title
transfer to BAHI, whether or not attached to the Center Facility.
Not later than ninety (90) days after the last day of this
Agreement, RTS shall, a RTS's expense, remove all of RTS's personal
property and those improvements made by RTS which have not become
the property of BAHI, including trade fixtures, cabinetwork,
movable paneling, partitions, and the like; repair all injury done
by or in connection with the installation or removal of such
property and improvements; and surrender the Center Facility in as
good condition as it was at the beginning of the term, reasonable
wear and tear excepted. All property of RTS remaining on the
premises after ninety (90) days following the last day of the term
of this Agreement shall be conclusively deemed abandoned and may be
used or removed by BAHI, and RTS shall reimburse BAHI for the cost
of such removal.
(c) Alterations. RTS shall not, without first obtaining the
written consent of BAHI, make any material alterations, additions,
or improvements in, to, or on and about the Center Facility.
11. CENTER ASSETS.
Assets Necessary to the Business. BAHI owns or leases all of
the properties, assets, and rights which are currently used or
which are reasonably necessary to carry on its business and
operations as currently conducted and all such properties, assets,
and rights will be made available by BAHI to RTS for the management
and operation of the Center as described herein.
12. INDEMNIFICATION.
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(a) Indemnification.
(i) BAHI shall indemnify, defend, and hold harmless RTS
from and against any and all losses, liabilities,
damages, obligations, payments, costs, and expenses
(including, without limitation, the costs and
expense of any and all actions, suits, proceedings,
judgments, settlements, and compromises relating
thereto, and reasonable attorneys' fees in
connection therewith) (collectively, "Indemnifiable
Losses" and each an "Indemnifiable Loss") of RTS
arising, directly or indirectly, not of or due to a
breach of any of the representations, warranties,
covenants, agreements, or undertakings of BAHI
contained in this Agreement.
(ii) RTS shall indemnify, defend, and hold harmless BAHI
from and against any and all Indemnifiable Losses
of BAHI arising, directly or indirectly, out of or
due to a breach of any of the representations,
warranties, covenants, agreements, or undertakings,
of RTS contained in this Agreement.
(b) Procedure for Indemnification. If a party entitled to
indemnification pursuant to Section 12(a)(i) or Section 12(a)(ii)
(the "Indemnitee") receives notice of the assertion by a person who
is not a party to this Agreement of any claim or of the
commencement by any such person of any action or proceeding (a
"Third Party Claim") with respect to which another party to this
Agreement (the "Indemnifying Party") is obligated to provide
indemnification, the Indemnitee shall give the Indemnifying Party
notice thereof after becoming aware of such Third Party Claim. Such
notice shall describe the Third Party Claim in reasonable detail,
and shall indicate the amount (estimated if necessary) of the
Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party may elect to compromise or
defend, at such Indemnifying Party,s own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. If the
Indemnifying Party elects to compromise or defend such Third Party
Claim, it shall within thirty (30) days (or sooner if the nature of
the Third Party Claim so requires) notify the Indemnitee of its
intent to do so, and the Indemnitee shall cooperate, at the expense
of the Indemnifying Party, in the compromise of, or defenses
against, such Third Party Claim. If the Indemnifying Party elects
not to compromise or defend against the Third Party Claim, or fails
to notify the Indemnitee of its election as herein provided, the
Indemnitee may pay, compromise, or defend such Third Party Claim
without waiving its claim for indemnification hereunder.
Notwithstanding the foregoing, neither the Indemnifying Party nor
the Indemnitee shall settle or compromise any claim over the
objection of the other; provided, however, that consent to
settlement or compromise shall not be unreasonably withheld. In any
event, the Indemnitee and the Indemnifying Party may each
participate, at its own expense, in the defense of such Third Party
Claim. If the Indemnifying Party chooses to defend any claim, the
Indemnitee shall make available, on a reasonable basis to the
Indemnifying Party, any personnel or any books, records, or other
documents within its control that are necessary for such defense.
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Any claim on account of an Indemnifiable Loss which does not
result in a Third Party Claim shall be asserted by written notice
given by the Indemnitee to the Indemnifying Party. The Indemnifying
Party shall have a period of thirty (30) days within which to
respond thereto. If the Indemnifying Party does not respond within
such thirty (30) day period, the Indemnifying Party shall be deemed
to have accepted responsibility to make payment, and shall have no
further right to contest the validity of such claim. If the
Indemnifying Party does respond within such thirty (30) day period
and rejects such claim in whole or in part, the Indemnitee shall be
free to pursue such remedies as may be available to such party by
applicable law.
(c) Remedies Cumulative. The remedies provided in Section 12
shall be cumulative and shall not preclude assertion by an
Indemnitee of any other rights or the seeking of any and all other
remedies against an Indemnifying Party.
13. MISCELLANEOUS PROVISIONS.
(a) Relationship of the Parties. The parties hereby
understand and agree that the relationship between BAHI and RTS
created by this Agreement shall be that of an independent
contractor or an independent subcontractor and that nothing
contained herein shall create a partnership, joint venture, or
relationship of principal and agent between BAHI and RTS.
(b) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if
hand delivered, transmitted by telegram, telex or telecopy or
mailed by registered or certified mail, postage prepaid, return
receipt requested, as follows:
(i) If to BAHI to:
22070 Broderick Drive
Sterling, Virginia 20166
Attention: Paul L. Harris
Senior Vice President and General Manager
(ii) If to RTS to:
4908 Tampa West Boulevard
Tampa, Florida 33634
Attention: Anthony S. Brancato
Executive Vice President
or to such other address as the person to whom notice is given may
have previously furnished to the other parties in writing in
accordance herewith, except that notice of change of address shall
be effective only upon receipt.
(c) Successors. This Agreement and all terms and provisions
hereof shall be binding upon and shall inure to the benefit of all
of the parties hereto, and their legal representative, heirs,
successors, and assigns, except as expressly herein otherwise
provided.
(d) Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws, but not the rules relating
to choice of laws, of the Commonwealth of Virginia.
(e) Assignability. Either party may assign this Agreement
and its right and obligations hereunder, to an affiliate thereof
(including Aero International (Regional)) without the prior consent
of, but upon notice to, the other party, but neither party may
otherwise assign this Agreement without the prior written consent
of the order.
(f) Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which
shall constitute one and the same instrument.
(g) Entire Understanding. This Agreement constitutes the
entire understanding between the parties hereto and supersedes any
prior understandings and agreements, written or oral, between them
respecting the subject matter hereof.
(h) Severability. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall
be held invalid by a court of competent jurisdiction, the remainder
of this Agreement, or the application of such provision to persons
or circumstances other than those to which it is held invalid by
such court, shall not be affected thereby.
(i) Amendments. This Agreement may only be amended upon the
prior written agreement of BAHI and RTS.
(j) Further Assurances. Each of the parties shall hereafter
execute and deliver such further instruments and do such further
acts and things as may be required or useful to carry out the
intent and purpose of this Agreement and as are not inconsistent
with the terms hereof
(k) Attorneys' Fees. In the event of litigation between the
parties arising directly or indirectly pursuant to this Agreement,
the prevailing party shall be entitled to the reimbursement of all
costs (including reasonable attorneys' fees at the trial and
appellate court levels) from the non-prevailing party.
(l) Headings and Captions. The titles or captions of section
and subsections contained in this Agreement are provided for
convenience of reference only, and shall not be considered a part
hereof for purposes of interpreting or applying this Agreement,
and, therefore, such titles or captions do not define, limit,
extend, explain, or describe the scope or extent of this Agreement
or any of its terms, provisions, representations, warranties,
conditions, etc., in any manner or way whatsoever.
(m) Gender and Number. All pronouns and variations thereof
shall be deemed to refer to the masculine, feminine or neuter, and
to the singular or plural, as the identity of the person or entity
or person or entities may required.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be executed as of the date
and year first above written.
BRITISH AEROSPACE HOLDINGS, INC.
By: Paul L. Harris
-----------------------------
Name: Paul L. Harris
Title: Senior Vice President and
General Manager
Date: 21 December 1995
REFLECTONE TRAINING SYSTEMS, INC.
By: Anthony S. Brancato
------------------------------
Name: Anthony S. Brancato
Title: Executive Vice President
Date: 21 December 1995
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