AMENDMENT NO. 1 TO THE ACQUISITION AGREEMENT
Amendment No. 1 ("Amendment No. 1"), dated as of December 3, 2002,
amending the Acquisition Agreement, dated as of July 16, 2002 (the "Agreement"),
among Alcoa Inc., a Pennsylvania corporation (the "Buyer"), The Fairchild
Corporation, a Delaware corporation (the "Parent"), Fairchild Holding Corp., a
Delaware corporation and an indirect, wholly owned subsidiary of the Parent
("Fairchild Holding"), and Sheepdog, Inc., a Delaware corporation and an
indirect, wholly owned subsidiary of the Parent ("SDI" and, together with the
Parent, Fairchild Holding and the subsidiaries of the Parent set forth on
Schedule 1.125 to the Agreement, collectively, the "Sellers").
WHEREAS, in accordance with Section 10.2 of the Agreement, the Buyer,
the Parent and the Sellers desire to amend the Agreement in accordance with the
terms of this Amendment No. 1.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and intending to be legally bound hereby, the parties agree as
follows:
1. Definitions. Capitalized terms used herein and not otherwise defined herein
shall have the meaning provided therefor in the Agreement.
2. Disclosure Schedule Amendments. Pursuant to Section 5.7 of the Agreement, the
following Schedules to the Agreement are hereby amended as follows:
(a) Schedule 1.54 (Excluded Assets) is hereby amended and restated to reflect
that each of the following is an Excluded Asset: (i) all credit cards issued to
the Transferred Employees, provided that all charges on such credit cards
related to the period ended on the Closing Date shall be deemed Assumed Fastener
Business Liabilities, (ii) the lease agreement entered into by Fairchild
Fasteners (U.K.) Ltd. relating to the warehouse unit 2C located at Hamilton
Business Park, Waterside Road, Leicester, United Kingdom, (iii) the lease
agreement entered into by Fairchild Fasteners Europe - Simmonds S.A.S., for the
office located at 50, avenue de Wagram, 75017, Paris, France, (iv) the office
equipment, furniture, video conferencing equipment and other personal property
located in the Parent's office in Dulles, Virginia and (v) the video
conferencing equipment located in the office of Fairchild Fasteners
Europe-Simmonds S.A.S., for the office located at 50, avenue de Wagram, 75017,
Paris, France, and as so amended and restated is attached hereto as Exhibit
A-1.54.
(b) Schedule 1.59 (Bank Accounts) is hereby amended and restated to (i) include
the bank accounts relating to Newco California and certain bank accounts
relating to Fairchild Fasteners Melbourne Pty., a company organized and existing
under the laws of Australia, and (ii) delete the workers' compensation bank
accounts and United States payroll bank accounts, and as so amended and restated
is attached hereto as Exhibit A-1.59.
(c) Schedule 1.61 (Fastener Business Contracts) is hereby amended and restated
to include certain additional contracts and to delete certain excluded
contracts, and as so amended and restated is attached hereto as Exhibit A-1.61.
(d) Schedule 1.125 (Sellers) is hereby amended and restated to include certain
subsidiaries of the Parent, and as so amended and restated is attached hereto as
Exhibit A-1.125.
(e) Schedule 1.140 (Transferred Fastener Subsidiaries) is hereby amended and
restated to replace CST LLC with Fasteners & Fastening Systems LLC as a
Transferred Fastener Subsidiary, and as so amended and restated is attached
hereto as Exhibit A-1.140.
(f) Schedule 1.93(a) (Other Current Assets) is hereby amended and restated to
include the account "prepaid salaries" as a current asset, and as so amended and
restated is attached hereto as Exhibit A-1.93(a).
(g) Schedule 3.2(a) (Capital Stock and Membership Interests of Transferred
Fastener Subsidiaries) is hereby amended and restated to reflect the
stockholders of the Transferred Fastener Subsidiaries as of the Closing Date,
and as so amended and restated is attached hereto as Exhibit A-3.2(a).
(h) Schedule 3.5 (Consents and Approvals) is hereby amended and restated to
include certain additional contracts that require the contracting party's
consent in connection with consummation of the transactions contemplated by the
Agreement, to delete certain excluded contracts, and to include the disclosure
of the expression of concern on behalf of the Retirement Plan for Employees of
The Fairchild Corporation - The Fairchild Fasteners Group Retirement Plan by the
Pension Benefit Guaranty Corporation, and as so amended and restated is attached
hereto as Exhibit A-3.5.
(i) Schedule 3.12(a) (Intellectual Property) is hereby amended and restated to
include additional Fastener Business Intellectual Property and delete any
Fastener Business Intellectual Property that is inactive or intellectual
property that is not Fastener Business Intellectual Property, and as so amended
and restated is attached hereto as Exhibit A-3.12(a).
(j) Schedule 3.13(b) (Exception to Sellers' Employee Benefit Plans; ERISA) and
Schedule 3.13(h) (Claims by or on Behalf of any Plans) are hereby amended and
restated to include the disclosure of the expression of concern on behalf of the
Retirement Plan for Employees of The Fairchild Corporation - The Fairchild
Fasteners Group Retirement Plan by the Pension Benefit Guaranty Corporation, and
as so amended and restated are attached hereto as Exhibits A-3.13(b) and
A-3.13(h).
(k) Schedule 3.13 (j) (Collective Bargaining Agreements; Organizing Efforts) is
hereby amended and restated to include the disclosure of the labor activities
involving the attempt by IG Metall Hildescheim to establish a workers' council
at the Sellers' Hildescheim plant in Germany operated by Fairchild Fasteners
Europe - VSD GmbH, and as so amended and restated is attached hereto as Exhibit
A-3.13(j).
(l) Section 3.14 (b) (Exceptions to Material Compliance with Applicable Laws) is
hereby amended and restated to include the lapse of the registration of the
sales office in Beijing with the appropriate Government entity and to disclose
that Fairchild Fasteners Femipari Kft. had only one member until shortly prior
to the Closing, and as so amended and restated is attached hereto as Exhibit
A-3.14(b).
(m) Schedule 3.16 (Litigation) is hereby amended and restated to include certain
litigation matters, including the disclosure of the expression of concern on
behalf of the Retirement Plan for Employees of The Fairchild Corporation - The
Fairchild Fasteners Group Retirement Plan by the Pension Benefit Guaranty
Corporation, and to update the status of the previously disclosed litigation
matters, and as so amended and restated is attached hereto as Exhibit A-3.16.
(n) Schedule 3.22 (Taxes) is hereby amended and restated to include disclosure
relating to the restriction on distribution of dividends in Germany, as so
amended and restated is attached hereto as Exhibit A-3.22.
(o) Schedule 3.23 (Insurance Policies) is hereby amended and restated to
indicate the insurance policies of the Transferred Fastener Subsidiaries that
are not deemed to be Excluded Assets, and as so amended and restated is attached
hereto as Exhibit A-3.23.
(p) Schedule 3.24 (Environmental Matters) is hereby amended and restated to
update the status of previously disclosed environmental matters, and as so
amended and restated is attached hereto as Exhibit A-3.24.
(q) Schedule 5.1(k) (Exceptions to Conduct of the Business) is hereby amended
and restated to include the change of the fiscal year-end of each of Fairchild
Fasteners Aichach GmbH, Fairchild Fasteners Europe - Camloc GmbH, Fairchild
Fasteners Europe - VSD GmbH, Fairchild Fasteners (U.K.) Ltd., Kaynar
Technologies Ltd. and Recoil (Europe) Ltd. from June 30 to December 31 for
accounting purposes, and as so amended and restated is attached hereto as
Exhibit A-5.1.
(r) Schedule 6.1 (Employment) is hereby amended and restated to include the
employees located at Simi Valley, to update the schedule since June 30, 2002 to
reflect newly hired employees of the Fastener Business and to update the
schedule to reflect the employees of the Fastener Business who have been
terminated during the 90-day period prior to the Closing Date, and as so amended
and restated is attached hereto as Exhibit A-6.1.
(s) Schedule 7.3(d) (Required Consents) is hereby amended and restated to
include the EADS Deutschland GmbH contracts that require consents prior to
Closing, and as so amended and restated is attached hereto as Exhibit A-7.3(d).
3. Definitions.
(a) Section 1.10(f) is hereby amended to read in its entirety as follows:
" All obligations and liabilities arising from, or relating
to, the Buyer's (or one of its subsidiaries designated
pursuant to Section 10.7) ownership of the Fastener Business
Assets after the Closing Date, subject to the Parent's
obligations to indemnify the Buyer pursuant to Article XI of
this Agreement."
(b) Section 1.10(g) is hereby amended to read in its entirety as follows:
"All other obligations and liabilities expressly assumed by
the Buyer (or one of its subsidiaries designated pursuant to
Section 10.7) pursuant to this Agreement."
(c) Section 1.94 is hereby amended to read in its entirety as follows:
" 'Newco California' shall mean Fasteners & Fastening Systems
LLC, a limited liability company existing under the laws of
California."
(b) The second clause of Section 1.54 (Excluded Assets)
is amended in its entirety to read as follows:
"(ii) all contracts of insurance insuring the Fastener
Business, the Fastener Business Assets, the Assumed Fastener Business
Liabilities or the employees of the Fastener Business, including,
without limitation, the contracts of insurance listed on Schedule 3.23
(other than the contracts of insurance with respect to the Transferred
Fastener Subsidiaries as indicated on Schedule 3.23 which are not
Excluded Assets and other than insurance proceeds or rights to
insurance coverage under all insurance policies to the extent they
relate to the Fastener Business, the Fastener Business Assets, the
Assumed Fastener Business Liabilities or the Transferred Employees
which are in effect prior to the Effective Time, including, without
limitation, the Fastener Business Product Liability Insurance
Policies);"
4. Purchase and Sale of the Fastener Business Assets. The first sentence of
Section 2.2 is hereby amended in its entirety to read as follows:
"Subject to the terms and conditions of this Agreement
(including, without limitation, Section 10.7) (or, with respect to any
condition not satisfied, the waiver thereof by the party for whose
benefit the condition exists) at the Closing, the Sellers will sell,
convey, assign, transfer and deliver, or cause to be sold, conveyed,
assigned, transferred and delivered to the Buyer or one of its wholly
owned subsidiaries, all of their direct and indirect right, title and
interest at the Effective Time in and to the Fastener Business Assets
(other than the Fastener Business Assets owned or held by the
Transferred Fastener Subsidiaries), in all cases free and clear of all
Liens (other than Permitted Exceptions), and the outstanding capital
stock and membership interests, as the case may be, of each of the
Transferred Fastener Subsidiaries, in all cases free and clear of all
Liens, and the Buyer will, directly or indirectly, purchase, acquire,
accept and pay for, as hereinafter provided, the Fastener Business
Assets, free and clear of all Liens (other than Permitted Exceptions),
and the outstanding capital stock and membership interests, as the case
may be, of each of the Transferred Fastener Subsidiaries, free and
clear of all Liens, and will assume the Assumed Fastener Business
Liabilities."
5. Post-Closing Adjustment.
(a) Section 2.7(a)(iv) is hereby amended to read in its entirety as
follows:
"In the event there is any cash or cash equivalents on the
Fastener Business Books and Records (other than the U.S. payroll bank
accounts set forth on Schedule 2.7(a)(iv)) that has not been
distributed as of the Closing Date out of the Fastener Business there
shall be recorded on the Closing Date Balance Sheet under "Current
Assets" the amount of such cash and cash equivalents (the "Remaining
Cash"); provided, however, that (i) the amount of such cash and cash
equivalents shall not be included in the calculation of Net Working
Capital and (ii) "Remaining Cash" shall not be deemed to include the
balance (whether positive or negative) of the U.S. payroll bank
accounts set forth on Schedule 2.7(a)(iv)."
(b) The first sentence of Section 2.7(d) is hereby amended to read in its
entirety as follows:
"If the amount of Net Working Capital is less than
$214,165,000, the amount of the Consideration shall be reduced by the
amount of such deficit."
(c) The first sentence of Section 2.7(e) is hereby amended to read in its
entirety as follows:
"If the amount of Net Working Capital exceeds $218,165,000,
the amount of the Consideration shall be increased by the amount of
such excess."
(d) Section 2.7(f) is hereby amended to read in its entirety as follows:
"If the amount of Net Working Capital is between $214,165,000
and $218,165,000 there shall no adjustment to the Consideration
pursuant to this Section 2.7."
6. Treatment of Accounts Receivable at the Closing. The first and second
sentences of Section 2.10 are hereby amended in their entirety as follows:
"At least five business days prior to the Closing Date, the
Parent shall deliver to the Buyer Schedule 2.10, a copy of which was
provided under separate cover to the Buyer and shall be deemed to be
included in the Schedules attached hereto, which shall set forth for
each receivable of the Fastener Business as of October 27, 2002
("October Month End"), the name of the payor, the date the receivable
was booked by the Fastener Business, the original amount of the
receivable, the date the receivable was or is due and the amount of the
receivable on October Month End. Schedule 2.10 shall also indicate each
receivable, which, as of October Month End, is more than ninety days
past due and the obligor of which is subject to bankruptcy or similar
insolvency proceedings (the "Overdue Closing Receivables")."
7. Amended Representation and Warranty. The second sentence of Section 3.2(a) of
the Agreement is hereby amended to read in its entirety as follows:
"Except as set forth on Schedule 3.2(a), all of the
outstanding shares of capital stock of each of the Transferred
Fastener Subsidiaries are duly authorized, validly issued, fully paid
and non-assessable and owned of record and beneficially directly or
indirectly by the Sellers, free and clear of all Liens."
8. Commercially Reasonable Efforts. Section 5.5 of the Agreement is hereby
amended by adding new subsection (d) following subsection (c) which shall read
as follows:
"(d) Each of the Buyer and the Sellers agrees and acknowledges
that (i) none of the terms and conditions of any third party consent or
novation in connection with the assignment of any Fastener Business
Contract, Fastener Business Intellectual Property License or Fastener
Business Lease to the Buyer (or one of its subsidiaries designated
pursuant to Section 10.7) pursuant to this Agreement shall amend or
otherwise modify or limit any of the provisions of this Agreement; (ii)
to the extent that any provision of any such third party consent or
novation is inconsistent or conflicts with this Agreement, the
provisions of this Agreement shall control as among the Buyer and the
Sellers (it being understood that no such consent or novation shall be
deemed invalid due to any such inconsistency or conflict); and (iii)
none of the terms and conditions contained in any third party consent
or assignment obtained by the parties in connection with the
consummation of the sale of the Fastener Business shall be deemed to be
a waiver of any rights or obligations of the Buyer or the Sellers under
this Agreement."
9. Sales, Use and Transfer Taxes and Fees. The first sentence of Section 5.9 is
hereby amended in its entirety to read in its entirety as follows:
"The parties agree that all sales, use and transfer Taxes and related
fees (including real estate, transfer Taxes, stamp or other Taxes of
the same or similar nature, and patent and trademark transfer Taxes and
recording fees but excluding, without limitation, any Taxes arising
from the failure of the German spin-off to qualify as tax-free which
shall solely be the responsibility of the Sellers) incurred in
connection with this Agreement and transactions contemplated hereby
will be borne equally by the Buyer and Sellers, provided that the Buyer
will pay the transfer Taxes and related fees and the Sellers will
reimburse the Buyer for one-half of the transfer Taxes and related fees
after the Closing."
10. Transferred Foreign Subsidiaries. In connection with the payment of transfer
Taxes and related fees pursuant to Section 5.9 of the Agreement and the
allocation of both the Consideration pursuant to Section 2.9 of the Agreement
and the maximum amount of the intercompany payables equal to $38,653,177 of
Fairchild Holding assumed by certain subsidiaries of the Buyer pursuant to the
letter agreement, dated December 3, 2002, between the Parent and the Buyer with
respect to intercompany accounts, the Buyer and the Sellers have agreed that the
valuation of the Fastener Business Assets held by Transferred Fastener
Subsidiaries in the countries identified below is as indicated:
(i) Australia: $ 6,500,000
(ii) Belgium: $ 1,900,000
(iii) France: $106,860,302
(iv) Germany: $106,206,256
(v) Hungary: $ 4,300,000
(vi) Singapore: $ 1,400,000
(vii) Thailand: $ 250,000
(viii) United Kingdom: $ 13,186,619
Any post-Closing balance sheet adjustments to Net Working Capital
(up or down) shall be treated as being allocable for valuation purposes
as intangibles in the United States.
11. Fairchild Logo. Section 5.15 is hereby amended by adding a new clause at the
end of such Section which shall read as follows:
"; provided, however, that solely for a period of one (1) year
immediately following the Closing, the Sellers may use the Fairchild
logo identified in Schedule 5.15, to the extent that such logo exists
or is contained (i) as of the Closing on any business cards, schedules,
stationery, displays, signs, promotional materials, manuals, forms,
computer software and other similar materials or (ii) following the
Closing on any documents filed by the Parent with the SEC or any other
Government entity or with regulatory authorities and agencies (provided
that the Sellers may distribute or use copies of such documents
prepared prior to the date hereof or during the one-year period set
forth in the proviso to this Section 5.15 following such one-year
period), in each case in a manner that complies with the obligations of
the Sellers set forth in this Agreement."
12. Accrued Expenses. Pursuant to Section 5.26 of the Agreement, the Buyer and
the Sellers have agreed on the items to be included as "Accrued Expenses" for
purposes of calculating Net Working Capital from the Closing Sheet Balance Sheet
which items are set forth on Schedule 1.93(c), and which as amended and restated
is attached hereto as Exhibit A-1.93(c).
13. Covenant. A new Section 5.29 is hereby added to the Agreement following
Section 5.28:
"Section 5.29. Releases from Lessors. The Sellers shall use their
commercially reasonable efforts to obtain a complete release of the
Transferred Fastener Subsidiaries from any and all of their respective
obligations or liabilities arising under, or relating to, the following
lease agreements: (i) Lease Agreement entered into by Fairchild
Fasteners (U.K.) Ltd. relating to the Warehouse unit 2C located at
Hamilton Business Park, Waterside Road, Leicester, United Kingdom and
(ii) Lease Agreement entered into by Fairchild Fasteners Europe -
Simmonds S.A.S., for the office located at 50, avenue de Wagram, 75017,
Paris, France; provided, however, that the Sellers shall not be
required to pay any amounts to the landlords in order to obtain such
releases."
14. Covenant. Two new Sections 5.30 and 5.31 are hereby added to the Agreement
following Section 5.29:
"Section 5.30. ATW German Claim. The Buyer shall reimburse the Parent
promptly upon written request for up to $25,000 of the costs and
expenses incurred by the Parent and its Affiliates through the Closing
Date in connection with the malpractice claim against ATW-Allgemeine
Treuhand Wirtschaftsberatung GmbH ("ATW") for which the Parent provides
written documentation. Any damage award received in connection with the
litigation against ATW shall be paid to the Buyer.
Section 5.31. Settled Litigation. The Sellers agree that they will
honor all settlement obligations in respect of litigation settled by
the Sellers as of or prior to the Closing Date involving the Sellers in
accordance with the terms of such settlement agreements."
15. Assumption of Plans. Section 6.2(a) is amended by adding the following
sentence at the end thereof.
"The former employees of the Fastener Business listed on Schedule
6.2(a) are listed as of October 31, 2002. The Sellers shall update such
Schedule, through the Closing Date, as promptly as practicable after
the Closing."
16. Payment Pool. Section 6.2(c) is hereby amended in its entirety to read as
follows:
"(c) (i) The Sellers shall retain and be responsible for all
liabilities and obligations, and the Sellers shall indemnify and hold harmless
the Buyer against any and all Damages, arising or related to any employment,
change of control or severance contract (including all payments thereunder)
between the Sellers and any Fastener Business Employee including, but not
limited to, those set forth on Schedule 6.2(c)(i). Following the Closing, the
Buyer agrees to make available an aggregate amount equal to $3,413,465 for
payments to certain of the Fastener Business Employees identified on Schedule
6.2(c)(ii) (the "Payment Pool") as further outlined in this Section 6.2(c). On
or within ten (10) days following the Closing, the Buyer shall make offers to
each member of the Payment Pool setting forth the terms of each additional
payment to each member of the Payment Pool, conditioned on continued employment
with the Buyer (each, a "Stay Pay Offer"). Each Stay Pay Offer will state that
each member of the Payment Pool will have until December 31, 2002 to accept such
offer. If a member of the Payment Pool accepts the Stay Pay Offer by December
31, 2002, such member of the Payment Pool will receive no later than January 30,
2003 25% of the amount set forth on the chart entitled "Fairchild Fasteners -
Key Employee Listing" dated November 25, 2002, a copy of which was delivered to
the Parent on November 25, 2002 (the "Payment Chart") provided, the recipient is
employed on such date by the Buyer in accordance with the terms of the Stay Pay
Offer letter. The Buyer will pay the remaining 75% of the amount set forth on
the Payment Chart (the "Retention Payment") to each member of the Payment Pool
who accepts and satisfies the terms and conditions of his or her Stay Pay Offer,
including, without limitation, the requirement that each applicable member of
the Payment Pool remain employed by the Buyer through the date of the Retention
Payment, unless his or her termination of employment is by the Buyer without
Cause (as such term is defined in the Stay Pay Offer). As soon as practicable
after each payment to a member of the Payment Pool, the Buyer will deliver to
the Parent documentation evidencing the Buyer's distribution to each such member
of the Payment Pool. Notwithstanding anything to the contrary contained herein,
the Buyer shall retain any amounts from the Payment Pool which are not
distributed pursuant to this Section 6.2(c)(i) due to the failure of any
Fastener Business Employee listed on Schedule 6.2(c)(ii) to accept or otherwise
respond to a Stay Pay Offer or due to any such Fastener Business Employee's
failure to comply with the terms of his or her Stay Pay Offer.
(ii) On the Closing Date, the Buyer shall remit to the Parent
a lump sum cash payment equal to $1,500,000, which the Parent shall distribute,
as soon as administratively practicable, but in no event more than thirty (30)
days following the Closing Date, to members of the Payment Pool as it may in its
sole discretion select (such payments being referred to herein as "Parent
Selected Payments"). As soon as practicable following the Closing, but in no
event more than 30 days thereafter, the Parent shall deliver to the Buyer
documentation evidencing the Parent's distribution of $1,500,000 to the members
of the Payment Pool it has selected pursuant to this first sentence of this
subparagraph (ii).
(iii) In the event the amount of money allocated from the
Payment Pool to any Fastener Business Employee set forth on Schedule 6.2(c)(ii)
is less than the aggregate amount of the change of control, stay pay and other
retention payments payable to such employee under his contract with the Fastener
Business, the Parent shall pay such difference to the Fastener Business Employee
in accordance with the terms of such person's contract, and the Buyer shall have
no obligation with respect to any such change of control, stay pay and other
retention payments. In the event that any Fastener Business Employee set forth
on Schedule 6.2(c)(i) becomes a Transferred Employee and such Transferred
Employee remains employed with the Buyer for a period of six months following
the Closing Date, the Buyer agrees to pay such employee the amount of the
severance obligations in accordance with the terms of such Employee's employment
agreement. In the event that any Fastener Business Employee set forth on
Schedule 6.2(c)(i) becomes a Transferred Employee and such Transferred Employee
is terminated without "cause" (as such term is defined in his or her employment
agreement) by the Buyer prior to the sixth month anniversary of the Closing
Date, (a) the Sellers shall remain fully liable for payment of the full amount
of such employee's severance payments under his or her employment agreement and
(b) the Buyer shall not rehire such terminated Transferred Employee as an
employee or a consultant for a two year period following such employee's date of
termination. It is the intention of the Buyer and the Parent that all payments
made under Section 6.2(c)(i) to members of the Payment Pool be applied to
satisfy the obligations of the Parent or the Sellers under the existing
employment, change of control and severance agreements listed on Schedule
6.2(c)(i); provided, however, that in no event shall such intention be construed
as an assumption by the Buyer of any such employment, change of control or
severance agreement. It is the intention of the Buyer and the Parent that no
payment made under Section 6.2(c)(i) to any member of the Payment Pool shall be
additional to or duplicative of any amount that any such member is otherwise
entitled to receive under any existing employment, change of control or
severance agreement, and the Buyer shall so inform a Payment Pool member in
response to any inquiry regarding the same."
17. Administrative Services - Health, Dental, Life Insurance and Disability.
Section 6.2 of the Agreement is hereby amended by adding new subsections (l),
(m), (n), (o) and (p) following subsection (k) which shall read as follows:
"(l) Flex Plan Benefits Through 2003. The Buyer agrees that following
the Closing Date through December 31, 2003, the flex plan benefits for
the Transferred U.S. Employees shall remain the same as are in effect
on the Closing Date. Employee contributions for health care benefits
shall continue to be 25% in the aggregate and the Buyer contributions
for health care benefits shall be 75% in the aggregate. Following the
Closing, the Buyer agrees to pay third-party vendors to administer the
flex plan benefits and will reimburse the Sellers for any documented
costs incurred by them to administer the flex plan benefits. The
Sellers will provide the Buyer with a monthly accounting statement and
invoice detailing the costs incurred administering the flex plan
benefits pursuant to this Section 6.2(l). For purposes of this
subsection (l), flex plan benefits refers to (i) medical, (ii) dental,
(iii) employee and dependent life insurance, (iv) employee and family
accidental death and disability insurance, and (v) short term and long
term disability insurance.
(m) Standard of Administrative Services. The Parent's benefits
department (currently located at the Parent's corporate headquarters in
Dulles, Virginia) will provide the administrative services stipulated
in Section 6.2(a) and 6.2(k) hereof in substantially the same manner as
it has provided such services through the Closing Date. The Buyer shall
indemnify, defend and hold harmless the Parent and its subsidiaries and
their respective directors, officers, employees, agents and
representatives (including, without limitation any predecessor or
successor to any of the foregoing) from and against any and all
Indemnifiable Losses relating to, resulting from or arising out of the
provision of such services, except to the extent such Indemnifiable
Losses resulted from fraud or willful misconduct by the Parent.
(n) Included Costs. With respect to services pursuant to Section 6.2(a)
and 6.2(k), the Buyer shall be responsible for paying the costs of
outside vendors for these services, as well as the cost of the Parent's
benefits department associated with providing such administering
services. Such costs shall be determined by maintaining time sheet
records of hours spent in providing such services, to be billed to
Buyer at an hourly rate equal to each individuals effective hourly
compensation. The effective hourly compensation shall be 125% of the
individual's weekly gross compensation, divided by forty. In the event,
the Parent outsources such administrative services, the Buyer shall
reimburse the Parent for 100% of such outsourcing costs.
The cost of outside vendors reimbursable by the Buyer shall include
costs incurred by the Sellers in setting up (prior to the Closing) the
flex plan benefits for the Buyer's account.
(o) Reimbursement for December Coverage. In the event that the Buyer
does not have insurance coverage for the Transferred Employees on the
date of the Closing, such employees may continue to be carried under
the Parent's insurance policies; provided, that: (i) such period shall
not extend beyond December 31, 2002; and (ii) the Buyer shall reimburse
the Parent for 100% of the employer's and the employee's premium
portion of such coverage to the extent paid by the Parent (pro-rated
from the Closing Date through December 31, 2002) and for any claims
incurred on the self insurance coverage (for the period from the
Closing Date through December 31, 2002).
(p) Assumption of Certain Marson Creative Fastener, Inc. Plans.
Effective as of the Closing Date, the Buyer shall assume each of the
plans set forth on Schedule 6.2(p) solely with respect to claims
incurred by Transferred Employees following the Closing."
18. Covenant. A new 6.3 is hereby added to the Agreement following Section 6.2:
"Section 6.3. Treatment of Participants in The Fairchild Fasteners
Group Retirement Plan. (a) Following the Closing, the Parent shall
cause the Retirement Plan for Employees of The Fairchild Corporation -
The Fairchild Fasteners Group Retirement Plan (the "Fairchild
Retirement Plan") to make a lump-sum cash distribution to each Fastener
Business Employee who is a participant in the Fairchild Retirement Plan
(the "Fastener Business Participant") and who is eligible for and
elects to receive a lump-sum distribution of his or her accrued plan
benefit in accordance with the terms of the Fairchild Retirement Plan
and applicable Law in connection with the Closing. The Parent shall use
its best efforts to cause such payments to be made to those Fastener
Business Participants eligible for and electing to receive lump sum
distributions no later than 25 calendar days following the receipt by
the Parent of such election. Such payments shall be in an amount equal
to such participant's accrued benefit under the Fairchild Retirement
Plan, determined in accordance with the terms of the Fairchild
Retirement Plan and applicable Law.
(b) On or prior to the Closing, the Parent shall deliver to the Buyer
(i) Schedule 6.1 which shall contain a complete list of all Fastener
Business Participants and (ii) Schedule 6.3(b) which shall set forth
for each Fastener Business Participant, the amount of such
participant's accrued benefit as of September 30, 2002 under the
Fairchild Retirement Plan. As soon as practicable following the Closing
Date, the Parent shall deliver to the Buyer an updated list containing
the amount of each Fastener Business Participant's accrued benefit as
of the Closing Date under the Fairchild Retirement Plan. Ms. Irene
Jacobson, Director-HR Services, Alcoa Inc., 6603 West Broad Street,
Mail Stop G-T-26, Richmond, Virginia 23230 is hereby designated as
Alcoa's representative to audit, inspect and review (A) the letter sent
to each Fastener Business Participant explaining the procedures for
electing to receive the lump-sum benefits distribution that each
Fastener Business Participant is entitled to receive under the
Fairchild Retirement Plan, (B) each election form sent to the Parent by
the Fastener Business Participant setting forth each such participant's
election relating to their lump-sum benefit distribution and (C) each
check sent by the Fairchild Retirement Plan in settlement of such
Fastener Business Participant's accrued benefit under the Fairchild
Retirement Plan as well as any letter or cover memo accompanying the
check."
19. Payroll Treatment During Week of Closing. A new Section 6.4 is hereby added
to the Agreement following Section 6.3:
"Section 6.4. Payroll Treatment During Week of Closing. During the
period set forth on Schedule 6.4 immediately following the Closing,
the payment of payroll for the Transferred Employees shall take place,
and be accounted for by the Buyer and the Sellers, in the manner set
forth on Schedule 6.4."
20. Indemnification. (a) Section 11.2(a) is hereby amended by adding new
subsections (viii) and (ix) following subsection (vii) which shall read as
follows:
"(viii) any non-compliance by Fairchild Fasteners Femipari LLC, a
company organized and existing under the laws of Hungary, or any of its
quotaholders or the predecessors of such quotaholders with
Section 4 (4) of the Act CXLIV of 1997 on Business Associations (the
"Companies' Act"); insofar as such section of the Companies Act
prohibits a one-member business association to be the sole member or
sole shareholder of a business association, unless otherwise provided
by Law; or
(ix) any claim by any Fastener Business Employee arising from, or
relating to, the relocation of such Fastener Business Employees from
50, avenue de Wagram, 75017, Paris, France to 15, rue du Petite Albi,
95800, Cergy, St. Christophe, France."
(b) Section 11.3(d) is hereby amended in its entirety to read as
follows:
"(d) Notwithstanding any other provisions of this Agreement or of any
applicable Law, the Buyer will be entitled to make a claim against any
of the Sellers under Section 11.2(a)(ii), (iii), (iv), (viii) and (ix)
until the fifth anniversary of the Closing Date."
21. Defense of Claims. The last sentence of Section 11.4(a) is hereby amended to
read in its entirety as follows:
"The Indemnifying Party will have the right to participate in, or, by
giving written notice to the Indemnitee, to assume, the defense of any
Third Party Claim (other than Product Claims which the Sellers shall
only have the right to participate in) at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel (reasonably
satisfactory to the Indemnitee), and the Indemnitee will cooperate in
good faith in such defense."
22. California Real Properties. In connection with the payment of transfer Taxes
and related fees pursuant to Section 5.9 of the Agreement and the allocation of
the Consideration pursuant to Section 2.9 of the Agreement, the Buyer and the
Sellers have agreed that the valuation of certain Fastener Business Real
Properties located in the State of California is as indicated below:
(i) 135 N. Unruh Ave., City of Industry, CA: $ 3,500,000
(ii) 13001 E. Temple Ave., City of Industry, CA: $ 3,200,000
(iii) 3000-3016 W. Lomita Blvd., Torrance, CA: $17,000,000
23. Miscellaneous. Except as expressly amended hereby, the terms and conditions
of the Agreement shall continue in full force and effect. This Amendment No. 1
is limited precisely as written and shall not be deemed to be an amendment to
any other term or condition of the Agreement or any of the documents referred to
therein. Wherever "Agreement" is referred to in the Agreement or in any other
agreements, documents and instruments, such reference shall be to the Agreement
as amended hereby.
24. Counterparts. This Amendment No. 1 may be executed in two or more
counterparts, each of which shall be deemed an original, but all for which
together shall constitute one and the same instrument.
25. Governing Law. This Amendment No. 1 shall be governed by the laws of the
State of Delaware (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect performance and remedies.
IN WITNESS WHEREOF, the Buyer and the Sellers have caused this
Amendment No. 1 to be executed as of the date first written above their
respective officers thereunto duly authorized.
ALCOA INC.
By: _____________________________
Name: Barbara Jeremiah
Title: Executive Vice President
THE FAIRCHILD CORPORATION
By: _____________________________
Name: Donald E. Miller
Title: Senior Vice President
FAIRCHILD HOLDING CORP.
By: _____________________________
Name: Donald E. Miller
Title: Vice President
SHEEPDOG, INC.
By: ___________________________
Name: Donald E. Miller
Title: Vice President
FAIRCHILD DATA CORPORATION
By: ______________________________
Name: John Flynn
Title: Vice President
FAIRCHILD TRADING CORP.
By: _____________________________
Name: John Flynn
Title: Vice President
MARSON CREATIVE FASTENER, INC.
By: _____________________________
Name: John Flynn
Title: Vice President
RHI HOLDINGS, INC.
By: _____________________________
Name: Donald E. Miller
Title: Vice President
SUCHOMIMOUS TERENSIS, INC.
By: _____________________________
Name: John Flynn
Title: Vice President
FAIRCHILD FINANCE COMPANY
By: _____________________________
Name: John Flynn
Title: Director
FAIRCHILD FASTENER GROUP LTD.
By: ______________________________
Name: John Flynn
Title: Director
FAIRCHILD FASTENERS CORP.
By: ______________________________
Name: John Flynn
Title: Vice President
VSI HOLDINGS, INC.
By: ______________________________
Name: John Flynn
Title: Vice President