Exhibit 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
THE BOEING COMPANY
AND
MID-WESTERN AIRCRAFT SYSTEMS, INC.
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Dated as of February 22, 2005
TABLE OF CONTENTS
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SECTION 1 PURCHASE AND SALE OF ASSETS................................... 1
1.1 Purchase and Sale of Assets................................... 1
1.2 Assumption of Liabilities..................................... 6
1.3 Determination of Final Purchase Price......................... 9
1.4 Allocation of Final Purchase Price............................ 10
1.5 Allocation of Expenses........................................ 11
1.6 Purchase Price Adjustment; Determination of Final Purchase
Price...................................................... 13
1.7 Payment of Purchase Price at Closing; Adjustment for
Overpayment or Underpayment of Purchase Price.............. 17
SECTION 2 CLOSING....................................................... 17
2.1 Closing Date.................................................. 17
2.2 Buyer's Closing Date Deliveries............................... 17
2.3 Seller's Closing Date Deliveries.............................. 22
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER...................... 26
3.1 Organization and Power and Authority of Seller................ 26
3.2 Authority of Seller; Conflicts................................ 26
3.3 Financial Statements.......................................... 27
3.4 Operations Since Interim Date................................. 28
3.5 Taxes......................................................... 30
3.6 Governmental Permits.......................................... 30
3.7 Real Property................................................. 31
3.8 Assets of the Business........................................ 34
3.9 Software...................................................... 34
3.10 No Violation, Litigation or Regulatory Action................. 34
3.11 Contracts..................................................... 35
3.12 Title to Assets............................................... 36
3.13 No Brokers.................................................... 37
3.14 ERISA......................................................... 37
3.15 Environmental Compliance...................................... 37
3.16 Employee Relations and Agreements............................. 38
3.17 No Undisclosed Liabilities.................................... 39
3.18 Security Clearance............................................ 39
3.19 Employees of the Business..................................... 39
3.20 Government Contracts.......................................... 40
3.21 Services...................................................... 40
3.22 Insurance..................................................... 40
3.23 Customers and Suppliers....................................... 40
3.24 Inventory..................................................... 41
3.25 No Material Adverse Effect.................................... 41
3.26 Product Warranty and Product Liability........................ 41
3.27 Export/Foreign Corrupt Practices Act.......................... 41
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3.28 HMSGTA Consistency............................................ 42
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER....................... 42
4.1 Organization of Buyer......................................... 42
4.2 Authority of Buyer............................................ 42
4.3 No Violation of Law and Agreements............................ 43
4.4 No Litigation or Regulatory Action............................ 43
4.5 No Brokers.................................................... 44
4.6 Financial Ability............................................. 44
4.7 Capital Structure............................................. 44
4.8 Service Acknowledgment........................................ 44
4.9 Independent Analysis.......................................... 44
4.10 ITAR.......................................................... 44
SECTION 5 ACTION PRIOR TO THE CLOSING DATE.............................. 45
5.1 Access to Information......................................... 45
5.2 Consents of Third Parties; Governmental Approvals............. 46
5.3 Operations on or Prior to the Closing Date.................... 47
5.4 Notice of Events or Circumstances............................. 50
5.5 Confidentiality............................................... 50
5.6 Notification of Certain Matters............................... 50
5.7 HSR Filings; CFIUS............................................ 51
5.8 No Negotiation................................................ 52
5.9 Itemization of IRB Assets..................................... 52
5.10 Title Report and Survey....................................... 52
5.11 Delivery of Audited Financial Statements...................... 53
SECTION 6 ADDITIONAL AGREEMENTS......................................... 53
6.1 Use of Names.................................................. 53
6.2 Employees; Employee Benefits.................................. 54
6.3 Insurance..................................................... 58
6.4 Release of Guaranties......................................... 58
6.5 Intercompany Work Orders...................................... 58
6.6 Bid Opportunities............................................. 58
6.7 Excluded Supply Contracts/Excluded Equipment Leases/Other
Supply Contracts........................................... 59
6.8 Geographical Location......................................... 59
6.9 Confidentiality Following the Closing......................... 59
6.10 Personnel Records............................................. 60
6.11 The IDS Transaction........................................... 60
6.12 Noncompetition, Nonsolicitation and Nondisparagement.......... 61
6.13 Environmental Matters......................................... 63
6.14 Actuarial Determination Difference............................ 68
6.15 Export Controls............................................... 69
6.16 Future Conveyances............................................ 69
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6.17 Audited 2001 Financials....................................... 69
6.18 Damaged Assets................................................ 69
6.19 Estoppel Certificates......................................... 70
6.20 Buyer's Capital Structure..................................... 70
6.21 Assignment of R&D Inventions.................................. 70
SECTION 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.................. 71
7.1 No Misrepresentation or Breach of Covenants and Warranties.... 71
7.2 Necessary Governmental Approvals.............................. 71
7.3 Deliveries by Seller.......................................... 72
7.4 No Injunction................................................. 72
7.5 Required Consents............................................. 72
7.6 HSR Waiting Period; CFIUS..................................... 72
7.7 Title Insurance and Surveys................................... 72
7.8 The IDS Transaction........................................... 73
7.9 Litigation.................................................... 73
7.10 Due Diligence................................................. 73
7.11 Financing..................................................... 73
7.12 Collective Bargaining Agreements; Acceptance of Employment
Offers..................................................... 73
7.13 Acceptance of Employment Offers............................... 74
7.14 McConnell Air Force Base...................................... 74
7.15 Utility Infrastructure........................................ 74
7.16 Audited Financial Statements.................................. 74
7.17 Export Licenses............................................... 74
SECTION 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER................. 74
8.1 No Misrepresentation or Breach of Covenants and Warranties.... 74
8.2 Necessary Governmental Approvals.............................. 75
8.3 Payment of Tentative Purchase Price........................... 75
8.4 Delivery by Buyer............................................. 75
8.5 Required Consents............................................. 75
8.6 No Injunction................................................. 75
8.7 HSR Waiting Period; CFIUS..................................... 75
8.8 Litigation.................................................... 75
8.9 Sufficient Employees.......................................... 76
8.10 McConnell Air Force Base...................................... 76
8.11 Utility Infrastructure........................................ 76
8.12 Buyer's Capital Structure..................................... 76
8.13 Export Licenses............................................... 76
8.14 Total Leverage Ratio.......................................... 76
SECTION 9 INDEMNIFICATION............................................... 76
9.1 Indemnification by Seller..................................... 76
9.2 Indemnification by Buyer...................................... 77
9.3 Notice of Claims.............................................. 78
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9.4 Third Person Claims........................................... 79
9.5 Environmental Indemnification................................. 81
9.6 Limitations................................................... 85
9.7 Mitigation.................................................... 85
9.8 Subrogation................................................... 85
9.9 No Offset..................................................... 86
SECTION 10 TERMINATION 1 ................................................ 86
10.1 Termination................................................... 86
SECTION 11 GENERAL PROVISIONS............................................ 87
11.1 Survival of Covenants......................................... 87
11.2 No Public Announcement........................................ 87
11.3 Notices....................................................... 87
11.4 Successors and Assigns........................................ 88
11.5 Records and Other Assistance after Closing.................... 88
11.6 Entire Agreement.............................................. 91
11.7 Interpretation................................................ 91
11.8 Amendments and Waivers........................................ 93
11.9 Bulk Sales Laws............................................... 93
11.10 Expenses ..................................................... 94
11.11 Partial Invalidity............................................ 94
11.12 Execution in Counterparts; Facsimile.......................... 94
11.13 Governing Law................................................. 94
11.14 Jurisdiction.................................................. 94
11.15 Attorneys' Fees............................................... 94
11.16 Time of Essence............................................... 94
11.17 Disclaimer of Warranties...................................... 94
11.18 References to U.S. Dollars.................................... 95
11.19 Further Assurances............................................ 95
11.20 No Rescission................................................. 95
11.21 Dispute Resolution............................................ 96
11.22 Code Section 6043A Reporting.................................. 97
SECTION 12 DEFINITIONS .................................................. 97
12.1 Definitions................................................... 97
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
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l .1(a)(iii) Owned Property
1.1(a)(iv) Governmental Permits
1.1(a)(v) Assigned Contracts
1.1(a)(xiii) Leased Property
1.1(a)(xv) Other Assets
1.1(a)(xvi) Included Spares Inventory
1.1(b)(vi) Nontransferable Government Permits
1.1(b)(xv) Excluded Supply Contracts
1.1(b)(xvi) Excluded Equipment Leases
1.1(b)(xxi) Excluded Tooling
1.1(b)(xxv) Assets Used by Shared Services Support
1.1(b)(xxvi) Assets of IDS Business
1.1(d) Excluded Assets
1.2(a)(viii) Liabilities of Seller
1.4 Allocation of Final Purchase Price
1.6(b) Exceptions to Closing Working Capital Statement
2.2(ee) McConnell AFB Access Easement
3.2(b) Seller's Conflicts
3.3(a) Unaudited Financial Statements
3.4(b) Post-Interim Date Occurrences
3.4(c) Changes Since Interim Date
3.4(c)(ii) Capital Expenditures Budget
3.6 Governmental Permits
3.7 Real Property
3.8 Assets of the Business
3.9(a) Third-Party Software
3.9(b) Software Contracts
3.10(a) Violations of Law
3.10(b) Litigation
3.10(c) Court Orders
3.10(d) Litigation Against Other Persons
3.10(f) Written Notice or Communication from Governmental Authority
3.11(a) Contracts
3.11(b) Non-Binding Business Agreements
3.14(a) Benefit Plans
3.14(c) Exceptions to Benefits
3.14(e) Parachute Payments
3.15 Exceptions to Environmental Compliance
3.16(a) Collective Bargaining Agreements
3.16(b) Strikes/Lock-outs/Proceedings
3.17 Undisclosed Liabilities
3.18 Security Clearance
3.19(a) Employees
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3.20(a) Government Contract Compliance
3.20(b) Government Contract Disputes
3.20(c) Government Contract Investigation
3.21 Services
3.22 Insurance
3.23(b) Disputes with Another Business of Seller
3.23(c) Disputes with Suppliers
3.24 Inventory
3.26(a) Product Warranty
3.26(b) Warranty Expense History
3.26(c) Exceptions to Product Warranty
4.1 Organization of Buyer
4.4 No Litigation or Regulatory Action - Buyer
5.1 Freely Accessible Employees of the Business
5.3(a) Required Operations Prior to Closing Date
5.3(b) Exceptions to Prohibited Operations Prior to the Closing Date
5.6 Buyer's Knowledge Group
6.2(f) Pension Asset Transfer
6.4 Guaranties
6.9(a) Treatment of Confidential Information Following Closing
6.9(b) Treatment and Use of Confidential Information Following Closing
6.12(a) Restricted Products
6.12(f) No Hire Group
7.5 Required Consents
7.7 Title Policy Endorsements
7.10 Due Diligence
7.12 Unions
7.17 Export Licenses
11.5(e) Tax Returns
12.1 Permitted Encumbrances
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EXHIBITS
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Exhibit A Assignment and Assumption Agreement
Exhibit B Transition Services Agreement
Exhibit C BCA Hardware Material Services General Terms Agreement
Exhibit D Supplemental License Agreement (Spare Parts)
Exhibit E Supplemental License Agreement (Ancillary Maintenance Repair and
Overall - Components)
Exhibit F Supplemental License Agreement (Ancillary Maintenance Repair and
Overall - Aircraft)
Exhibit G Supplemental License Agreement (Know-How)
Exhibit H Employee Consent - Medical, Employee Assistance Plan and Drug Free
Workplace Act Records
Exhibit I IDS Supply Agreement
Exhibit J Bill of Sale
Exhibit K [Intentionally Deleted]
Exhibit L [Intentionally Deleted]
Exhibit M Employee Consent
Exhibit N Net Working Capital
Exhibit O Site Access and Environmental Support Services Agreement
Exhibit P Note Term Sheet
Exhibit Q Memorandum of Agreement (787)
Exhibit R Special Business Provisions (Spares)
Exhibit S Special Business Provisions (Sustaining)
Exhibit T Strategic Alliance Agreement
Exhibit U General Terms Agreement (Sustaining)
Exhibit V Administrative Agreement
Exhibit W Sublease (IRBs)
Exhibit X [Intentionally Deleted]
Exhibit Y Electronic Access Agreement
Exhibit Z Restrictive Covenant (KDHE)
Exhibit AA Declaration of Restrictive Covenant and Easement
Exhibit BB IDS Site
Exhibit CC [Intentionally Deleted]
Exhibit DD Special Business Provisions (Tech Services)
Exhibit EE Special Business Provisions (Repair Services)
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of February 22, 2005, by and
between The Boeing Company, a Delaware corporation ("Seller"), and Mid-Western
Aircraft Systems, Inc., a Delaware corporation ("Buyer").
WITNESSETH:
WHEREAS, Seller is engaged in the business of (i) the design,
manufacture and support of structural components (including spare parts), as
described in the Memorandum of Agreement (787) or in each Attachment 1 on the
Closing Date to each of the Special Business Provisions (Sustaining), and the
Special Business Provisions (Spares), for commercial airplanes, including the
737, 747, 757, 767, 777 and the 787 aircraft in facilities in Wichita, Kansas
and Tulsa and McAlester, Oklahoma, (ii) the manufacture of components for
military platforms as described in Attachment 1 as of the Closing Date to the
IDS Supply Agreement for the E-3 Airborne, Warning and Control System Aircraft,
AC130U Gunship, KC-135 Tanker, UCAS, V-22, and treated core (low observables)
for various rotorcraft in facilities in Tulsa and McAlester, Oklahoma, (iii)
tooling design and manufacturing at the Manufacturing Center of Excellence in
Wichita, Kansas, (iv) commercial aircraft fleet support as currently conducted
in facilities in Wichita, Kansas and Tulsa and McAlester, Oklahoma, and (v)
shared services support primarily related to the businesses described in
Subsections (i), (ii), (iii) and (iv) of this paragraph in facilities in
Wichita, Kansas and Tulsa and McAlester, Oklahoma (collectively, the
"Business"). For the avoidance of doubt, the Business does not include the
shared services support assets described in Section 1.1(b)(xxv) or the assets
primarily used by the IDS Wichita Development and Modification Center facilities
located in Wichita, Kansas;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, the Assets (as hereinafter defined), and Buyer is willing
to assume the Assumed Liabilities (as hereinafter defined), all on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual representations,
covenants and agreements hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, it is
hereby agreed between Buyer and Seller as follows (certain initially capitalized
terms used herein are defined in Section 12):
SECTION 1 PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets.
(a) Upon the terms and subject to the conditions of this Agreement, on
the Closing Date, Buyer shall purchase from Seller, and Seller shall irrevocably
sell, convey, transfer, assign and deliver to Buyer, free and clear of all
Encumbrances other than Permitted Encumbrances, all right, title and interest of
Seller in and to all of the following (the "Assets"):
(i) The tangible personal property including, without limitation,
the trade fixtures, furnishings, furniture, office supplies, tools (but not
including the Excluded Tooling described in Section 1.1(b)(xxi)), machinery,
vehicles, equipment and computer equipment (the "Equipment") (A) primarily used
in the operation of the Business as currently
conducted, (B) procurement coded for the Wichita Facility, wherever located so
long as owned by Seller and in existence, or (C) procured by the Business for
the 787 program;
(ii) The entire inventory of the Business, including, but not
limited to, all materials and supplies, all work in process and all finished
products primarily related to the Business, but excluding any inventory that has
been delivered FOB the Facilities or is in transit to another business unit of
Seller on or prior to the Closing Date that is not part of the Business (the
"Inventory");
(iii) All parcels of real property set forth on Schedule
1.1(a)(iii), including any and all buildings, structures and improvements
located thereon and all fixtures attached thereto, all easements, rights of way,
reservations, privileges, appurtenances and other estates and rights benefiting
such real property and Seller's use thereof and all of Seller's right, title and
interest, if any, in and to (a) all oil, gas and mineral rights related to the
foregoing, (b) the land lying in the bed of any street, road or avenue adjoining
the real property and (c) any condemnation award or any payment in lieu thereof
for any taking thereof or for any change in grade of any street road or avenue
adjacent thereto (collectively, the "Owned Property");
(iv) To the extent transferable by Seller to Buyer and not
required to be retained by Seller in order to continue to operate its businesses
that are not part of the Business, all Governmental Permits related to the
Business and all pending applications therefor or renewals thereof, including,
without limitation, those set forth on Schedule 1.1(a)(iv);
(v) All Contracts primarily related to the Business other than
with regard to third-party customers and subject to the provisions of Sections
5.2(d) and 5.2(e) (the "Assigned Contracts"), including but not limited to the
Contracts set forth on Schedule 1.1(a)(v), but not including the Contracts
described in Section 1.1(b);
(vi) All rights of Seller primarily related to the Business to
utility, security and other deposits made by Seller and any prepaid expenses
paid by Seller to third parties, but only to the extent reflected on the Closing
Working Capital Statement;
(vii) All information (other than Intellectual Property) and
records (whether in tangible or electronic form) primarily related to the
operations of the Business, including (A) supplier lists and records (supplier
financial information to the extent permitted pursuant to the confidentiality
provisions in the Assigned Contracts), (B) manufacturing research and
development reports and records, (C) production reports and records, (D) service
and warranty records, equipment logs, operating guides and manuals directly
relating to the Equipment at the Facilities, (E) financial and accounting
records (other than with respect to third-party customers), (F) studies,
reports, correspondence and other similar documents and records, (G) copies of
all of the foregoing information and records (except as excluded above or in
Section 1.1(b)) and (H) copies of all personnel records related (to the extent
permitted by the relevant written consent) to the Business (and not the
originals thereof) for each Hired Employee that executes an appropriate written
consent for the relevant records in the form attached hereto as Exhibit H or
Exhibit M; provided, however, that the Assets shall not include the records
described in Section 1.1(b)(xxiii), personnel records for non-Hired Employees,
corporate charter, all documents subject to the attorney-client privilege, Tax
Returns filed by Seller and books and
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records of Seller relating thereto, taxpayer and other identification numbers,
records, seals, minute books, stock transfer books used, and all other assets
primarily used, in connection with the corporate functions of Seller; provided,
further, that in no case shall any Boeing proprietary information made available
to Buyer for its use under the BCA Intellectual Property License Agreement, the
BCA Supply Agreement or the IDS Supply Agreement be included hereunder; and,
provided, further, that Seller has the right to redact, on or prior to the
Closing Date, any information that is not related to the Business, the Assets or
the Assumed Liabilities;
(viii) Assets of Seller related to Benefit Plans to the extent
provided in Section 6.2;
(ix) All goodwill associated with the Business and, to the extent
assignable, telephone and fax numbers and listings for the 526 prefix;
(x) A 77.77% interest as a tenant in common in the Kansas
Industrial Energy Supply Company established pursuant to the Tenants-in-Common
Management Agreement dated October 3, 1980;
(xi) Assets of Seller directly related to the electricity
transmission and distribution system used to provide electricity to the Wichita
Facility;
(xii) [Intentionally Deleted]
(xiii) All right, title and interest of Seller in and to the real
property set forth on Schedule 1.l(a)(xiii), including any and all buildings,
structures and improvements located thereon and all fixtures attached thereto,
together with all easements, rights of way, reservations, privileges,
appurtenances and other estates and rights benefiting such real property, held
by Seller pursuant to a lease, sublease, license or other written occupancy
agreement (collectively, the "Leased Property");
(xiv) All rights, claims, credits, causes of action, demands,
privileges and rights of set-off of Seller against third parties primarily
related to the Assets or to the extent related to the Assumed Liabilities,
including claims pursuant to all warranties, representations and guarantees made
by suppliers, manufacturers, contractors and other third parties, but excluding
any claim against a supplier, manufacturer, contractor or third party based on
the presence of asbestos in a component that was furnished by such Person to the
extent relating to a liability retained by Seller pursuant to Section
1.2(b)(xxiv) or directly relating to a liability retained by Seller pursuant to
Section 1.2(b)(xii);
(xv) The assets described in Schedule 1.1(a)(xv);
(xvi) The Spares Inventory set forth on Schedule 1.1(a)(xvi); and
(xvii) The assets subleased to Buyer pursuant to the terms of the
Sublease (IRBs).
Notwithstanding the foregoing, Seller may retain copies of any
Contracts referenced in Section 1.1(a)(v) or records: (1) which relate to
properties or activities of Seller
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other than the Business, (2) which are required to be retained pursuant to any
Requirement of Law or are subject to the attorney-client privilege, for
financial reporting purposes, for Tax purposes, legal defense or prosecution
purposes or otherwise in connection with the Excluded Assets or the Excluded
Liabilities, or (3) which are reasonably deemed necessary by Seller.
Notwithstanding the foregoing, the transfer of the Assets pursuant to
this Agreement shall not include the assumption of any Liability related to the
Assets unless Buyer expressly assumes that Liability pursuant to Sections
1.2(a), 6.13 or 9.5.
(b) Notwithstanding anything to the contrary herein, Seller shall not
contribute, convey, assign, or transfer to Buyer, and Buyer shall not acquire or
have any rights to acquire, any assets other than those specifically set forth
in Section 1.1(a) (the "Excluded Assets"). Without limiting the generality of
the foregoing, the following shall constitute Excluded Assets:
(i) All cash, cash equivalents and securities of Seller except as
described in Section 1.1(a)(vi);
(ii) All notes, drafts and accounts receivable or other
obligations for the payment of money;
(iii) All bank and other depository accounts and safe deposit
boxes of Seller;
(iv) All refunds of Taxes and Tax loss carry forwards relating to
any period or portion thereof ending on or prior to the Closing Date (and any
such refunds received by Buyer shall be promptly paid over by Buyer to Seller);
(v) All assets, whether real or personal, tangible or intangible,
which are owned, used or held for use by Seller primarily to conduct any
business operation or activity other than the Business including, but not
limited to, the IDS Business and shared services support primarily related to
the IDS Business;
(vi) Nontransferable Governmental Permits, pending applications
or renewals and those Governmental Permits, pending applications or renewals
needed in whole or in part by Seller to continue to operate its businesses other
than the Business, as set forth on Schedule 1.1(b)(vi) hereto;
(vii) All insurance policies of Seller related to the Business,
any refunds paid or payable in connection with the cancellation or
discontinuance of any insurance policies applicable to the Business and any
claims made or to be made under any such insurance policies;
(viii) [Intentionally Deleted]
(ix) All assets used primarily in connection with the corporate
functions of Seller (including but not limited to personnel records, other than
the personnel records included as Assets pursuant to Section l.1(a)(vii),
corporate charter, all documents
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subject to the attorney-client privilege, Tax Returns filed by Seller and books
and records related thereto, taxpayer and other identification numbers, records,
seals, minute books and stock transfer books);
(x) All rights of Seller under this Agreement, the Seller
Transaction Agreements and the Tentative Purchase Price and Final Purchase
Price;
(xi) Assets of Seller related to all Benefit Plans, except as set
forth in Section 6.2;
(xii) All Intellectual Property, including, without limitation,
the Intellectual Property that will be licensed to Buyer pursuant to the BCA
Intellectual Property License Agreement or any other Seller Transaction
Agreement;
(xiii) The existing collective bargaining agreements covering the
employees of the Business;
(xiv) Any Government Furnished Equipment and any tooling owned by
Seller provided to Buyer pursuant to the IDS Supply Agreement;
(xv) The Contracts set forth on Schedule 1.l(b)(xv) relating to
enterprise wide supply arrangements ("Excluded Supply Contracts");
(xvi) The Contracts set forth on Schedule 1.1(b)(xvi) relating to
leased equipment (the "Excluded Equipment Leases");
(xvii) Any domain names used in the Business;
(xviii) The Marks;
(xix) Any inventory of the Business, including, but not limited
to, all materials and supplies, all work in process, and all finished products,
that on or prior to the Closing Date has been delivered FOB the Facilities or is
in transit to another business unit of Seller that is not part of the Business
(excluding the Spares Inventory set forth on Schedule 1.1(a)(xvi));
(xx) Intercompany accounts receivable between Seller and Seller's
Affiliates;
(xxi) The tooling assets identified on Schedule 1.1(b)(xxi) (the
"Excluded Tooling");
(xxii) the "Permit No. 234 Landfill" (also known as the "Emery
Landfill," "Boeing Landfill," and "Boeing/Emery Landfill" located approximately
..5 miles from the Wichita Facility;
(xxiii) All records relating primarily to Excluded Assets and
Excluded Liabilities, including any such records primarily related to
environmental Liabilities retained by
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Seller, provided, Buyer shall be entitled to copies of certain such records as
described in Section 11.5(b);
(xxiv) Except to the extent provided in Section l.1(a)(xiv), all
rights, claims, credits, causes of action or rights of set-off of Seller against
third parties, including causes of action, claims and rights under insurance
policies relating thereto;
(xxv) The assets used by the shared services support included in
the Business but set forth on Schedule 1.1(b)(xxv);
(xxvi) In addition to the Excluded Assets described in Section
1.1(b)(v) above, the Excluded Assets shall also include the assets of the IDS
Business set forth on Schedule 1.1(b)(xxvi);
(xxvii) A 1.42% interest as a tenant in common in the Kansas
Industrial Energy Supply Company established pursuant to the Tenants-in-Common
Management Agreement dated October 3, 1980; and
(xxviii) Any assets (including any current assets) not otherwise
treated as Excluded Assets and that relate to Taxes collected or withheld by
Seller and payable to any Governmental Authority.
(c) In addition to the Excluded Assets described in Section 1.1(b)
above, for the avoidance of doubt, the Excluded Assets shall also include the
assets primarily used by the IDS Wichita Development and Modification Center
facilities located in Wichita, Kansas.
(d) In addition to the Excluded Assets described in Sections 1.1(b)
and (c) above, the Excluded Assets shall also include those set forth on
Schedule 1.1(d).
1.2 Assumption of Liabilities.
(a) Upon the terms and subject to the conditions set forth herein, at
the Closing Buyer shall assume from Seller (and thereafter pay, perform,
discharge or otherwise satisfy in accordance with their respective terms), and
Seller shall irrevocably convey, transfer and assign to Buyer, only the
following Liabilities of Seller (the "Assumed Liabilities"):
(i) Liabilities of Seller reflected on the Closing Working
Capital Statement finally determined in accordance with Section 1.6;
(ii) Liabilities arising after the Closing under the Assigned
Contracts (other than Liabilities arising out of or relating to any act or
omission that occurred prior to the Closing);
(iii) Liabilities of Seller arising after the Closing under any
Assigned Contract included in the Assets that is entered into by Seller after
the date hereof in accordance with the provisions of this Agreement (other than
Liabilities to the extent arising out of or relating to any act or omission that
occurred prior to the Closing);
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(iv) Liabilities for pension Liability, Accrued Vacation, retiree
medical, flexible spending accounts, sick leave, and personal time, to the
extent provided in Section 6.2.
(v) Warranty obligations and claims and associated costs and
damages arising from products (or component parts thereof) delivered after the
Closing Date;
(vi) Liabilities arising from the defective manufacture of
products (or component parts thereof) delivered after the Closing Date, whether
manufactured or repaired before, on or after the Closing Date;
(vii) Liabilities arising from defects in a product specification
and/or design defects in products (or component parts thereof) delivered after
the Closing Date, but not including any design defects with regard to items
designated with an engineering delegation level of 3 or below on Attachment 4 to
the Special Business Provisions (Sustaining), the Special Business Provisions
(787) or the Special Business Provisions (Spares);
(viii) Liabilities of Seller described in Schedule 1.2(a)(viii);
and
(ix) Liabilities arising out of exposure to asbestos, as follows:
(A) With respect to exposure to asbestos in a product (or
component part thereof), Buyer shall assume such Liabilities to
the extent that the product was manufactured or produced after
the Closing Date; and
(B) With respect to exposure to asbestos in a Facility,
Buyer shall assume such Liabilities to the extent that the
exposure to asbestos occurred after the Closing Date. This
Section 1.2(a)(ix) shall not apply to claims for exposure to
asbestos asserted under workers compensation Laws.
(b) Buyer shall not assume any Liabilities other than the "Assumed
Liabilities." All Liabilities of Seller other than the Assumed Liabilities (the
"Excluded Liabilities") shall remain the sole responsibility of and shall be
retained, paid, performed and discharged solely by Seller. Without limiting the
generality of the foregoing, "Excluded Liabilities" shall include, without
limitation:
(i) Liabilities for Income Taxes of Seller;
(ii) Liabilities of Seller in respect of transaction costs
payable by it pursuant to Section 11.10 hereof or otherwise;
(iii) Liabilities of Seller not arising out of or related to the
Business or the Assets;
(iv) Liabilities of Seller related to all Benefit Plans, except
as set forth in Section 6.2;
7
(v) Liabilities of Seller to employees of the Business who are
not hired by Buyer immediately following the Closing Date, except as provided in
Section 9.2(a)(v);
(vi) Liabilities of Seller arising under any Environmental Law
relating to conditions existing on or prior to the Closing Date with respect to
Seller's Facilities or to properties formerly owned, operated or used by Seller
or the Business and Liabilities relating to properties to which Seller or the
Business have sent waste, on or prior to the Closing Date, for treatment,
storage or disposal, except as set forth in Sections 6.13 and 9.5;
(vii) Liabilities for amounts of Taxes collected or withheld by
Seller and payable to any Governmental Authority;
(viii) Warranty obligations and claims and associated costs and
damages arising from products (or component parts thereof) shipped FOB the
Facilities or otherwise on or prior to the Closing Date;
(ix) Liabilities arising from the defective manufacture of
products (or component parts thereof) shipped FOB the Facilities or otherwise on
or prior to the Closing Date;
(x) Liabilities arising from defects in a product specification
and/or design defects in products (or component parts thereof) shipped FOB the
Facilities or otherwise on or prior to the Closing Date;
(xi) Liabilities arising from design defects in products (or
component parts thereof), but only with regard to items designated with an
engineering delegation level of 3 or below on Attachment 4 to the Special
Business Provisions (Sustaining), the Special Business Provisions (787) or the
Special Business Provisions (Spares);
(xii) Liabilities under Assigned Contracts assumed by Buyer
pursuant to Section 1.2(a) that arise after the Closing to the extent arising
out of or relating to any act or omission that occurred prior to the Closing;
(xiii) Liabilities under any Contract not assumed by Buyer under
Section 1.2(a), including Liabilities arising out of or relating to Seller's
credit facilities or any security interest related thereto;
(xiv) Liabilities of the Business to Seller or to any Affiliate
of Seller;
(xv) Liabilities of Seller under any easement, access agreement
or other document or instrument recorded against or affecting the Facilities or
any portion thereof, to the extent arising or relating to the period of time
prior to Closing;
(xvi) Liabilities to indemnify, reimburse or advance amounts to
any officer, director, employee or agent of Seller or any officer, employee or
agent of the Business;
(xvii) Liabilities to the extent covered by insurance policies of
Seller in effect prior to the Closing;
8
(xviii) Liabilities arising out of any Proceeding pending as of
the Closing, except for Liabilities to the extent such Liabilities relate to any
act or omission of Buyer after the Closing Date;
(xix) Liabilities arising out of any Proceeding commenced after
the Closing to the extent arising out of or relating to any act or omission
occurring on or prior to the Closing Date;
(xx) Liabilities related to Seller's use of Intellectual Property
on or prior to the Closing Date;
(xxi) Liabilities to the extent arising out of or resulting from
Seller's compliance or noncompliance with any Requirement of Law or Court Order
or order of any Governmental Authority;
(xxii) Liabilities of Seller under this Agreement or any Seller
Transaction Agreement;
(xxiii) Liabilities of Seller based upon Seller's acts or
omissions occurring after the Closing; and
(xxiv) Liabilities arising out of exposure to asbestos, as
follows:
(A) With respect to exposure to asbestos in a product (or
component part thereof), Seller shall retain such Liabilities to
the extent that the product was manufactured or produced on or
prior to the Closing Date; and
(B) With respect to exposure to asbestos in a Facility,
Seller shall retain such Liabilities to the extent that the
exposure to asbestos occurred on or prior to the Closing Date.
This Section 1.2(b)(xxiv) shall not apply to claims for exposure
to asbestos under workers compensation Laws.
1.3 Determination of Final Purchase Price.
(a) The amount to be paid by Buyer to Seller for the Assets (the
"Final Purchase Price") shall be the Tentative Purchase Price as defined and
determined in Section 1.3(c) below, as the Tentative Purchase Price may be
adjusted after the Closing pursuant to the provisions of Section 1.5(a) and
Section 1.6 below. The Final Purchase Price shall be paid in accordance with the
provisions of Section 1.7 below.
(b) Not later than thirty (30) calendar days prior to the Closing,
Seller will deliver to Buyer (i) an estimate of the Closing Net Working Capital,
which estimate shall be the Net Working Capital of the Business as of the end of
the most recent accounting month for which internal financial statements are
available (the "Estimated Closing Net Working Capital") and (ii) an estimate of
the book value of the capital assets acquired for the 787 program as
9
contemplated by the capital plan in the Memorandum of Agreement (787), without
regard to time period (the "787 Assets") as of the Closing Date (the "Estimated
787 Book Value").
(c) The Final Purchase Price shall be calculated with reference to an
amount determined on or before the Closing Date in accordance with this Section
1.3 (the "Tentative Purchase Price"). The Tentative Purchase Price shall be the
sum of (x) the book value of the Assets as reflected on the Audited Interim
Financial Statements (reduced by the amount of capitalized interest reflected
therein) including an unaudited value of Spares Inventory as of February 17,
2005 as set forth on a schedule attached to the Audited Interim Financial
Statements plus (y) One Hundred Ninety-Two Million Four Hundred Thousand Dollars
($192,400,000), as adjusted as follows:
(i) If the Estimated Closing Net Working Capital is greater than
or less than the Target Net Working Capital Amount, the Tentative Purchase Price
shall be increased by such excess or decreased by such shortfall, as applicable.
(ii) The Tentative Purchase Price shall be increased by the
amount of the Estimated 787 Book Value, less the aggregate book value of the 787
Assets as reflected on the Audited Interim Financial Statements.
(d) In order to determine the Final Purchase Price, the Tentative
Purchase Price shall be adjusted after the Closing pursuant to the provisions of
Section 1.5(a) and Section 1.6 below.
(e) For purposes of the adjustments to the Tentative Purchase Price
and Final Purchase Price provided in this Section 1.3 and Section 1.5(a) and
Section 1.6 below, and also for purposes of determining the amount by which the
Tentative Purchase Price and Final Purchase Price shall be considered to have
been paid in accordance with Section 1.7 below by way of assumption by the Buyer
of Accrued Vacation Liability, Accrued Vacation Liability and any estimates
thereof shall be included as the amount determined multiplied by 1.0765 in order
to reflect the payroll taxes related thereto.
1.4 Allocation of Final Purchase Price.
(a) The consideration for the Assets provided herein shall be
allocated among the various categories of Assets for Tax purposes in accordance
with U.S. Treasury Regulations Sections 1.1060-1(a)(1) and 1.338-6(b) pursuant
to a schedule prepared in accordance with the provisions of Section 1.4(b) (as
finalized pursuant to Section 1.4(b) and, to the extent applicable, Section
1.4(c), the "Allocation Schedule"). Buyer and Seller shall execute and file all
federal, state, local and foreign Tax Returns in accordance with the Allocation
Schedule (with appropriate changes, if necessary, in the case of Tax Returns
other than United States federal Income Tax Returns) and shall not take any
position with respect to Taxes before any Governmental Authority or in any
judicial Proceeding that is inconsistent with such allocation, except as
otherwise required pursuant to (i) Court Order (including for this purpose an
arbitration award only if it is described in clause (ii) or (iii) of this
sentence), (ii) a determination of a Tax Arbitrator pursuant to an arbitration
conducted in accordance with Section 1.4(c) below that a Tax Return preparer for
Seller or Buyer would be subject to penalty under Section 6694 of the
10
Code as a result of signing a Tax Return based on such allocation, or (iii) a
final "determination" (as that term is defined in Section 1313(a) of the Code)
or similar determination pursuant to state, local or foreign Tax law. Buyer and
Seller shall each timely file a Form 8594 with the IRS in accordance with the
requirements of Section 1060 of the Code.
(b) Within ninety (90) days after the Closing Date, Buyer shall draft
and provide to Seller a draft Allocation Schedule in which the consideration for
the Assets as determined for federal income Tax purposes ("Tax Purchase Price")
shall be allocated solely to Assets and among the categories thereof in
accordance with U.S. Treasury Regulations Sections 1.1060-1(a)(1) and 1.338-6(b)
and the provisions of this Section 1.4. Such draft Allocation Schedule shall be
prepared by Buyer so as to make such allocation based upon their net book value
as reflected on the books of Seller maintained for financial reporting purposes
and as adjusted through the date of Closing, unless (i) otherwise agreed by
Seller and Buyer, or (ii) required as the result of a determination by an
independent third party appraiser (after giving Seller and Buyer the opportunity
to provide such data and information as they believe pertinent thereto) in
connection with the preparation of the Allocation Schedule that such net book
value cannot reasonably be considered to represent fair market value of the
applicable Assets. Unless Seller shall, within ten (10) days after receipt of
such draft Allocation Schedule, give notice to Buyer of its objection to the
draft Allocation Schedule, which objection shall not be unreasonable, the draft
Allocation Schedule shall become the final Allocation Schedule.
(c) Any disagreement regarding the allocation contained in the draft
Allocation Schedule prepared by Buyer pursuant to Section 1.4(b), whether
arising as contemplated pursuant to Section 1.4(b) or thereafter in connection
with the filing of any Tax Return or any Proceeding related to Taxes, shall be
submitted for final and binding resolution to a Tax partner at the Neutral
Accounting Firm to resolve such disagreements (the "Tax Arbitrator"). Buyer and
Seller shall instruct the Tax Arbitrator to choose either the allocation
schedule proposed by Buyer or the allocation schedule proposed by Seller and to
deliver to Buyer and Seller, as promptly as practicable and in any event within
ninety (90) calendar days after his or her appointment, a written report setting
forth the resolution of any such disagreement determined in accordance with this
Section 1.4. The determination of the Tax Arbitrator shall be final and binding
upon Buyer and Seller. The fees, expenses and costs of the Tax Arbitrator shall
be borne one hundred percent (100%) by the party whose position is rejected by
the Tax Arbitrator. Other than such fees and expenses of the Tax Arbitrator,
Buyer and Seller shall each be responsible for their own costs and expenses
incurred in connection with any actions taken pursuant to this Section 1.4.
1.5 Allocation of Expenses. On the Closing Date, the following
expenses attributable to the Business shall be allocated between and are hereby
assumed by Buyer on the one hand and Seller on the other hand as follows:
(a) Taxes, Utilities, and Prepaid Expenses. All state, county and
local ad valorem Taxes on real or personal property shall be apportioned between
Buyer and Seller as of 11:59 p.m. (Central Time) on the Closing Date, computed
on the basis of the fiscal year for which the same are levied. All utility
charges, gas charges, electric charges, water charges, water rents and sewer
rents, if any, shall be apportioned between Buyer and Seller as of 11:59 p.m.
(Central Time) on the Closing Date, to the extent feasible, based upon a meter
reading, and to the
11
extent not feasible, based upon a fraction, the numerator of which is the number
of days in the period for which such charges or rents are imposed, ending on and
including the Closing Date (as to Seller's allocation), and the denominator of
which is the total number of days in such period, with Buyer being responsible
for the balance. All prepaid expenses paid by Seller on or prior to the Closing
Date in respect of the Business (other than in respect of Taxes) shall be
apportioned between Buyer and Seller as of 11:59 p.m. (Central Time) on the
Closing Date computed on the basis of the benefit received by Seller on or prior
to the Closing Date and the benefit to be received by Buyer subsequent to the
Closing Date with respect to any Contract or other matter to which the prepaid
expense relates. All prorations shall be made insofar as feasible on the Closing
Date, except to such extent such prorations are reflected in the Estimated
Closing Net Working Capital. During the ninety (90) day period subsequent to the
Closing Date, Seller shall advise Buyer and Buyer shall advise Seller of any
actual changes to such prorations, and such changes shall be taken into account
in calculation of the Final Purchase Price as an increase or decrease, as
applicable, at the end of such ninety (90) day period. In the event Buyer or
Seller shall receive bills either (i) after the Closing Date for expenses
incurred on or prior to the Closing Date that were not prorated in accordance
with this Section 1.5(a), or (ii) more than ninety (90) days after the Closing
Date that were not prorated and taken into account in the calculation of the
Final Purchase Price, then, in either such case, Buyer or Seller, as the case
may be, shall promptly notify the other party in writing as to the amount of the
expense subject to proration and the responsible party shall promptly pay its
portion of such expense (or, in the event such expense has been paid on behalf
of the responsible party, reimburse the other party for its portion of such
expense), and such expense shall not be taken into account in the calculation of
either the Tentative Purchase Price or the Final Purchase Price.
(b) Transfer Taxes. Buyer and Seller shall cooperate in preparing,
executing and filing use, sales, real estate, transfer and similar Tax Returns
relating to the purchase and sale of the Assets. Buyer shall be responsible for
and shall duly and timely pay, or within five (5) Business Days after demand
therefor shall reimburse Seller for any payment by Seller of, all transfer
Taxes, including any penalties, interest and additions to Tax relating to such
transfer Taxes, incurred in connection with the purchase and sale of the Assets,
regardless of (i) when such transfer Taxes and such other amounts may be
assessed or levied or action otherwise taken to collect such transfer Taxes,
(ii) whether the incidence or responsibility for such transfer Taxes and such
other amounts (as determined without regard hereto) may fall upon Seller or
Buyer, and (iii) whether such transfer Taxes and such other amounts may be
assessed, levied or otherwise collected from Seller or Buyer; provided, however,
Seller shall bear (x) one half (1/2) of transfer Taxes to the extent such
transfer Taxes are applied to amounts not greater than the net book value of the
applicable Assets as carried on the books of Seller as adjusted through the date
of Closing and (y) one half (1/2) of transfer Taxes (but not more than one
hundred and fifty thousand dollars ($150,000)) to the extent such transfer Taxes
are applied to amounts greater than the net book value of the applicable Assets
as carried on the books of Seller as adjusted through the date of Closing. Such
Tax Returns shall be prepared in a manner that is consistent with the
determination of the aggregate fair market value of the Assets by the classes
contemplated by Section 1.4.
(c) Tax Prosecution Rights. Notwithstanding anything contained herein
to the contrary other than Section 9.4(b) to the extent provided in Section
9.4(c) hereof, Seller shall have the right (at its own expense) to prosecute and
continue to prosecute, and to control the
12
conduct of, any Tax audit or examination and any administrative appeal or
litigation relating thereto, or any other Tax Proceeding, to the extent it
relates to any Taxes with respect to which Seller is obligated hereunder to
indemnify the Buyer Group Members; and Seller shall have the right to determine
whether and to what extent to extend or waive any statute of limitations for the
assessment of any Tax with respect to which the Seller is obligated hereunder to
indemnify the Buyer Group Members; provided, however, without the consent of
Buyer (which consent shall not be unreasonably withheld or delayed), Seller
shall not settle any such audit, examination, appeal, litigation or Proceeding
to the extent that Liability of the Buyer for Taxes of the type that are the
subject of the settlement for any period or portion thereof after Closing would
reasonably be expected to be increased as a result of the settlement (provided
further, the obligation of Seller to obtain such consent of Buyer shall be
subject to the execution by Buyer of a confidentiality agreement setting forth
reasonable terms pursuant to which Buyer will maintain the confidentiality of
any information provided by Seller to Buyer in connection with such consent or
the matters to which it relates). Any refunds obtained for such claims for any
Tax years prior to the Tax year in which the Closing occurs and the pro rata
portion of any refunds obtained for such claims for the Tax year in which the
Closing occurs, net of the expenses incurred in obtaining such refunds, shall be
paid to Seller.
1.6 Purchase Price Adjustment; Determination of Final Purchase Price.
(a) Within ninety (90) calendar days after the Closing Date, Seller
shall prepare and deliver to Buyer:
(i) a statement setting forth the Closing Net Working Capital
(such statement, the "Closing Working Capital Statement");
(ii) a statement setting forth the actual book value of the 787
Assets (the "Actual 787 Book Value") as of the Closing Date (the "Actual 787
Book Value Statement"); and
(iii) a statement setting forth:
(A) the number of employees of the Wichita Division - Boeing
Commercial Airplanes on the Closing Date (the "Number of
Employees"), and
(B) the Number of Employees that both (i) did not receive
offers of employment from Buyer and (ii) are entitled to receive
severance under Seller's severance plans or policies in effect as
of the date hereof as a result of the transactions contemplated
by this Agreement and who have either received or have begun to
receive such severance payments
(the "Severance Statement") and, together with the Closing
Working Capital Statement and the Actual 787 Book Value Statement, the "Purchase
Price Adjustment Statements").
(b) Buyer shall cooperate with Seller in connection with, and shall
furnish to Seller all such information as Seller may reasonably require, in the
preparation of the Purchase
13
Price Adjustment Statements. Buyer shall provide to Seller in writing promptly
after offers of employment are made, the Number of Employees that received
offers of employment from Buyer and a listing of the names of each such
employee. Except as set forth on Schedule 1.6(b), the Purchase Price Adjustment
Statements will be prepared using the same accounting methods, policies,
practices and procedures, with consistent classifications and estimation
methodologies as were used in the preparation of the Target Net Working Capital
Amount, the Estimated Closing Net Working Capital Amount and the Estimated 787
Book Value, to the extent applicable, and will not include any changes in assets
or Liabilities as a result of purchase accounting adjustments arising from or
resulting as a consequence of the transactions contemplated hereby or subsequent
changes in accounting policy or procedure. In the event that the Closing Date
does not occur at a financial week or month end for accounting purposes, the
parties shall agree on mutually acceptable roll forward or roll back procedures.
Buyer shall make its employees available to assist Seller in the preparation of
the Purchase Price Adjustment Statements.
(c) Each party shall provide the other party and its representatives
with reasonable access to books and records and relevant personnel during the
preparation of the Purchase Price Adjustment Statements and the resolution of
any disputes that may arise under this Section 1.6 and Section 1.7.
(d) If Buyer disagrees with the determination of the Closing Net
Working Capital as shown on the Closing Working Capital Statement, the Actual
787 Book Value as shown on the Actual 787 Book Value Statement, the information
shown on the Severance Statement or the determination of the Purchase Price
Differential, Buyer shall notify Seller in writing of such disagreement within
sixty (60) calendar days after delivery of the applicable Purchase Price
Adjustment Statement, which notice shall describe the nature of any such
disagreement in reasonable detail, identify the specific items involved and the
dollar amount of each such disagreement and provide reasonable supporting
documentation for each such disagreement. After the end of such sixty (60)
calendar day period, neither Buyer nor Seller may introduce additional
disagreements with respect to any item in the applicable Purchase Price
Adjustment Statement or increase the amount of any disagreement, and any item
not so identified shall be deemed to be agreed to by Buyer and Seller and will
be final and binding upon the parties. During the sixty (60) calendar day period
of its review, Buyer shall have reasonable access to any documents, schedules or
work papers used in the preparation of the Purchase Price Adjustment Statements.
(e) Buyer and Seller agree to negotiate in good faith to resolve any
such disagreement. If Buyer and Seller are unable to resolve all disagreements
properly identified by Buyer pursuant to Section 1.6(d) within thirty (30)
calendar days after delivery to Seller of written notice of such disagreement,
then such disagreements may be submitted by either party for final and binding
resolution to the Neutral Accounting Firm to resolve such disagreements (the
"Accounting Arbitrator"). The Accounting Arbitrator will only consider those
items and amounts set forth in a Purchase Price Adjustment Statement as to which
Buyer and Seller have disagreed within the time periods and on the terms
specified above and must resolve the matter in accordance with the terms and
provisions of this Agreement. The Accounting Arbitrator shall deliver to Buyer
and Seller, as promptly as practicable and in any event within ninety (90)
calendar days after its appointment, a written report setting forth the
resolution of any such
14
disagreement determined in accordance with the terms of this Agreement. The
Accounting Arbitrator shall select as a resolution the position of either Buyer
or Seller for each item of disagreement and may not impose an alternative
resolution. The Accounting Arbitrator shall make its determination based solely
on presentations and supporting material provided by the parties and not
pursuant to any independent review. The determination of the Accounting
Arbitrator shall be final and binding upon Buyer and Seller. The fees, expenses
and costs of the Accounting Arbitrator shall be borne one hundred percent (100%)
by the party whose aggregate position was furthest from the aggregate final
determination of the Accounting Arbitrator. Other than such fees and expenses of
the Accounting Arbitrator, Buyer and Seller shall each be responsible for their
own costs and expenses incurred in connection with any actions taken pursuant to
Section 1.6.
(f) Except as set forth on Schedule 1.6(b), the parties hereto agree
that the procedure set forth herein with respect to the Purchase Price
Adjustment Statements, and the purchase price adjustment provided herein and in
Section 1.7, are not intended to permit the introduction of different accounting
methods, policies, practices, procedures, classifications or estimation
methodologies for purposes of determining the asset and Liability balances from
those used in the preparation of the Audited Financial Statements.
(g) If after the Closing Date, Seller pays any Liability on the
Closing Working Capital Statement, then Buyer and Seller agree that such
Liability shall to the extent of such payment be deemed removed from the Closing
Working Capital Statement if such payment is made prior to the date on which the
Closing Working Capital Statement is delivered, or if after such date, Buyer
shall promptly reimburse Seller for the amount of such payment if Buyer did not
make payment before receiving written notice from Seller of Seller's payment.
(h) The Tentative Purchase Price shall be subjected to the following
adjustments and, as so adjusted, shall be the Final Purchase Price:
(i) If the Closing Net Working Capital as finally determined in
accordance with this Section 1.6 is less than the Estimated Closing Net Working
Capital, the Tentative Purchase Price shall be decreased on a dollar-for-dollar
basis by the amount of such shortfall, and if the Closing Net Working Capital is
greater than the Estimated Closing Net Working Capital, the Tentative Purchase
Price shall be increased on a dollar-for-dollar basis by the amount of such
excess.
(ii) If the Actual 787 Book Value as finally determined in
accordance with this Section 1.6 is less than the Estimated 787 Book Value, the
Tentative Purchase Price shall be decreased on a dollar-for-dollar basis by the
amount of such shortfall, and if the Actual 787 Book Value is greater than the
Estimated 787 Book Value, the Tentative Purchase Price shall be increased on a
dollar-for-dollar basis by the amount of such excess.
(iii) If the sum of (A) the Number of Employees referred to in
Section 1.6(a)(iii)(B) plus (B) Factor A is greater than ten percent of the sum
of (C) the Number of Employees plus (D) Factor B, the Tentative Purchase Price
shall be increased by an amount determined pursuant to the following formula:
15
((A/B) - .1000) x 100) x $2,000,000
Where "A" represents the sum of (A) the Number of Employees
referred to in Section 1.6(a)(iii)(B) plus (B) Factor A and "B" represents the
sum of (C) the Number of Employees plus (D) Factor B.
If the Final Purchase Price is less than or greater than the Tentative Purchase
Price, the amount of such difference (the "Purchase Price Differential") shall
be paid as provided in Section 1.7.
(i) As an additional adjustment to the purchase price for the Assets
(but not to be taken into account in the calculation of the Tentative Purchase
Price or Final Purchase Price nor considered in connection with payment thereof
under Section 1.7), within thirty (30) days after filing its Kansas Corporation
Income Tax Return on Kansas Department of Revenue Form K 120 (or any successor
form) for each taxable year of Seller ended after the Closing Date during which
any Industrial Revenue Bond remains outstanding in the hands of Seller, Seller
shall pay to Buyer an amount equal to one-half (1/2) of the reduction in Kansas
corporate Income Tax actually payable by Seller pursuant to such Kansas
Corporation Income Tax Return (including a refund of such Tax) solely to the
extent attributable to exemption of interest on the Industrial Revenue Bonds
from gross income for purposes of Kansas corporate Income Taxation (calculated
by comparing the amount of such Tax imposed upon or refundable to Seller
pursuant to such Kansas Corporation Income Tax Return with the amount of such
Tax that would be so imposed or refundable if such interest were not so
excludible); provided, however, for the taxable year of Seller during which the
Closing occurs, the amount Seller is required to pay to Buyer under this Section
1.6(i) shall be one half (1/2) of the amount equal to the product of (i) such
tax reduction for the entire taxable year in which the Closing Date occurs
multiplied by (ii) a fraction, the numerator of which is the amount of interest
income accrued on Industrial Revenue Bonds during such post-Closing Date portion
of such taxable year and the denominator of which is the total amount of
interest income accrued on Industrial Revenue Bonds during all of such taxable
year. In the event of any final determination for any reason that any such
interest is not so excludible from gross income of Seller, the Buyer shall repay
to Seller the amount of any payment made by Seller to Buyer pursuant to this
Section 1.6(i) based upon excludability of such interest from gross income of
Seller for Kansas corporate Income Tax purposes within thirty (30) days after
notice by Seller to Buyer of such determination and the amount of repayment
required by this sentence. Any payment or repayment pursuant to this Section
1.6(i) shall be treated as an adjustment to purchase price for federal and state
Income Tax purposes to the extent required or permitted by applicable Law
regarding Taxes imposed on income.
(j) For purposes of eliminating doubt, the parties acknowledge that,
by virtue of the definitions of Assets, Excluded Assets, Assumed Liabilities,
and Excluded Liabilities, in the calculation of Closing Net Working Capital and
Actual 787 Book Value, (i) there shall not be taken into account as assets any
Assets that relate to Taxes collected or withheld by Seller and payable to any
Governmental Authority and (ii) there shall not be taken into account as
Liabilities any accrued and unpaid Taxes related to the Business for which
Seller is responsible under this Agreement.
16
1.7 Payment of Purchase Price at Closing; Adjustment for Overpayment
or Underpayment of Purchase Price. Payment shall be made with respect to the
Tentative Purchase Price and Final Purchase Price as follows:
(a) At the Closing, Buyer shall pay to Seller, by means of a wire
transfer of immediately available U.S. funds to one or more accounts designated
in writing by Seller to Buyer at least four (4) days prior to the Closing Date,
an amount equal to the Tentative Purchase Price less each of the following:
(i) the amount of the Liabilities of the Business reflected in
the Audited Interim Financial Statements, excluding pension Liabilities, retiree
medical Liabilities and Accrued Sick Leave (the "Estimated Adjusted
Liabilities"); and
(ii) Two Hundred and Forty-Three Million Dollars ($243,000,000)
as an agreed credit against the cash payment of Tentative Purchase Price
relating to the treatment of pension Liabilities, retiree medical Liabilities
and Accrued Sick Leave pursuant to Section 6.2 below.
(b) Buyer and Seller hereby agree that there will be no adjustment to
the Tentative Purchase Price, the Final Purchase Price, or the payment thereof,
for the actual amount of pension Liabilities, retiree medical Liabilities or
Accrued Sick Leave Liability as of the Closing Date. Subsequent to Closing, the
provisions of Section 1.6 and this Section 1.7 shall be applied consistently
with the immediately preceding sentence.
(c) The Purchase Price Differential shall be paid (i) by Buyer to
Seller if the Final Purchase Price is greater than the Tentative Purchase Price,
or (ii) by Seller to Buyer if the Final Purchase Price is less than the
Tentative Purchase Price, by means of a wire transfer of immediately available
U.S. funds to one or more accounts designated in writing by the party to be paid
within five (5) Business Days after determination of the amount of the Purchase
Price Differential in accordance with Section 1.6 hereof (or, if later, within
four (4) days after such designation of one or more accounts) in an amount equal
to the Purchase Price Differential, plus interest on the amount of the Purchase
Price Differential from the Closing Date to the date of such payment thereof at
the per annum rate equal to the rate announced by Citibank, N.A. in the City of
New York as its base rate in effect on the Closing Date.
SECTION 2 CLOSING
2.1 Closing Date. The Closing shall be consummated on a date and at a
time agreed upon by Buyer and Seller, but in no event later than the fifth
Business Day after the conditions set forth in Sections 7 and 8 have been
satisfied, at the offices of Kaye Scholer LLP, 425 Park Avenue, New York, NY
10022, or at such other place as shall be agreed upon by Buyer and Seller. The
time and date on which the Closing is actually held is referred to herein as the
"Closing Date." The Closing will be deemed effective at 11:59 p.m. (Central
Time) on the Closing Date for all transactions contemplated to be completed at
Closing.
2.2 Buyer's Closing Date Deliveries. Subject to fulfillment or waiver
of the conditions set forth in Section 7, at the Closing Buyer shall deliver to
Seller all of the following:
17
(a) An amount in cash equal to the Tentative Purchase Price, as
adjusted pursuant to Section 1.7(a), payable as provided in Section 1.3.
(b) The following instruments of assumption and assignment:
(i) The Assignment and Assumption Agreement, providing, among
other things, for the assignment of the Assumed Liabilities by Seller to Buyer
and the assumption of the same by Buyer, executed by a duly authorized officer
of Buyer;
(ii) The Assignment and Assumption of Real Property Leases,
executed by a duly authorized officer of Buyer, with respect to the Leased
Property; and
(iii) All other instruments and certificates of assumption,
novation and release as Seller may reasonably request in order to effectively
make Buyer responsible for all Assumed Liabilities and release Seller therefrom
to the fullest extent permitted under applicable Law; provided, however, that
Buyer shall use reasonable commercial efforts to assist Seller to obtain
releases from third parties, but in no event shall Buyer be required to pay
monies to such third parties.
(c) A copy of Buyer's certificate of incorporation certified as of a
recent date by the Secretary of State of the State of Delaware;
(d) A certificate of good standing of Buyer issued as of a recent date
by the Secretary of State of the State of Delaware;
(e) A certificate of the Secretary or an Assistant Secretary of Buyer,
dated the Closing Date, in form and substance reasonably satisfactory to Seller,
as to (i) the lack of amendments to the certificate of incorporation of Buyer
since the date of the certificate referred to in Section 2.2(c) above; (ii) the
bylaws of Buyer; (iii) resolutions of the Board of Directors of Buyer
authorizing the transactions contemplated by this Agreement;
(f) The Transition Services Agreement, executed by a duly authorized
officer of Buyer;
(g) The BCA Hardware Material Services General Terms Agreement,
executed by a duly authorized officer of Buyer;
(h) The Supplemental License Agreement (Ancillary Maintenance Repair
and Overall - Aircraft), executed by a duly authorized officer of Buyer;
(i) The Supplemental License Agreement (Ancillary Maintenance Repair
and Overall - Components), executed by a duly authorized officer of Buyer;
(j) The Supplemental License Agreement (Know-How), executed by a duly
authorized officer of Buyer;
(k) [Intentionally Deleted]
18
(l) The Supplemental License Agreement (Spare Parts), executed by a
duly authorized officer of Buyer;
(m) The IDS Supply Agreement, executed by a duly authorized officer of
Buyer;
(n) The Site Access and Environmental Support Services Agreement,
executed by a duly authorized officer of Buyer;
(o) Counterparts of real estate transfer Tax or documentary stamp Tax
Returns, if required;
(p) A certified or official bank check made payable to the appropriate
Taxing authority for the amount of transfer Tax imposed on Buyer in accordance
with Section 1.5(b) in connection with the conveyance of the Facilities;
(q) The certificate contemplated by Section 8.1, executed by a duly
authorized officer of Buyer;
(r) Buyer's Legal Opinion;
(s) The Memorandum of Agreement (787), or, if in final form prior to
the Closing Date, each of the Special Business Provisions (787) and the General
Terms Agreement (787), executed by a duly authorized officer of Buyer;
(t) The General Terms Agreement (Sustaining), executed by a duly
authorized officer of Buyer;
(u) The Special Business Provisions (Sustaining), executed by a duly
authorized officer of Buyer;
(v) The Special Business Provisions (Spares), executed by a duly
authorized officer of Buyer;
(w) The Special Business Provisions (Tech Services), executed by a
duly authorized officer of Buyer;
(x) The Special Business Provisions (Repair Services), executed by a
duly authorized officer of Buyer;
(y) The Electronic Access Agreement, executed by a duly authorized
officer of Buyer;
(z) The Administrative Agreement, executed by a duly authorized
officer of Buyer;
(aa) [Intentionally Deleted]
19
(bb) The Strategic Alliance Agreement, executed by a duly authorized
officer of Buyer;
(cc) All transfer Tax Returns required to be executed and filed by
Buyer with respect to the transfer of the Assets;
(dd) A Real Estate Sales Validation Questionnaire with respect to the
Facilities located in Kansas;
(ee) An easement agreement in recordable form and acceptable to Buyer
granting and conveying to Buyer an irrevocable right of access over and across
the area delineated on the IDS Site as set forth on Schedule 2.2(ee) for
purposes of ingress to and egress from McConnell Air Force Base (such agreement,
the "McConnell AFB Access Easement"), together with such other easements,
rights-of-way, shared parking agreements and other agreements as Buyer may
require for the continued use and operation of the Wichita Facility in a manner
consistent with Seller's use thereof as of the date hereof, and so as not to be
adversely affected in any way by the consummation of the IDS Transaction (the
McConnell AFB Access Easement, together with any and all additional easements
and agreements relative to the IDS Site, the "IDS Easements");
(ff) An exemption certificate which (i) is duly completed and executed
by Buyer and contains such additional statements and information as required to
comply fully with paragraph (c) of Kansas Administrative Regulation 92-19-25b
and (ii) states that Buyer certifies that the sale by Seller to Buyer of those
Assets consisting of tangible personal property identified on a schedule to such
exemption certificate (which shall include Inventory and similar items) is
exempt from the Tax levied by the Kansas retailers' sales tax act (A) pursuant
to Kansas Statutes Annotated Section 79-3606(m) for the reason that such
tangible personal property will become an ingredient or component part of
tangible personal property or services produced, manufactured or compounded for
ultimate sale at retail within or without the state of Kansas, and/or (B)
pursuant to Kansas Statutes Annotated Section 79-3606(n) for the reason that
such tangible personal property will be consumed in the production, manufacture,
processing, mining, drilling, refining or compounding of tangible personal
property, the treating of by-products or wastes derived from any such production
process, or the providing of services for ultimate sale at retail within or
without the state of Kansas, and/or (C) pursuant to Kansas Statutes Annotated
Section 79-3306(ff) for the reason that the property sold constitutes material
handling equipment, racking systems, and other related machinery and equipment
that is used for the handling, movement or storage of tangible personal property
in a warehouse or distribution facility in the State of Kansas;
(gg) A resale exemption certificate issued by Buyer as a registered
retailer under the Kansas retailers' sales tax act which (i) is duly completed
and executed by Buyer in the form and content required by, and in compliance
with, paragraph (e) of Kansas Administrative Regulation 92-19-25b, and (ii)
identifies the Inventory as the tangible personal property described in such
exemption certificate;
(hh) A valid Oklahoma Resale exemption certificate as described in 68
O.S. Sec. 1357(3) or documentation supplied by the relevant Taxing authority
acknowledging
20
(i) receipt of Buyer's application for such certificate and (ii) Buyer's
qualification to receive such certificate;
(ii) A valid Oklahoma Manufacturing exemption certificate as described
in 68 O.S. Sec. 1359(1) or documentation supplied by the relevant Taxing
authority acknowledging (i) receipt of Buyer's application for such certificate
and (ii) Buyer's qualification to receive such certificate;
(jj) All necessary Oklahoma sales Tax and manufacturing Permits to
provide resale and manufacturing certification as described in Sections 2.2(hh)
and (ii) and be permitted as a manufacturer or documentation supplied by the
relevant Taxing authority acknowledging (i) receipt of Buyer's application for
such permit and (ii) Buyer's qualification to receive such permit;
(kk) The Parking Access Easement, executed by a duly authorized
officer of Buyer;
(ll) The Reciprocal Access Agreement, executed by a duly authorized
officer of Buyer;
(mm) The Substation Installation and Maintenance Easement, executed by
a duly authorized officer of Buyer;
(nn) The Boeing Site Real Estate Lease, executed by a duly authorized
officer of Buyer;
(oo) The Buyer's Site Real Estate Lease, executed by a duly authorized
officer of Buyer;
(pp) The Shared Parking Agreement, executed by a duly authorized
officer of Buyer;
(qq) The Storm Water Detention and Maintenance Closing Agreement,
executed by a duly authorized officer of Buyer;
(rr) The No-Build Easement, executed by a duly authorized officer of
Buyer;
(ss) The Transition Real Estate Lease, executed by a duly authorized
officer of Buyer;
(tt) The Utility Support Services Agreement, executed by a duly
authorized officer of Buyer;
(uu) The Fire and Emergency Response Services Agreement, executed by a
duly authorized officer of Buyer;
(vv) The Real Property Right of First Refusal Agreement, executed by a
duly authorized officer of Buyer;
21
(ww) The Note Documents, executed by a duly authorized officer of
Buyer, its Affiliates and any other relevant party as applicable;
(xx) The Declaration of Restrictions (Boeing Industrial District),
executed by a duly authorized officer of Buyer;
(yy) The Option to Acquire Property (Boeing Industrial District),
executed by a duly authorized officer of Buyer;
(zz) The Sublease (IRBs), executed by a duly authorized officer of
Buyer;
(aaa) The Declaration of Restrictive Covenant and Easement, executed
by a duly authorized officer of Buyer; and
(bbb) The Flightline Operating Agreement, executed by a duly
authorized officer of Buyer.
2.3 Seller's Closing Date Deliveries. Subject to fulfillment or waiver
(where permissible) of the conditions set forth in Section 8, at the Closing
Seller shall deliver to Buyer all of the following:
(a) An original Warranty Deed in recordable form, executed by a duly
authorized officer of Seller and acknowledged and witnessed, as appropriate,
with respect to all parcels of Owned Property;
(b) The Assignment and Assumption of Real Property Leases, executed by
a duly authorized officer of Seller, with respect to the Leased Property;
(c) The Assignment and Assumption Agreement, executed by a duly
authorized officer of Seller;
(d) The Bill of Sale, executed by a duly authorized officer of Seller;
(e) All documents, affidavits, indemnities (in respect of title),
certificates, including without limitation, consents, estoppels and, in
recordable form, memoranda of leases, lease terminations (as applicable) and
assignments of leases, and other information as the Title Company reasonably
shall require in order to issue the Title Policies in accordance with the terms
of Section 7.7 hereof;
(f) Copies, or if related to real property, originals (in recordable
form), of all instruments, certificates, documents and other filings (if
applicable) necessary to release the Assets from all Encumbrances, other than
Permitted Encumbrances;
(g) With respect to the Leases and at Seller's expense, a consent from
each lessor, ground lessor and/or sublessor under a Lease set forth on Schedule
7.5, in form and substance reasonably acceptable to Buyer and without
modification to the terms and conditions of each such Lease;
22
(h) A copy of the certificate of incorporation of Seller certified by
the Secretary of State of the State of Delaware;
(i) A certificate of good standing of Seller issued as of a recent
date by the Secretary of State of the State of Delaware;
(j) A certificate of the Secretary or an Assistant Secretary of
Seller, dated the Closing Date, in form and substance reasonably satisfactory to
Buyer, as to (i) the lack of amendments to the certificate of incorporation of
Seller since the date of the certificate referred to in Section 2.3(h) above;
(ii) the bylaws of Seller; and (iii) delegation resolutions of the Board of
Directors of Seller authorizing the transactions contemplated by this Agreement;
(k) A properly executed certificate of nonforeign status, described
under Treasury Regulation Section 1.1445-2(b)(2);
(l) The Transition Services Agreement, executed by a duly authorized
officer of Seller;
(m) All transfer Tax Returns required to be executed and filed by
Seller with respect to the transfer of the Assets;
(n) A Real Estate Sales Validation Questionnaire with respect to the
Facilities located in Kansas;
(o) The McConnell AFB Access Easement and other IDS Easements;
(p) The BCA Hardware Material Services General Terms Agreement,
executed by a duly authorized officer of Seller;
(q) The Supplemental License Agreement (Ancillary Maintenance Repair
and Overall - Aircraft), executed by a duly authorized officer of Seller;
(r) The Supplemental License Agreement (Ancillary Maintenance Repair
and Overall - Components), executed by a duly authorized officer of Seller;
(s) The Supplemental License Agreement (Know-How), executed by a duly
authorized officer of Seller;
(t) The Supplemental License Agreement (Spare Parts), executed by a
duly authorized officer of Seller;
(u) The IDS Supply Agreement, executed by a duly authorized officer of
Seller;
(v) The Site Access and Environmental Support Services Agreement,
executed by a duly authorized officer of Seller;
23
(w) A certified or official bank check made payable to the appropriate
Taxing authority for the amount of transfer Tax imposed on Seller in accordance
with Section 1.5(b) in connection with the conveyance of the Facilities;
(x) The certificate contemplated by Section 7.1, executed by a duly
authorized officer of Seller;
(y) Seller's Legal Opinion;
(z) The Memorandum of Agreement (787), or, if in final form prior to
the Closing Date, each of the Special Business Provisions (787) and the General
Terms Agreement (787), executed by a duly authorized officer of Seller;
(aa) The General Terms Agreement (Sustaining), executed by a duly
authorized officer of Seller;
(bb) The Special Business Provisions (Sustaining), executed by a duly
authorized officer of Seller;
(cc) The Special Business Provisions (Spares), executed by a duly
authorized officer of Seller;
(dd) The Special Business Provisions (Tech Services), executed by a
duly authorized officer of Seller;
(ee) The Special Business Provisions (Repair Services), executed by a
duly authorized officer of Seller;
(ff) The Electronic Access Agreement, executed by a duly authorized
officer of Seller;
(gg) The Administrative Agreement, executed by a duly authorized
officer of Seller;
(hh) The Declaration of Restrictive Covenant and Easement, executed by
a duly authorized officer of Seller;
(ii) The Restrictive Covenant (KDHE), executed by a duly authorized
officer of Seller;
(jj) The Strategic Alliance Agreement, executed by a duly authorized
officer of Seller;
(kk) All documents necessary to consummate the IDS Transaction;
(ll) The Parking Access Easement, executed by a duly authorized
officer of Seller;
24
(mm) The Reciprocal Access Agreement, executed by a duly authorized
officer of Seller;
(nn) The Substation Installation and Maintenance Easement, executed by
a duly authorized officer of Seller;
(oo) The Boeing Site Real Estate Lease, executed by a duly authorized
officer of Seller;
(pp) The Buyer's Site Real Estate Lease, executed by a duly authorized
officer of Seller;
(qq) The Shared Parking Agreement, executed by a duly authorized
officer of Seller;
(rr) The Storm Water Detention and Maintenance Closing Agreement,
executed by a duly authorized officer of Seller;
(ss) The No-Build Easement, executed by a duly authorized officer of
Seller;
(tt) The Transition Real Estate Lease, executed by a duly authorized
officer of Seller;
(uu) The Utility Support Services Agreement, executed by a duly
authorized officer of Seller;
(vv) The Fire and Emergency Response Services Agreement, executed by a
duly authorized officer of Seller;
(ww) The Real Property Right of First Refusal Agreement, executed by a
duly authorized officer of Seller;
(xx) The Note Documents, executed by a duly authorized officer of
Seller and/or its Affiliates, as applicable;
(yy) The Declaration of Restrictions (Boeing Industrial District),
executed by a duly authorized officer of Seller;
(zz) The Option to Acquire Property (Boeing Industrial District),
executed by a duly authorized officer of Seller;
(aaa) The Sublease (IRBs), executed by a duly authorized officer of
Seller or its Affiliate as appropriate;
(bbb) The Flightline Operating Agreement, executed by a duly
authorized officer of Seller; and
(ccc) Documents effecting the assignment, conveyance and transfer to
Buyer of Seller's rights, title and interest in and to the Tulsa Airport Use
Agreements.
25
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to the disclosures set forth in the Schedules of Seller
delivered to Buyer concurrently with the parties' execution of this Agreement
(each of which disclosures shall clearly indicate the Section and, if
applicable, the Subsection of this Section 3 to which it relates, and each of
which disclosures shall also be deemed to be representations and warranties made
by Seller to Buyer under this Section 3), Seller represents and warrants to
Buyer as follows:
3.1 Organization and Power and Authority of Seller. Seller is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware. Seller has the corporate power and corporate
authority to own or lease, use and operate the Assets and to carry on the
Business as currently conducted. Seller is duly qualified to do business as a
foreign corporation and is in good standing under the Laws of each state or
other jurisdiction in which either the ownership or use of the properties or the
nature of the activities conducted by it in connection with the Assets or the
Business requires such qualification, except for such failures to qualify or be
in good standing which individually or in the aggregate could not have a
Material Adverse Effect.
3.2 Authority of Seller; Conflicts.
(a) Seller has the corporate power and corporate authority to execute,
deliver and perform this Agreement and the Seller Transaction Agreements. The
execution, delivery and performance of this Agreement and the Seller Transaction
Agreements by Seller has been duly authorized and approved by all necessary
corporate action. This Agreement has been duly authorized, executed and
delivered by Seller and (assuming the valid authorization, execution and
delivery of this Agreement by Buyer) is the legal, valid and binding obligation
of Seller enforceable in accordance with its terms, and each Seller Transaction
Agreement has been duly authorized by Seller and upon execution and delivery by
Seller will be (assuming the valid authorization, execution and delivery by each
other party thereto) the legal, valid and binding obligation of Seller
enforceable in accordance with its terms, in each case subject to bankruptcy,
insolvency, reorganization, moratorium and similar Laws of general application
relating to or affecting creditors' rights and to general equity principles.
(b) Except as set forth in Schedule 3.2(b), the execution and delivery
by Seller of this Agreement and each Seller Transaction Agreement, and the
performance by it of its obligations hereunder or thereunder, do not and will
not:
(i) violate any provision of the certificate of incorporation or
bylaws of Seller;
(ii) (A) violate any provision of applicable Law relating to
Seller; (B) violate any provision of any order, arbitration award, judgment or
decree to which Seller is subject; or (C) except as required under the HSR Act,
ITAR or the Exon-Florio Amendment, require a registration, filing, application,
notice, consent, approval, order, qualification or waiver with, to or from any
Governmental Authority, except in any case under this clause, any violation,
breach, default or non-compliance that would not individually or in the
aggregate be reasonably likely to have a Material Adverse Effect; or
26
(iii) (A) require a consent, approval or waiver from, or notice
to, any party to an Assigned Contract, or (B) result in a breach of, cause a
default under, give rise to a right of cancellation or termination under or
result in acceleration of any obligation or loss of any benefit under, any
Assigned Contract.
3.3 Financial Statements.
(a) Schedule 3.3(a) sets forth (i) an unaudited statement of assets to
be acquired and liabilities to be assumed of the Business as of December 31,
2001, 2002 and 2003, and the related statement of products shipped and operating
expenses of the Business for the fiscal years then ended (the "Unaudited Annual
Financial Statements") and (ii) an unaudited statement of assets to be acquired
and liabilities to be assumed of the Business as of the Interim Date and related
statement of products shipped and operating expenses of the Business for the
nine (9) month period then ended (the "Unaudited Interim Financial Statements"
and, collectively, with the Unaudited Annual Financial Statements, the
"Unaudited Financial Statements"). The Unaudited Financial Statements were
created specially by Seller in connection with the transactions contemplated
hereby from Seller's financial records. Except as set forth on Schedule 3.3(a),
the Unaudited Annual Financial Statements and, subject to the foregoing
circumstances with respect to their creation and the remainder of this Section
3.3, the Unaudited Interim Financial Statements, (i) are derived from and in
accordance with the books and records of Seller; (ii) present fairly, in all
material respects, the financial position of the Business for the respective
periods then ended; (iii) have been prepared in accordance with Seller's normal
practices for the Business (which practices are in accordance with GAAP, except,
with respect to the Unaudited Interim Financial Statements, for normal year end
adjustments, consistently applied with prior periods and with respect to the
Unaudited Financial Statements, the absence of footnotes and other disclosures
required by GAAP) and (iv) are true, complete and correct in all material
respects. The Business has not operated as a separate "stand-alone" entity and
the Unaudited Financial Statements do not present the results of operation that
would have occurred if the Business had been operated as a "stand-alone" entity.
As a result, certain judgments regarding financial allocations have been made as
discussed more fully in the notes accompanying the Unaudited Financial
Statements. In addition, in order to present Unaudited Financial Statements for
the Business, a number of assumptions regarding the basis of presentation have
been made, all of which are set forth on Schedule 3.3(a).
(b) Seller has established and maintains a system of internal
accounting controls sufficient to provide reasonable assurances (i) that
transactions, receipts and expenditures of Seller related to the Business and
the Assets are being executed and made only in accordance with appropriate
policies and procedures and appropriate authorizations of management and the
board of directors of Seller, (ii) that transactions related to the Business and
the Assets are recorded as necessary (A) to permit preparation of financial
statements in conformity with GAAP and (B) to maintain accountability for assets
and (iii) regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the Assets. To the Knowledge of Seller, since December 31,
2001, Seller has not identified or been made aware of any fraud that involves
the Assets, the Business or its management, or other current employees or any
claim or allegation regarding any of the foregoing and Seller has received no
written notice from its independent auditors regarding any of the foregoing. To
the Knowledge of Seller, there are no significant deficiencies or material
weaknesses in the design or operation
27
of Seller's internal controls relating to the Assets or the Business which could
reasonably be expected to adversely affect Seller's ability to record, process,
summarize and report financial data.
3.4 Operations Since Interim Date.
(a) Since the Interim Date through the date hereof, Seller has
conducted the Business only in the ordinary course consistent with past
practice.
(b) Except as set forth on Schedule 3.4(b), since the Interim Date,
with respect to the Business or the Assets, there has not occurred:
(i) any material damage, destruction, casualty or loss with
respect to any property (whether or not covered by insurance);
(ii) any material labor dispute or claim of unfair labor
practices;
(iii) incurrence, creation or assumption of any Encumbrance
(other than a Permitted Encumbrance) on any Assets;
(c) Except as set forth on Schedule 3.4(c), since the Interim Date
through the date hereof, Seller has not:
(i) made any material change in the Business or its operations,
except such changes as may be required to comply with any applicable
Requirements of Law;
(ii) made any capital expenditure related to the Business or
entered into any Contract related to the Business or commitment therefor in
excess of five hundred thousand dollars ($500,000) in the aggregate, except in
the ordinary course of business consistent with past practice or in accordance
with a capital expenditures budget attached hereto as Schedule 3.4(c)(ii) (the
"Capital Expenditures Budget");
(iii) entered into any material Contract related to the Business
for the purchase or lease (as lessor or lessee) of real property, except in the
ordinary course of business consistent with past practice;
(iv) sold, leased (as lessee or lessor), transferred or otherwise
disposed of, mortgaged or pledged or imposed any Encumbrance (other than
Permitted Encumbrances) on any of the Assets, other than sales or other
dispositions of inventory in the ordinary course of business consistent with
past practice and personal property sold or otherwise disposed of in the
ordinary course of business consistent with past practice which is excess,
obsolete or is not material to the Business;
(v) created, incurred or assumed, or agreed to create, incur or
assume, any indebtedness for borrowed money related to the Business (other than
money borrowed or advanced from Seller in the ordinary course of business
consistent with past practice or any unsecured indebtedness which is an Excluded
Liability);
28
(vi) instituted any material increase in any, entered into,
adopted, terminated or materially amended any profit sharing, bonus, incentive,
deferred compensation, insurance, pension, retirement, medical, hospital,
disability, severance, termination, welfare or other employee Benefit Plan with
respect to employees of the Business, other than in the ordinary course of
business, as required by any such existing plan. or pursuant to any existing
employment or collective bargaining agreement or by Requirements of Law;
(vii) made any material change in the compensation or benefits of
employees of the Business, other than changes made in accordance with normal
compensation practices and consistent with past practices of Seller or changes
pursuant to employment or collective bargaining agreements or required by any
Requirements of Law;
(viii) entered into any Contract which is or would be included in
the definition of Assigned Contracts or terminated, extended, renewed or made
any material modification to any existing Assigned Contract, in each case other
than any Contracts related to the Business or any extensions thereof which
involve ten million dollars ($10.000,000) or less and which are entered into or
modified in the ordinary course of business consistent with past practice;
(ix) with respect to the Business, acquired or purchased any
material properties or assets (other than capital expenditures or purchases in
the ordinary course of business consistent with past practice), merged or
consolidated with, or acquired all or substantially all of the assets of, or
otherwise acquired, any Person, or made any material investment in any Person;
(x) made any loans or advances (other than in the ordinary course
of business or routine expense advances to employees of the Business consistent
with past practice) to, or any investments in or capital contributions to, any
Person or forgiven or discharged in whole or in part any outstanding loans or
advances, or prepaid any indebtedness for borrowed money, in any such case, in
connection with the Business;
(xi) made any changes in accounting methods or practices
(including any change in depreciation or amortization policies or rates or
revenue recognition policies) or revalued any of the Assets (including writing
down the value of inventory other than in the ordinary course of business),
except in each case as required by changes in GAAP;
(xii) changed in any material way the manner in which Seller
provides warranties, discounts, credits, accommodations or other concessions to
direct customers of the Business;
(xiii) commenced a material lawsuit or settled or agreed to
settle any material pending or threatened lawsuit or other material dispute
related to the Business in any such case, other than (A) for the routine
collection of bills or (B) in such cases where it in good faith determined that
failure to commence suit would have resulted in the material impairment of a
valuable asset of the Business;
(xiv) sold, conveyed, disposed of or otherwise transferred in any
manner any portion of the Owned Property;
29
(xv) terminated, amended or modified in any material manner, any
Contract related to the use of the Facilities; or
(xvi) taken, or agreed in writing or otherwise to take, any of
the actions described in clauses (i) through (xv) of this Section 3.4(c).
3.5 Taxes.
(a) Seller has filed or will have filed on a timely basis all material
Tax Returns related to the Business or the Assets in connection with any
federal, state or local Tax required to be filed by it, and all such Tax Returns
were or will be true, complete and correct in all material respects. Seller has
or will have timely paid all material Taxes related to the Business or the
Assets that have become due except as contested upon audit.
(b) None of the Assets is subject to any lien in favor of the United
States pursuant to Section 6321 of the Code for nonpayment of federal Taxes, or
any lien -in favor of any state or locality pursuant to any comparable provision
of state or local Law, under which transferee Liability might be imposed upon
Buyer as a buyer of such Assets pursuant to Section 6323 of the Code or any
comparable provision of state or local Law.
(c) No Tax Return of Seller relating to property Taxes, transfer
Taxes, sales or use Taxes or any Tax for which Buyer could have Liability as a
transferee of the Business or the Assets is under audit or examination by any
Governmental Authority, and no written notice of such an audit or examination
has been received by Seller. Each deficiency resulting from any audit or
examination relating to any such Taxes by any Governmental Authority has been
paid, except for deficiencies being contested in good faith by appropriate
Proceedings. Seller has not given nor is there a pending request to give waivers
or extensions (or is or would be subject to a waiver or extension given by any
other Person) of any statute of limitations relating to any such Taxes.
(d) All Taxes related to the Business that are required by
Requirements of Law to be withheld or collected have been duly withheld or
collected and, to the extent required, have been paid to the proper Governmental
Authority or Person.
3.6 Governmental Permits.
(a) Set forth on Schedule 3.6 are all material Permits owned, held or
possessed by Seller that are used in the Business or necessary to entitle it to
own or lease, operate and use the Assets and to carry on and conduct the
Business as currently conducted (herein collectively called "Governmental
Permits"). With respect to each Permit set forth on Schedule 3.6, Seller has
indicated on such Schedule whether or not such Permit is permitted by the terms
thereof to be transferred to Buyer, and, if a Permit is permitted to be
transferred to Buyer, whether or not such Permit is needed by Seller to continue
to operate its businesses other than the Business.
(b) Except as set forth on Schedule 3.6, since January 1, 2002, Seller
has not received any written notice or written communication from any
Governmental Authority (each a "Permit Notice") regarding (i) any actual or
possible violation of any Law with respect to
30
requiring a Person to obtain a Governmental Permit or of any failure to comply
with any term or requirement of any Governmental Permit or (ii) any actual or
possible revocation, withdrawal, suspension, cancellation, termination or
modification of any Governmental Permit, that has not been resolved.
(c) Set forth on Schedule 3.6 are all Permit Notices that, to the
Knowledge of Seller, have been resolved since January 1, 2004.
(d) None of the Governmental Permits (other than as indicated on
Schedule 3.6) will be terminated or impaired, or will become terminable, in
whole or in part, as a result of the consummation of the transactions
contemplated by this Agreement.
3.7 Real Property.
(a) Schedule 3.7 contains a complete and accurate list of the
following:
(i) each lease, sublease, license and other written occupancy
agreement pursuant to which Seller holds or has been granted the right to use or
occupy, now or in the future, the Leased Property or any portion thereof,
including any and all modifications, amendments, renewals, extensions and
supplements thereto and any assignments thereof (collectively, the "Leases")
and, except as set forth on Schedule 3.7, the legal description of the real
property leased thereunder;
(ii) all Contracts, rights of first refusal or options (and all
amendments, extensions and modifications thereto) granted by or to Seller, or
contractual obligations (and all amendments, extensions and modifications
thereto) on the part of Seller to purchase or acquire any interest in real
property to be used primarily in the Business; and
(iii) all Contracts, rights of first refusal or options (and all
amendments, extensions and modifications thereto), or contractual obligations
(and all amendments, extensions and modifications thereto) to sell or dispose of
any interest in real property used in the Business.
(b) The Owned Property and Leased Property collectively represent all
of the real property primarily used or held for use by Seller in the Business
and is all of the real property necessary to operate the Business as currently
conducted. Except as set forth on Schedule 3.7, Seller has the exclusive right
under the Leases to occupy and use all Leased Property and Seller is in quiet
and undisturbed possession of the Leased Property. Except as set forth on
Schedule 3.7, Seller (x) owns and holds fee simple title to the Owned Property
and (y) has good and valid leasehold title in and to the Leased Property. Seller
has received all material Permits of Governmental Authorities (including without
limitation Permits and a certificate of occupancy or other similar certificate
permitting the use and occupancy of the Facilities as currently used by Seller)
required in connection with the operation thereof. The improvements constructed
on the Facilities, including without limitation all buildings, structures and
improvements, owned or leased by Seller at the Facilities are to the Knowledge
of Seller (w) in good operating condition and repair, subject to ordinary wear
and tear, (x) sufficient for the operation of the Business as currently
conducted and (y) in compliance with all applicable Laws. To the Knowledge of
Seller, there are no facts which would prevent the Facilities from
31
being occupied and used after the Closing by Buyer in a manner comparable to
that of Seller prior to Closing.
(c) Except as set forth on Schedules 3.7 and 3.15, during the three
(3) years prior to the date hereof, Seller has not received any written notice
that it is, and Seller has no Knowledge that it is, in material violation of any
planning, health, safety, fire, zoning, use, occupancy or building regulation,
wetlands or Environmental Law or other Law or requirement relating to the
Facilities, including without limitation the Americans With Disabilities Act and
Environmental Laws, or any order, regulation, deed restriction, covenant, site
plan approval, subdivision regulations, urban redevelopment plan, covenant or
requirement, and the use being made of the Facilities at present is in
compliance in all material respects with the certificate of occupancy issued for
the applicable Facility.
(d) Except as set forth on Schedule 3.7, (i) each Lease is in full
force and effect, and is valid and binding upon Seller and, to the Knowledge of
Seller, to each other party thereto, (ii) Seller is in compliance in all
material respects with the terms of each Lease and, to the Knowledge of Seller,
no event has occurred and no condition exists which, with the giving of notice
or the lapse of time or both, would constitute a default or termination event by
Seller or any other party thereto under a Lease, (iii) no consent or approval of
any Person or entity is required for the valid conveyance of the Leased Property
and assignment of each Lease to Buyer in accordance with the terms of this
Agreement, except as identified on Schedule 7.5 as a "Required Consent", (iv)
Seller has not entered into a lease, sublease, license or other occupancy
agreement of any kind, whether oral or written, pursuant to which Seller has
granted a third party a right to use or occupy any portion of the Facilities,
(v) subject to receipt of the Required Consents applicable thereto, consummation
of the transactions contemplated by this Agreement shall not cause a default
under any Lease or other agreement affecting the Facilities, and (vi) no Lease
is subject to or encumbered by any Encumbrance or other restriction which
materially impairs the use of the property to which it relates in the Business
of Seller as now conducted by Seller.
(e) To the Knowledge of Seller, there is no Proceeding seeking to
challenge, condition or restrict the ownership, lease, use, occupancy or
operations by Seller at all or any portion of any Facility and Seller has
received no written notice thereof. Seller has received no written notice that
it lacks any Permit required for the ownership, lease, use, occupancy or
operations of Seller at all or any portion of any Facility.
(f) Except as set forth on Schedule 3.7, no Person other than Seller
holds any right, title or interest in or to the Owned Property and no Person
other than Seller holds a leasehold interest in the Leased Property and Seller
has not granted any leases, subleases, licenses, concessions or other agreements
granting to any Person any right to the possession, use, occupancy, or enjoyment
of any Facility or any portion thereof.
(g) To the Knowledge of Seller, there are no existing or threatened,
(i) Proceedings to rezone any portion of the Facilities or (ii) condemnation or
eminent domain Proceedings affecting the Facilities or any portion thereof.
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(h) The covenants, conditions, rights-of-way, easements and similar
restrictions burdening all or any portion of the Facilities do not, in each
case, impair in any material respect the use of any such Facilities in the
operation of the Business as currently conducted by Seller, and to the Knowledge
of Seller, no default or breach exists thereunder by Seller. Upon consummation
of the transactions contemplated by this Agreement and conveyance of the Assets
(exclusive of the IDS Site) to Buyer, Buyer shall be entitled to enjoy the
benefit of all covenants, conditions, rights-of-way, easements, access
agreements and similar agreements benefiting all or any portion of the
Facilities which Seller enjoys as of the date hereof (collectively, the
"Beneficial Easements"), or, if the rights, privileges and benefits granted to
Seller pursuant to any such Beneficial Easement are not transferable by their
terms to Buyer or if Seller elects in its reasonable discretion not to convey
any such Beneficial Easement to Buyer at Closing, then in either such event,
Seller shall obtain for Buyer at or prior to Closing, at Seller's expense and
subject to Buyer's approval thereof, all such agreements, easements, written
arrangements and other instruments as may be required by Buyer in order to
receive all rights, privileges and benefits equivalent to those held by Seller
pursuant to any such Beneficial Easement.
(i) Seller has good and valid rights of ingress and egress to and from
all of the Facilities from and to the public street systems for all usual
street, road and utility purposes and other purposes necessary or incidental to
the operation of the Business as currently operated by Seller or has access to
such public street system via a permanent, irrevocable easement benefiting the
relevant Facility.
(j) All improvements, buildings and structures located on the
Facilities are supplied with adequate utilities and other services necessary for
the operation of the Business as currently conducted by Seller. The Facilities
are served, as of the date hereof, with water and sanitary sewer service
provided by the local municipality in such quality, quantity and manner as are
sufficient for the use and operation of the Facilities as currently operated by
Seller. At Closing, Seller shall convey, transfer and deliver to Buyer all
existing agreements, written arrangements, easements and other instruments (or
the equivalent thereto in form and substance acceptable to Buyer) providing for
the delivery and provision of electric, gas, fuel, water and other utility
services to the Facilities.
(k) To the Knowledge of Seller, no Facility or any portion thereof is
located within a flood plain as defined by the Federal Emergency Management
Agency. Seller holds, pursuant to (1) paragraph 5.4 of the Lease dated October
12, 1979 (and identified in Schedule 1.l(a)(xiii); (2) paragraph 4.2 of the
Lease dated July 1, 1994 (and identified in Schedule 1.l(a)(xiii); and (3) that
certain License and Use Agreement dated July 1, 1994 between Tulsa Airports
Improvement Trust and Seller (the documents identified in items (1), (2) and (3)
of this Section 3.7(k) are collectively referred to as the "Tulsa Airport Use
Agreements"), good and valid rights in common with the public, of ingress to and
egress from, and the use of taxiways, ramps, runways and other ancillary rights
at Tulsa International Airport, as are necessary for the operation of the
Business at the Facilities, or any portion thereof. Seller is not in violation
or breach of the Tulsa Airport Use Agreements and, to the Knowledge of Seller,
no event or condition exists which, with the passage of time or the giving of
notice or both, could result in an event of default under the Tulsa Airport Use
Agreements.
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(l) Seller has delivered to Buyer true, correct and complete copies of
(i) all Leases, including all modifications, amendments and supplements thereto
and (ii) all Contracts and other instruments or documents pursuant to which
Seller holds an interest in or to any portion of the Facilities or has been
granted a material right benefiting Seller in its use of the Facilities.
(m) The BID is an industrial district formed pursuant to the
provisions of Sections 19-3801, et seq. of the Kansas Statutes Annotated and is
validly existing and in good standing. The Non-Annexation Agreement (BID) is in
full force and effect, and is valid and binding upon Seller, and to the
Knowledge of Seller, upon the City of Wichita. There has been no material change
to the Non-Annexation Agreement (BID). Seller is in compliance in all material
respects with the terms of the Non-Annexation Agreement (BID) and, to the
Knowledge of Seller, no event has occurred and no condition exists which, with
the giving of notice or lapse of time or both, would constitute a default or a
termination event by Seller or the City of Wichita under the Non-Annexation
Agreement (BID).
3.8 Assets of the Business.
(a) Except as set forth in Section 4.8 or Schedule 3.8, the Assets,
the Assigned Contracts and the rights provided to Buyer under the Buyer
Transaction Agreements comprise all of the assets, tangible and intangible, of
any nature whatsoever, and rights of Seller used in or necessary for the conduct
of the Business as currently conducted.
(b) The tooling transferred to Buyer hereunder, together with the
tooling rights granted to Buyer pursuant to the Buyer Transaction Agreements, is
all the tooling used in or necessary for the conduct of the Business as
currently conducted and for Buyer to perform under the BCA Supply Agreement.
3.9 Software.
(a) To the Knowledge of Seller, Schedule 3.9(a) contains a list of all
material Software licensed by Seller used in the operation of the Business as
currently conducted.
(b) Except as set forth on Schedule 3.9(b), Seller has the right and
license to use the Software set forth on Schedule 3.9(a) in the conduct of the
Business pursuant to the Assigned Contracts identified pursuant to Section
3.11(a).
3.10 No Violation, Litigation or Regulatory Action.
(a) To the Knowledge of Seller, except as set forth on Schedule
3.10(a) and 3.15, Seller is in compliance in all material respects with, and has
complied in all material respects with, all applicable Requirements of Law
related to the Business and the Assets;
(b) Except as set forth on Schedule 3.10(b), there are no material
Proceedings related to the Business or the Assets pending or, to the Knowledge
of Seller, threatened, against Seller;
34
(c) Except as set forth on Schedule 3.10(c) and 3.15, there is no
Court Order against Seller related to the Business or the Assets;
(d) Except as set forth on Schedule 3.10(d), Seller does not have any
material Proceedings pending against any other Person related to the Business or
the Assets;
(e) There is no Proceeding pending or, to the Knowledge of Seller,
threatened, that (i) questions the legality or propriety of the transactions
contemplated by this Agreement or any of the Seller Transaction Agreements or
(ii) would reasonably be expected to prevent, hinder or delay the consummation
of any of the transactions contemplated hereby; and
(f) Except as set forth on Schedule 3.10(f), with respect to the
Business or the Assets, since January 1, 2002, (i) Seller has not received any
written notice or written communication from any Governmental Authority
regarding any actual or possible material violation of Law, that has not been
resolved and (ii) to the Knowledge of Seller, Seller has not received any
written notice or written communication from any Governmental Authority
regarding any actual or possible material violation of Law that has been
resolved since January 1, 2004.
3.11 Contracts.
(a) Except as set forth on Schedule 3.11(a), Seller is not party to or
bound by any of the following Contracts primarily related to the Business or the
Assets:
(i) any Contract (other than purchase orders issued or received
in the ordinary course of business) involving the obligation of Seller to
purchase or sell products or services pursuant to which the aggregate of
payments to become due from or to Seller is equal to or exceeds two million
dollars ($2,000,000) over the life of the Contract;
(ii) any option or other agreement of Seller to purchase or
otherwise acquire or sell or otherwise dispose of any interest in real property;
(iii) any commitment of Seller to make a capital expenditure or
to purchase a capital asset, not contemplated by the Capital Expenditures
Budget;
(iv) any Contract for the employment of any employee or any other
type of Contract with any employee that is not immediately terminable by Seller
without cost or Liability;
(v) any Contract that expires or may be renewed at the option of
any Person other than Seller so as to expire more than one year after the date
of this Agreement;
(vi) any Contract or written arrangement involving a partnership,
joint venture or other cooperative undertaking;
(vii) any Contract containing covenants that in any way purport
to restrict the business activity of the Business or limit the freedom of the
Business to engage in any
35
line of business or to compete with any Person, except for any such restrictions
which will not apply to Buyer after the Closing;
(viii) any Contract providing for commissions or other payments
to or by any Person based on or determined by reference to sales, purchases or
profits, other than direct payments for goods and royalty agreements related to
Intellectual Property;
(ix) any Contract that was not entered into in the ordinary
course of business;
(x) any Contracts related to the Facilities pursuant to which
Seller, the Facilities or the Business receives or is entitled to receive Tax or
other monetary benefits of any kind; and
(xi) any other oral or written Contract or obligation (other than
purchase orders issued or received in the ordinary course of business) not
listed in clauses (i) through (x) that individually has an annual value or
commitment in excess of five million dollars ($5,000,000) or is otherwise
material to the Business.
(b) Except as set forth on Schedule 3.11(b), each Business Agreement
is, with respect to Seller, valid, binding and in full force and effect, and
with respect to any other party, to the Knowledge of Seller, valid, binding and
in full force and effect. Except as set forth on Schedule 3.11(b), Seller and,
to the Knowledge of Seller, each other party thereto has performed all material
obligations required to be performed by it to date under each Business Agreement
and is not in breach or default or to the Knowledge of Seller, alleged to be in
breach or default, of any material obligation thereunder. True, complete and
correct copies of all Business Agreements have been made available or delivered
to Buyer, except that in copies made available or delivered to Buyer prior to
the date hereof certain pricing information and, in some cases, the name of the
supplier, has been redacted therefrom.
(c) In the event Seller cannot provide Buyer with an unredacted copy
of any Business Agreement or Excluded Supply Contract pursuant to the provisions
of Section 5.1 prior to the Closing Date, Seller represents that, to the extent
applicable, the pricing information in any remaining redacted Business Agreement
or Excluded Supply Contract is in all material respects accurately reflected in
the cost data in the procurement system of the Business provided to Buyer prior
to the date hereof.
3.12 Title to Assets.
(a) Seller has good and valid title to all of the Assets, free and
clear of all Encumbrances, except Permitted Encumbrances.
(b) The plant, property and equipment of Seller that are used in the
Business are (i) in a condition and state of repair sufficient for the purposes
for which they are presently used and (ii) not obsolete, dangerous or in need of
renewal or replacement, except for renewal or replacement in the ordinary course
of business, consistent with past practice. There are no properties or assets or
rights to any properties or assets used in or necessary for the operation of the
Business which are owned or held by any subsidiary or Affiliate of Seller.
36
3.13 No Brokers. Except for Goldman, Sachs & Co., whose fees shall be
paid by Seller, Seller has not become obligated to pay any fee or commission to
any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
3.14 ERISA.
(a) Each Benefit Plan is set forth on Schedule 3.14(a) (the "Plans"),
and Seller has delivered or made available to Buyer, true and complete copies of
(i) the most current version of each such Plan and any amendments thereto, (ii)
the most current Summary Plan Description thereto, together with each Summary of
Material Modifications thereto, (iii) the most recent actuarial reports for each
Benefit Plan which is a "defined benefit plan" (with the meaning of Section
3(35) of ERISA), and (iv) the most recent favorable determination letter, if
any, for such Plan.
(b) With respect to each Plan: (i) each such Plan has been maintained
and operated in material compliance with its terms and with the applicable
requirements of the Code and ERISA and the regulations issued thereunder, (ii)
except as set forth on Schedule 3.10(a), (b), (c) or (d), no material litigation
or asserted claims against Seller exist with respect to any such Plan other than
claims for benefits in the normal course of business, and (iii) no material
claim by the IRS, the Pension Benefit Guaranty Corporation or the Department of
Labor is currently pending.
(c) Each Plan intended to qualify under Section 401(a) of the Code
meets the requirement to so qualify and, except as set forth on Schedule
3.14(c), has received a favorable determination letter that it is so qualified
by the IRS.
(d) With respect to each Benefit Plan, all required payments,
premiums, contributions, reimbursements or accruals for all periods ending prior
to or as of the Closing Date has been made or will be timely made.
(e) Except as set forth on Schedule 3.14(e), neither the execution and
delivery of this Agreement nor the consummation of any of the transactions
contemplated hereby will (i) directly or indirectly result in any payment made
or to be made on behalf of any pension to constitute a "parachute" payment
within the meaning of Section 280G of the Code, or (ii) require the immediate
funding or financing of any compensation or benefits, which could reasonably
become a Liability of Buyer.
3.15 Environmental Compliance. Except as set forth on Schedule 3.15:
(a) The Business is in compliance in all material respects with
current applicable Environmental Laws and all settlements, consent orders and
Proceedings.
(b) Seller possesses all material Permits required under Environmental
Laws for operation of the Business as currently conducted.
(c) To the Knowledge of Seller, there has been no release of any
Hazardous Substance from the Business at any of the Facilities, at any property
formerly owned, operated or used by the Business, or at any other location to
which the Business have sent waste, that is in
37
violation of or is reasonably likely to lead to material Liability arising under
any Environmental Law.
(d) During the three (3) years prior to the date hereof, Seller has
not received any written notice of a material violation, nor, to the Knowledge
of Seller, is any material claim or action pending or threatened, asserting
actual or potential Liability under any Environmental Law in respect to the
Business.
(e) All material environmental studies and audits conducted in
relation to the Facilities in the last five (5) years of which Seller has
custody or control have been delivered, or made available for review (and to
copy) to Buyer.
(f) Notwithstanding any other provisions of this Agreement, Buyer
acknowledges and agrees that the representations and warranties contained in
this Section 3.15 are the only representations and warranties given by Seller
with respect to environmental matters or compliance with Environmental Laws and
Hazardous Substances and no other provisions of this Agreement shall be
interpreted as containing any representation or warranty with respect thereto.
3.16 Employee Relations and Agreements.
(a) In connection with the Business, to the Knowledge of Seller,
Seller has complied in all material respects with all Requirements of Law
relating to employment practices, terms and conditions of employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining and other Requirements of Law, the payment of social
security and similar Taxes and occupational safety and health. To the Knowledge
of Seller, Seller is not liable for the payment of any Taxes, fines, penalties,
or other amounts, however designated, for failure to comply with any of the
foregoing Requirements of Law. Schedule 3.16(a) contains a list of all
collective bargaining agreements or other agreements with any labor union or
other bargaining unit relating to the employees of the Business that Seller is
now, and has been, party to during the past three (3) years.
(b) Except as set forth on Schedule 3.16(b), in connection with the
Business, (i) within the past five (5) years, there has not been and there is
not presently existing, and to the Knowledge of Seller there is not threatened
any strike, slowdown, picketing, work stoppage or mass employee grievance
process involving Seller; (ii) to the Knowledge of Seller, within the past five
(5) years, no event has occurred or circumstance exists that could provide the
basis for any strike, slow down, picketing, work stoppage or other mass
grievance action; (iii) there is not pending or, to the Knowledge of Seller,
threatened against or affecting Seller any material Proceeding relating to an
alleged violation of any Requirement of Law pertaining to labor relations or
employment matters, including any charge or complaint filed with the National
Labor Relations Board or any comparable Governmental Authority, and, to the
Knowledge of Seller, there is no organizational activity or other labor dispute
against or affecting Seller or the Facilities; (iv) no application or petition
for an election of or for certification of a collective bargaining agent is
pending; (v) no grievance or arbitration Proceeding exists, or to the Knowledge
of Seller, is threatened that would be reasonably likely to have a Material
Adverse Effect; (vi) there is no lockout of any employees by Seller, and no such
action is contemplated by
38
Seller, (vii) within the past five (5) years, there has been no charge of
discrimination filed against Seller with the Equal Employment Opportunity
Commission (the "EEOC") or other Governmental Authority that would be reasonably
likely to have a Material Adverse Effect; (viii) there is no Proceeding pending
before the EEOC and Seller has not received any written notice of any pending
investigation by the EEOC; and (ix) there is no Proceeding pending before any
Governmental Authority (other than the EEOC) or private arbitration tribunal
relating to labor or employment matters, and Seller has not received any written
notice of any pending investigation by any such body or agency relating to labor
or employment matters of the Business, that would be reasonably likely to have a
Material Adverse Effect. True, complete and correct copies of all existing
collective bargaining agreements or labor Contracts covering employees of the
Business have been made available to Buyer.
3.17 No Undisclosed Liabilities. The Business does not have any
Liabilities of a nature required by GAAP to be reflected on or disclosed in the
footnotes or on the face of a balance sheet of the Business except for (i)
Liabilities disclosed, reflected or reserved against in the Unaudited Financial
Statements, (ii) Liabilities incurred after the Interim Date in the ordinary
course of business, (iii) the matters disclosed in or arising out of matters set
forth on Schedule 3.17 and the other Schedules to this Agreement or which are
the subject of other representations and warranties set forth herein, (iv)
Liabilities incurred in connection with this Agreement and the transactions
contemplated hereby and (v) Liabilities which do not and could not have a
Material Adverse Effect. Notwithstanding the foregoing, no representation and
warranty is made pursuant to this Section 3.17 with respect to any matter that
is specifically addressed by another representation or warranty contained in
this Section 3 or any certificate delivered pursuant hereto.
3.18 Security Clearance. Except as may be prohibited by the National
Industrial Security Program Operating Manual, Schedule 3.18 sets forth all
facility and personnel security clearances related to the Business or the
Assets. Except as set forth in Schedule 3.18, if the United States Department of
Defense grants Buyer a facility security clearance and Buyer then reinstates the
personnel security clearances, such security clearances are sufficient to allow
Buyer to conduct the Business as currently conducted by Seller. Except as set
forth in Schedule 3.18, to the Knowledge of Seller, there is no proposed or
threatened termination or invalidation of any facility or personnel security
clearances related to the Business or the Assets.
3.19 Employees of the Business.
(a) Except as set forth in Schedule 3.19(a), all employees necessary
to conduct the Business as currently conducted are employees of Seller.
(b) To the Knowledge of Seller, Seller has not materially violated
WARN or any similar state or local Requirement of Law in the past three (3)
years.
(c) To the Knowledge of Seller, no employee, consultant, or contractor
of the Business is bound by any Contract that purports to limit the ability of
such employee, consultant, or contractor (i) to engage in or continue or perform
any conduct, activity, duties or practice related to the Business or (ii) to
assign to Seller or to any other Person any rights to any invention,
improvement, or discovery. To the Knowledge of Seller, no current employee of
39
Seller is a party to, or is otherwise bound by, any Contract that in any way has
adversely affected, affects, or will adversely affect the ability of Seller or
Buyer to conduct the Business as currently conducted.
3.20 Government Contracts.
(a) Except as set forth on Schedule 3.20(a), with respect to each
Government Contract or Government Bid to which Seller is a party: (i) Seller has
complied with all material terms and conditions thereof and all applicable Laws
which relate to the Business; (ii) Seller is on schedule to meet the
contractually specified delivery dates for those items that relate to the
Business; (iii) no written notice has been received by Seller (and, to the
Knowledge of Seller, none has been threatened) alleging that Seller, or any
director, officer or employee of the Business, is in breach or violation of any
Law or contractual requirement as the same relate to the Business; and (iv) no
written notice of termination, cure notice or show-cause notice has been
received by Seller (and to the Knowledge of Seller, none has been threatened)
for items that relate to the Business.
(b) Except as set forth on Schedule 3.20(b), no Governmental Authority
nor any prime contractor, subcontractor or vendor has asserted in writing any
claim or initiated any dispute Proceeding against Seller relating to Government
Contracts or Government Bids involving the Business and to the Knowledge of
Seller no such claim or dispute is threatened, nor is Seller asserting any claim
or initiating any dispute Proceeding directly or indirectly against any such
party concerning any Government Contract or Government Bid.
(c) The rates and rate schedules submitted to Governmental Authorities
with respect to the Government Contracts primarily related to the Business or
otherwise included in the Assets have been closed for all years prior to 1995.
Except as set forth on Schedule 3.20(c), (i) there are no audit issues, demands,
or unresolved accounting issues with respect to any Government Contracts that
relate to the Business and (ii) there are no claims or assessments by any
Governmental Authority or any other customer that relate to the Business.
3.21 Services. Set forth on Schedule 3.21 is a list of all categories
of services which are provided to the Business by Seller or any of its
Affiliates.
3.22 Insurance. Within the past three (3) years, Seller has not
received any written notice of cancellation of any insurance policies insuring
the Business or the Assets. Schedule 3.22 sets forth, by year, for the current
policy year and each of the five (5) preceding policy years: (a) a summary of
the loss experience related to the Business or the Assets under each policy of
insurance; and (b) a statement describing each claim primarily related to the
Business or the Assets (other than workers compensation claims, for which Seller
shall include a summary of the loss experience relating thereto, and excluding
general aircraft product liability claims), which sets forth: (i) the name of
the claimant and (ii) a description of the policy by insurer, type of insurance
and period of coverage.
3.23 Customers and Suppliers.
(a) To the Knowledge of Seller, there are no outstanding material
disputes related to the products manufactured by the Business with any
third-party customer or
40
distributor. Since January 1, 2003, Seller has not had any products manufactured
by the Business returned by a third-party customer, except for normal returns
and rework consistent with past history.
(b) Except as set forth on Schedule 3.23(b), to the Knowledge of
Seller, since January 1, 2003, the Business has not had a material dispute with
another business of Seller with respect to any products delivered by the
Business.
(c) Except as set forth on Schedule 3.23(c), Seller has no outstanding
material dispute related to the Business concerning products and/or services
provided by any supplier. Each supplier of the Business to which the Business
incurred obligations in excess of twenty-five million dollars ($25,000,000)
during the twelve-month period immediately prior to the date hereof is listed on
Schedule 3.23(c). Seller has not received any written information from any
supplier listed on Schedule 3.23(c) that such supplier shall not continue as a
supplier to Seller (or Buyer after the Closing) or that such supplier intends to
terminate or modify existing Contracts related to the Business with Seller.
Seller has access, on commercially reasonable terms, to all products and
services reasonably necessary to carry on the Business, and to the Knowledge of
Seller, there is no reason why it (or Buyer after the Closing) will not continue
to have such access on commercially reasonable terms.
3.24 Inventory. All items included in the Inventory, including without
limitation all Inventory shown on the Unaudited Financial Statements and all
Inventory thereafter created or acquired by Seller on or prior to the Closing
Date wherever located, has been created or acquired in the ordinary course of
business. All Inventory is in the possession or control of Seller at the
locations listed under paragraph (a) of Schedule 3.24, except for (x) Spares
Inventory which is located at the locations listed under paragraph (b) of
Schedule 3.24 and (y) items that are in the possession or control of suppliers
set forth on Schedule 3.23(c). Such Inventory is in good and marketable
condition and held for sale.
3.25 No Material Adverse Effect. Since the Interim Date, there has not
been a Material Adverse Effect, and no event has occurred or circumstance exists
that could reasonably be expected to result in a Material Adverse Effect.
3.26 Product Warranty and Product Liability. Schedule 3.26(a) sets
forth all standard warranty terms delivered by Seller in connection with
products sold or services rendered by Seller in the operation of the Business
since January 1, 2001. Schedule 3.26(b) sets forth a true, correct and complete
warranty expense history incurred by Seller for warranty work performed on
products of the Business since January 1, 2001. Except as set forth on Schedule
3.26(c), since January 1, 2001, with respect to the Business or the Assets, (i)
there are no outstanding Federal Aviation Administration mandated retro-fit
campaigns for warrantable conditions applicable to the products of the Business,
and (ii) to the Knowledge of Seller, there is no systemic design, manufacturing
or other defect in any model or type of product or product specification of
Seller in connection with any product manufactured, sold, leased, or delivered
by the Business.
3.27 Export/Foreign Corrupt Practices Act. To the Knowledge of Seller,
with respect to the Business, during the last five (5) years:
41
(a) Seller has been and is in compliance with in all material respects
all United States export control Laws, including trade sanctions and embargoes
to which the United States is a party. Seller has filed voluntary disclosures of
export violations relating to its commercial aircraft operations and its defense
operations, but none of the matters addressed in these voluntary disclosures
involves the Business as exporter;
(b) the Seller has had and has all necessary authority under the
United States export control Laws to conduct the Business as currently conducted
in all material respects including (i) necessary Permits for any export
transactions, (ii) necessary Permits and clearances for the disclosure of
information to foreign Persons and (iii) necessary registrations with any United
States Governmental Authority with authority to implement applicable export
control Laws;
(c) Seller has not participated directly or indirectly in any boycotts
or other similar practices in violation of the regulations of the Export
Administration Act (50 U.S.C. App. Section 2401 et seq.) or Section 999 of the
Code; and
(d) Seller has complied in all material respects with the Foreign
Corrupt Practices Act.
3.28 HMSGTA Consistency. The disclaimer, indemnity and insurance
provisions of Articles 11, 12 and 13, respectively, of Part 1 and the warranty
provisions of Articles 1 through 5 of Part 3 of the BCA Hardware Material
Services General Terms Agreement are consistent with Seller's standard practice
in the BCA Hardware Material Services General Terms Agreement V3.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER
Subject to the disclosures set forth in the Schedules of Buyer
delivered to Seller concurrently with the parties' execution of this Agreement
(each of which disclosures shall clearly indicate the Section and, if
applicable, the Subsection of this Section 4 to which it relates, and each of
which disclosures shall also be deemed to be representations and warranties made
by Buyer to Seller under this Section 4), Buyer hereby represents and warrants
to Seller as follows:
4.1 Organization of Buyer. Buyer is a corporation duly incorporated,
validly existing and in good standing under the Laws of the State of Delaware.
Buyer has the corporate power and corporate authority to own or lease and
operate its assets and to carry on its business in the manner that they were
conducted immediately prior to the date of this Agreement. Buyer was created
solely for the transactions contemplated hereby, is indirectly majority owned
and controlled by Onex Partners, LP, and, except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby and
except as set forth on Schedule 4.1, has not incurred any Liability or engaged
in any business or activity of any type or kind whatsoever or entered into any
agreement or arrangement with any Person.
4.2 Authority of Buyer. Buyer has the corporate power and corporate
authority to execute, deliver and perform this Agreement and each of the Buyer
Transaction Agreements. The execution, delivery and performance of this
Agreement and the Buyer
42
Transaction Agreements by Buyer have been duly authorized and approved by
Buyer's board of directors and do not require any further authorization or
consent of Buyer or its stockholders. This Agreement has been duly authorized,
executed and delivered by Buyer and (assuming the valid authorization, execution
and delivery of this Agreement by Seller) is the legal, valid and binding
agreement of Buyer enforceable in accordance with its terms, and each of the
Buyer Transaction Agreements has been duly authorized by Buyer and upon
execution and delivery by Buyer will be (assuming the valid authorization,
execution and delivery by each other party thereto) the legal, valid and binding
obligation of Buyer enforceable in accordance with its terms, in each case
subject to bankruptcy, insolvency, reorganization, moratorium and similar Laws
of general application relating to or affecting creditors' rights and to general
equity principles.
4.3 No Violation of Law and Agreements. The execution and delivery by
Buyer of this Agreement and each Buyer Transaction Agreement, and the
performance by it of its obligations hereunder or thereunder, do not and will
not:
(a) violate any provision of the certificate of incorporation or
bylaws of Buyer;
(b) (i) violate any provision of applicable Law relating to Buyer;
(ii) violate any provision of any order, arbitration award, judgment or decree
to which Buyer is subject; or (iii) except as required under the HSR Act, ITAR
or the Exon-Florio Amendment, require a registration, filing, application,
notice, consent, approval, order, qualification or waiver with, to or from any
Governmental Authority, except in any case under this clause, any violation,
breach, default or non-compliance that would not individually or in the
aggregate be reasonably likely to have a material adverse effect on Buyer's
ability to consummate the transactions contemplated hereby or perform its
obligations hereunder or under the Transaction Agreements; or
(c) (i) require a consent, approval or waiver from, or notice to, any
party to any Contract to which Buyer or any Affiliate thereof is a party, or
(ii) result in a breach of, cause a default under or result in the acceleration
of any obligation or loss of any benefit under, any Contract to which Buyer or
any Affiliate thereof is a party, except in any case, any failure, breach,
default or non-compliance with respect to any of the items in (i) or (ii) above
that would not reasonably be likely to have a material adverse effect on the
ability of Buyer to consummate the transactions contemplated by this Agreement
and perform its obligations hereunder and under the Transaction Agreements.
4.4 No Litigation or Regulatory Action. Except as set forth on
Schedule 4.4:
(a) There are no Proceedings pending or, to the Knowledge of Buyer,
threatened against Buyer or its Affiliates which would reasonably be expected to
prevent, hinder or delay the consummation of any of the transactions
contemplated hereby; and
(b) There is no Proceeding pending or, to the Knowledge of Buyer,
threatened, that questions the legality or propriety of the transactions
contemplated by this Agreement or any of the Buyer Transaction Agreements.
43
4.5 No Brokers. Neither Buyer nor any Person acting on its behalf has
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.
4.6 Financial Ability. Buyer has obtained a commitment letter from
Citicorp North America, Inc. to provide debt financing, which commitment letter
is in full force and effect and has been delivered previously to Seller (the
"Financing Commitment"). Subject to receipt of the debt financing contemplated
by the Financing Commitment, Buyer will have on the Closing Date the financial
ability to consummate the transactions contemplated by this Agreement.
4.7 Capital Structure. As of the Closing Date, Buyer will have equity
in an amount which represents at least thirty percent (30%) of the sum of
Buyer's Liabilities for borrowed money (excluding any Assumed Liabilities) plus
all equity, but in any event equity of no less than three hundred and
seventy-five million dollars ($375,000,000).
4.8 Service Acknowledgment. Buyer acknowledges that Seller and/or its
Affiliates provide the Business with the services listed on Schedule 3.21, which
services are necessary for the ongoing operation of the Business and that
certain assets owned by Seller and/or its Affiliates which are necessary to
provide such services will not be purchased by Buyer under the terms and
provisions of this Agreement. Accordingly, in order to conduct the Business in a
manner similar to that conducted by Seller, Buyer must provide itself, obtain
from Seller pursuant to the Transition Services Agreement, or obtain from third
parties, such services.
4.9 Independent Analysis. Except pursuant to the Seller Transaction
Agreements, Buyer recognizes that Seller has not made any representation or
warranty upon which Buyer is relying with respect to the ability of Buyer to
obtain business from Seller subsequent to the Closing Date. Buyer further
recognizes that, except as set forth in the Seller Transaction Agreements, any
cost estimates, projections or other predictions contained or referred to in the
Schedules hereto or in the information provided to Buyer (including, without
limitation, the information provided in the Memorandum and the Management
Presentation) or any of its employees, agents or representatives were prepared
for internal planning purposes only and are not and shall not be deemed to be
representations or warranties of Seller. Buyer acknowledges that it has had
access to the management of the Business, and has received information from such
management, and that, except as set forth in this Agreement, Seller is making no
representation or warranty with respect to any such information. Buyer further
acknowledges that Buyer has performed its own independent analysis to determine
the appropriateness of the prices set forth in the BCA Supply Agreement and the
IDS Supply Agreement.
4.10 ITAR. As of the date of this Agreement and as of the date of
Closing (a) Buyer is and will continue to be a "U.S. person" as defined in ITAR,
and (b) Buyer is not and will continue not to be a "foreign national" as that
term is used in the EAR, and transfers to Buyer of Seller's technical data and
technology will therefore not effect an "export" of such technical data and
technology under either the ITAR or the EAR.
44
SECTION 5 ACTION PRIOR TO THE CLOSING DATE
Buyer and Seller covenant and agree to take the following actions
between the date hereof (or for purposes of Section 5.3(b), February 18, 2005)
and through the Closing Date:
5.1 Access to Information. Subject to any and all applicable Law and
prior to Closing, Seller shall permit Buyer and its representatives to have
reasonable access to the Assets and the Business, Seller's properties, Contracts
related to the Business, Governmental Permits, and books and records and other
documents and data of the Business, during regular business hours and upon
reasonable advance written notice, and Seller shall otherwise cooperate and
assist, to the extent reasonably requested by Buyer, with Buyer's investigation
of the Assets and the Business; provided, however, that to the extent any such
documents or information are subject to confidentiality restrictions on
disclosure, Seller shall use commercially reasonable efforts to obtain consent
to the disclosure thereof or, if such consent cannot be obtained, Seller shall
provide as much information regarding such documents or information as is
permissible under such confidentiality restrictions on disclosure (e.g., by
means of redacted disclosure or of summarization) and shall use all commercially
reasonable efforts to obtain consent, if required, to such arrangements, but if
any such consent cannot be obtained, Seller shall not be required to violate any
obligation of confidentiality to which Seller is subject in discharging its
obligations pursuant to this Section 5.1, nor shall the foregoing require Seller
to permit any inspection of documents subject to Seller's attorney-client
privilege, or to permit inspection or to disclose any information, to the extent
that in Seller's reasonable judgment it would result in the loss of trade secret
protection at law or in equity for any trade secrets; provided, further, that
Buyer and its representatives comply with the Confidentiality Agreement. The
foregoing sentence notwithstanding, with respect to the agreements listed on
Schedule 1.1(b)(xv), Seller shall only be obligated to request in writing
authorization from the relevant party to provide such confidential information
to Buyer. To the extent Buyer requests copies of documents from Seller pursuant
to this Section 5.1, Buyer may direct its request to an appropriate person at
the Facilities and, if Buyer does so, simultaneously to an Authorized
Representative of Seller that is not located at the Facilities. Buyer agrees
that such investigation shall be conducted in such a manner as not to interfere
unreasonably with the operations of Seller, and Buyer and its representatives
shall not speak to any of the employees of the Business without the prior
consent (which shall not be unreasonably withheld or delayed) of an Authorized
Representative of Seller, such communications shall be limited to the purposes
of effecting the contemplated transactions and transition planning and shall
only be made in the presence of an Authorized Representative of Seller. With
respect to Buyer's communication with employees of the Business located at the
Wichita Facility, Seller agrees to make an Authorized Representative of Seller
available at the Wichita Facility at all reasonable times. Despite the
foregoing, Buyer shall have reasonable direct access to those employees of
Seller listed on Schedule 5.1 solely for purposes of reasonable ongoing due
diligence, transition planning and labor union consultation relating to the
transactions contemplated by this Agreement without the prior consent of Seller
and without a representative of Seller being present, so long as Buyer does not
interfere with the day-to-day responsibilities of such employees, such employees
will not be directly involved in negotiations with Seller relating to
transactions contemplated by this Agreement, to the extent counsel for Buyer
contacts such employees, such contact is only for the purpose of obtaining
information or with respect to assistance in negotiation with parties other than
Seller, and Buyer acknowledges that Seller is not responsible for any
information provided to Buyer by such an employee. To the
45
extent any Person listed on Schedule 5.1 is an employee of Seller employed as an
attorney for Seller, Buyer shall only be allowed reasonable access to such
Person with respect to factual matters but shall not be entitled to discuss
matters protected by the attorney-client privilege or that constitute attorney
work product. Buyer shall not be permitted to solicit legal advice from such
Person and hereby acknowledges that any such Person is counsel to Seller and not
to Buyer.
5.2 Consents of Third Parties; Governmental Approvals.
(a) Buyer and Seller will act diligently and reasonably to secure, on
or prior to the Closing Date, the Required Consents; provided, however, that
neither Seller nor Buyer shall be required to incur any financial or other
obligation in connection therewith (other than normal and customary transaction
costs and filing fees not otherwise required hereby to be incurred by the other
party).
(b) During the period on or prior to the Closing Date, Buyer and
Seller shall act diligently and reasonably, and shall cooperate with each other,
to secure any consents and approvals of any Governmental Authority required to
be obtained by them in order to permit the consummation of the transactions
contemplated by this Agreement, or to otherwise satisfy the conditions set forth
in Section 7.2 and Section 8.2.
(c) Subject to the terms and conditions of this Agreement, each party
shall use its reasonable efforts to cause the Closing to occur (including,
without limitation, the use of reasonable efforts to execute any documents
reasonably requested by either party hereto and to satisfy such party's
conditions to Closing set forth herein).
(d) In the event that any and all novations, transfer or other
agreements, consents, approvals or waivers necessary for the assignment,
transfer and/or novation of any Assigned Contract, or any right or benefit
arising thereunder or resulting therefrom, shall not have been obtained on or
prior to the Closing Date, then as of the Closing Date, this Agreement, to the
extent permitted by Law, shall constitute full and equitable assignment by
Seller to Buyer of all of right, title and interest of Seller in and to, and all
Liabilities of Seller under, such Assigned Contracts, and Buyer shall be deemed
Seller's agent for purpose of completing, fulfilling and discharging all
Liabilities of Seller after the Closing Date under any such Assigned Contract.
The parties shall take all necessary steps and actions to provide Buyer with the
benefits of such Assigned Contracts, and to relieve Seller of the performance
and other obligations thereunder, including entry into subcontracts for the
performance thereof. Buyer agrees to pay, perform and discharge, and indemnify
Seller against and hold Seller harmless from, all Liabilities of Seller relating
to such performance or failure to perform under such Assigned Contracts provided
that Buyer receives the rights and benefits thereunder.
(e) In the event that Seller shall be unable to make the equitable
assignment described in Section 5.2(d), or if such attempted assignment would
give rise to any right of termination, or would otherwise adversely affect the
rights of Seller or Buyer under any such Assigned Contract, or would not assign
all of the rights of Seller thereunder at the Closing, Seller and Buyer shall
continue to cooperate and use all reasonable efforts to provide Buyer with all
such rights. To the extent that any such consents and waivers are not obtained,
or until the impediments to such assignment are resolved, Seller shall use all
reasonable commercial efforts
46
(without the expenditure, in the aggregate, of any material sum) to (i) provide
to Buyer, at the request of Buyer, the benefits of any such Assigned Contract to
the extent related to the Business, (ii) cooperate in any lawful arrangement
designed to provide such benefits to Buyer and (iii) enforce, at the request of
and for the account of Buyer, any rights of Seller arising from any such
Assigned Contract against any third party (including any Governmental
Authority), including the right to elect to terminate in accordance with the
terms thereof upon the advice of Buyer. To the extent that Buyer is provided the
benefits of any Assigned Contract referred to herein (whether from Seller or
otherwise), Buyer shall perform at the direction of Seller and for the benefit
of any third party (including any Governmental Authority), and shall assume the
Liabilities of Seller thereunder or in connection therewith. Buyer agrees to
pay, perform and discharge, and indemnify Seller against and hold Seller
harmless from, all Liabilities of Seller relating to such performance or failure
to perform. In the event of a failure of such indemnity, Seller shall cease to
be obligated under this Agreement in respect of the Assigned Contract which is
the subject of such failure.
(f) Except as otherwise provided herein, the obligations of the
parties under this Section 5.2 shall not include any requirement of Seller or
Buyer to expend money (other than normal legal and professional fees or filing
fees), commence or participate in any litigation or offer or grant any
accommodation (financial or otherwise) to any third party.
5.3 Operations on or Prior to the Closing Date.
(a) During the period from the date hereof to and including the
Closing Date, except as required by Law, this Agreement, or as set forth on
Schedule 5.3(a), Seller shall:
(i) conduct, operate and carry on the Business in the ordinary
course of business consistent with past practice and use reasonable commercial
efforts to preserve intact its current business organization, use reasonable
commercial efforts to maintain in all material respects the ordinary and
customary relationships of the Business with its suppliers, customers,
landlords, employees and others having business relationships with Seller in
connection with the Business; provided, however, nothing in this Section
5.3(a)(i) shall prohibit or otherwise restrict in any way the operation of any
other business of Seller;
(ii) maintain the Assets in a state of repair and condition that
materially complies with Requirements of Law and is consistent with the
requirements and conduct of the Business as currently required or conducted;
(iii) reasonably cooperate with Buyer and assist Buyer in
identifying and obtaining the Governmental Permits required by Buyer to operate
the Business after the Closing Date;
(iv) maintain all books and records related to the Business in
the ordinary course of business; and
(v) subject to compliance with applicable Law and as determined
to be necessary by Seller's in-house counsel to preserve Seller's
attorney-client privilege, confer from time to time as reasonably requested by
Buyer with one or more representatives of Buyer to discuss any material changes
or developments in the operational matters of the Business and the
47
general status of the ongoing operations of the Business; provided such request
is in accordance with the provisions of Section 5.1 herein.
(b) Without limiting the provisions of Section 5.3(a), except as set
forth on Schedule 5.3(b), as otherwise contemplated by this Agreement or with
the written approval of Buyer (which approval, except with respect to Sections
5.3(b)(ix), (xv) and (xvi) below, shall not be unreasonably withheld or delayed,
provided that Seller acknowledges that it is reasonable for Buyer to withhold
its approval of the matters set forth in Section 5.3(b)(vi) if Buyer, in its
good faith judgment, determines such matter would have an adverse impact on
Buyer's operation of the Business after the Closing Date, and provided further
that no inference shall be drawn from the foregoing proviso as to whether it is
reasonable or unreasonable for Buyer to withhold consent for any other reason),
on or between February 18, 2005 and the Closing Date, Seller shall not do any of
the following:
(i) make any material change in the Business or its operations,
except such changes as may be required to comply with any applicable
Requirements of Law;
(ii) make any capital expenditure related to the Business or
enter into any Contract related to the Business or commitment therefor in excess
of five hundred thousand dollars ($500,000) in the aggregate, except in the
ordinary course of business consistent with past practice or in accordance with
the Capital Expenditures Budget;
(iii) enter into any material Contract related to the Business
for the purchase or lease (as lessor or lessee) of real property, except in the
ordinary course of business consistent with past practice;
(iv) sell, lease (as lessee or lessor), transfer or otherwise
dispose of, mortgage or pledge or impose any Encumbrance (other than Permitted
Encumbrances) on any of the Assets (exclusive of the IDS Site as part of the IDS
Transaction), other than sales or other dispositions of inventory in the
ordinary course of business consistent with past practice and personal property
sold or otherwise disposed of in the ordinary course of business consistent with
past practice which is excess, obsolete or is not material the Business;
(v) create, incur or assume, or agree to create, incur or assume,
any indebtedness for borrowed money related to the Business (other than money
borrowed or advanced from Seller in the ordinary course of business consistent
with past practice or any unsecured indebtedness which is an Excluded
Liability);
(vi) institute any material increase in, enter into, adopt,
terminate or materially amend any profit sharing, bonus, incentive, deferred
compensation, insurance, pension, retirement, medical, hospital, disability,
severance, termination, welfare or other employee benefit plan with respect to
employees of the Business, other than in the ordinary course of business, as
required by any such existing plan, or pursuant to any existing employment or
collective bargaining agreement or by Requirements of Law;
(vii) make any change in the compensation of employees of the
Business, other than changes made pursuant to existing employment or collective
bargaining agreements or required by any Requirement of Law; provided that, the
provisions of this
48
Section 5.3(b)(vii) shall not apply to payments or awards made under Seller's
incentive compensation programs consistent with past practices of Seller or
changes to which Buyer has consented;
(viii) enter into any Contract which would be included in the
definition of Assigned Contracts or terminate, extend, renew or make any
material modification to any existing Assigned Contract, in each case other than
any Contracts related to the Business or any extensions thereof which involve
ten million dollars ($10,000,000) or less and which are entered into or modified
in the ordinary course of business consistent with past practice;
(ix) with respect to the Business, merge or consolidate with,
acquire all or substantially all of the assets of, or otherwise acquire, any
Person, or make any material investment in any Person;
(x) make any loans or advances (other than in the ordinary course
of business or routine expense advances to employees of the Business, consistent
with past practice) to, or any investments in or capital contributions to, any
Person or forgive or discharge in whole or in part any outstanding loans or
advances, or prepay any indebtedness for borrowed money in any such case, in
connection with the Business;
(xi) make any changes in accounting methods or practices
(including any change in depreciation or amortization policies or rates or
revenue recognition policies) or revalue any of the Assets (including writing
down the value of inventory other than in the ordinary course of business),
except in each case as required by changes in GAAP and after notice to Buyer;
(xii) change the manner in which Seller provides warranties,
discounts, credits, accommodations or other concessions to direct customers of
the Business;
(xiii) commence a material lawsuit or settle or agree to settle
any material pending or threatened lawsuit or other material dispute related to
the Business which involves an Assumed Liability, or which could otherwise have
a material effect on the Assets or an Assumed Liability, or Buyer's future
conduct of the Business, in any such case, other than (A) for the routine
collection of bills, (B) in such cases where it in good faith determines that
failure to commence suit would result in the material impairment of a valuable
asset of the Business (provided that it consults with Buyer prior to the filing
of such a suit), (C) for a breach of this Agreement related to the Business or
(D) any settlement or agreement to settle that would require Seller only to pay
money and would not have a material adverse effect on the Business;
(xiv) enter into any Contract related to the Business (other than
with Buyer) which would require the procurement of any consent, waiver or
novation, provide for any change in the obligations of any party in connection
with or terminate as a result of the consummation of the transactions
contemplated by this Agreement;
(xv) sell, convey, dispose of or otherwise transfer in any manner
any portion of the Facilities, exclusive of the IDS Site as part of the
consummation of the IDS Transaction;
49
(xvi) terminate, amend or modify in any manner any material
Contract related to the use of the Facilities;
(xvii) take any action or institute any Proceeding, to detach or
withdraw any portion of the Facilities from the Boeing Industrial District
("BID") formed under the applicable Law of the State of Kansas, or enter into
any Contracts on behalf of the BID, or take any action or institute any
Proceeding to impair, diminish or otherwise adversely affect in any manner, the
rights and benefits granted to the BID pursuant to that certain Supplemental
Contract dated December 19, 2000 between the BID and the City of Wichita (the
"Non-Annexation Agreement (BID)");
(xviii) take, or agree in writing or otherwise to take, any of
the actions described in clauses (i) through (xvii) of this Section 5.3(b); or
(xix) take any action which would reasonably be expected to make
any of Seller's representations or warranties contained in this Agreement untrue
or incorrect (such that the condition set forth in the first sentence of Section
7.1 would not be satisfied) or prevent Seller from performing or cause Seller
not to perform one or more covenants required hereunder to be performed by
Seller (such that the condition set forth in Section 7.1 would not be
satisfied).
5.4 Notice of Events or Circumstances. Seller and Buyer will notify
the other promptly after learning of the occurrence of any event or circumstance
which would reasonably be expected to cause any condition to Closing not to be
satisfied and in such event, the parties will negotiate in good faith to attempt
to resolve the consequences of such circumstance; provided, that the failure to
so notify the other party or to take any action in response to any such
notification shall not affect a party's rights hereunder, including any right to
assert the failure of satisfaction of a condition or to terminate this Agreement
in respect thereof or to assert a claim for indemnification pursuant to Section
9 hereof.
5.5 Confidentiality. The terms of the Confidentiality Agreement are
hereby incorporated by reference and shall continue in full force and effect
until the Closing, at which time such Confidentiality Agreement and the
obligations of Buyer under this Section 5.5 shall terminate. If this Agreement
is, for any reason, terminated prior to the Closing, the Confidentiality
Agreement shall continue in full force and effect in respect of such
confidential information in accordance with its terms. Buyer agrees that, if it
discovers that after the Closing Date that any Hired Employee possesses any
confidential or proprietary document and which Buyer is not entitled to possess
under this Agreement, the BCA Intellectual Property License Agreement, the
Transition Services Agreement, the BCA Supply Agreement or the IDS Supply
Agreement, Buyer will use commercially reasonable efforts to cause such employee
to immediately return it to Seller. Buyer acknowledges that nothing herein
entitles Buyer or any Hired Employee to use the information contained in such
confidential or proprietary document.
5.6 Notification of Certain Matters. In the event that (other than as
a result of the updating of Schedules by Seller pursuant to Section 11.7) any of
the Persons set forth on Schedule 5.6 (x) obtains actual Knowledge prior to the
Closing Date of facts or circumstances that constitute a breach of one or more
representations or warranties of Seller, (y) is actually aware that such facts
and circumstances constitute a breach of one or more representations or
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warranties of Seller and (z) believes that such breaches would, individually or
in the aggregate, entitle Buyer not to consummate the Closing pursuant to
Section 7.1 below, Buyer shall promptly notify Seller in writing of such
breach(es) (the "Discovered Breach(es)") and of such belief. If (x) Buyer does
not so notify Seller prior to Closing, (y) the Discovered Breach(es) entitled
Buyer not to consummate the Closing pursuant to Section 7.1 below and (z) the
Closing nevertheless occurs, Buyer shall be deemed to have waived any and all
rights, remedies or other recourse against Seller to which Buyer might otherwise
be entitled in respect of any such breach(es), including any rights or remedies
under Section 9. If Buyer does so notify Seller prior to Closing, the following
shall apply:
(a) If Seller agrees that the Discovered Breach(es) would entitle
Buyer not to consummate the Closing pursuant to Section 7.1 below, Seller shall
so notify Buyer in writing within five (5) Business Days after receipt of
Buyer's notice (and in any event, prior to the Closing) and it shall be
conclusively established that Buyer is entitled not to consummate the Closing
pursuant to Section 7.1 below. If Seller so notifies Buyer and the Closing
nevertheless occurs, Buyer shall be deemed to have waived any and all rights,
remedies or other recourse against Seller to which Buyer might otherwise be
entitled in respect of any such Discovered Breach(es), including any rights or
remedies under Section 9.
(b) If Seller does not notify Buyer in writing within five (5)
Business Days after receipt of Buyer's notice (and in any event prior to the
Closing) that Seller agrees that such Discovered Breach(es) would entitle Buyer
not to consummate the Closing pursuant to Section 7.1 below, or if Seller
notifies Buyer in writing that Seller does not so agree, then any and all
rights, remedies or other recourse against Seller to which Buyer is entitled in
respect of such Discovered Breach(es), including any rights or remedies under
Section 7.1 or Section 9, shall be deemed not to have been waived and shall not
be affected or impaired by any Knowledge, belief or other matter referred to in
this Section 5.6.
If Buyer delivers a notice to Seller pursuant to this Section 5.6 more than one
hundred ten (110) days after the date of this Agreement, the date provided for
in Section 10.1(a)(iii) shall be extended to the date which is ten (10) days
following the date of such delivery.
5.7 HSR Filings; CFIUS.
(a) Buyer and Seller will each as promptly as practicable, but in no
event later than five (5) Business Days following the execution and delivery of
this Agreement, file with the United States Federal Trade Commission (the "FTC")
and the United States Department of Justice (the "DOJ") the notification and
report form, if any, required for the transactions contemplated by this
Agreement and any supplemental information requested in connection therewith
pursuant to the HSR Act. Each of Buyer and Seller shall be responsible for
paying one-half of the applicable filing fee pursuant to the HSR Act with
respect to the transactions contemplated by this Agreement. Any such
notification and report form and supplemental information will be in compliance
with the requirements of the HSR Act. Seller and Buyer shall furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission which is
necessary under the HSR Act. Seller and Buyer shall keep each other apprised of
the status of any communications with, and inquiries or requests for additional
information from, the FTC and the
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DOJ and shall comply promptly with any such inquiry or request. Seller and Buyer
will use all reasonable efforts to obtain any clearance required under the HSR
Act for the transactions contemplated by this Agreement, and to request early
termination under the HSR Act.
(b) Buyer and Seller will, as promptly as practicable, but in no event
later than fifteen (15) calendar days following the execution and delivery of
this Agreement, submit a joint filing (collectively, the "Joint Filing") to
CFIUS pursuant to 31 C.F.R. Part 800 with regard to the transactions
contemplated by this Agreement, provided that Buyer shall take primary
responsibility for the preparation and submission of the Joint Filing. Buyer
shall keep Seller informed of all material communications with CFIUS and any
interested Governmental Authority concerning the Joint Filing. Seller shall
cooperate with Buyer in the preparation and submission of the Joint Filing and
provide all additional information reasonably necessary to obtain approval.
5.8 No Negotiation. Until such time as this Agreement shall have been
terminated pursuant to Section 10, Seller shall not, directly or indirectly,
through any officer, director, employee, representative or agent of Seller or
any of its subsidiaries, take any action of any kind which might reduce the
likelihood of, or interfere with, the consummation of the transactions
contemplated hereby, including without limitation, soliciting, initiating,
assisting, encouraging or entertaining any offers, inquiries or proposals from,
discussing or negotiating with, providing any nonpublic information to or
considering the merits of any inquiries or proposals from any Person (other than
Buyer) relating to any business combination transaction involving the Business
or the Assets (other than in the sale of inventory in the ordinary course of
business consistent with past practice), including without limitation through
the sale of assets or stock or by merger. Seller shall notify Buyer within five
(5) calendar days of receipt of any such offer, inquiry or proposal if Seller in
good faith determines it is bona fide.
5.9 Itemization of IRB Assets. Prior to the Closing, subject to
Buyer's reasonable approval, Seller shall revise and update Schedule III to the
Sublease (IRBs) so as to make such adjustment. if any, as may be required to
identify correctly the assets to be leased to Buyer pursuant to the Sublease
(IRBs) (i.e., to describe assets that, were they owned by Seller and not leased
pursuant to the Lease Agreement (as defined in the Sublease (IRBs)), would be
Assets as determined under the provisions of Section 1.1 hereof other than
Section 1.1(a)(xvii) therein contained). In the event Buyer and Seller cannot
agree with respect to the identification of such assets, such disagreement shall
be treated as an Asset or Liability Dispute pursuant to Section 11.21(d).
5.10 Title Report and Survey. If Buyer wishes to object to a survey
and/or title report (each a "Title Document") required to be delivered to Buyer
with respect to each Owned Property or Leased Property, Buyer shall provide
Seller with written notice of Buyer's objections with respect to a particular
property ("Buyer's Title Notice") in reasonable specificity before: (a) if,
prior to the date hereof, Buyer has received all Title Documents required to be
delivered to Buyer with respect to a particular property, twenty-one (21)
calendar days from the date hereof, or (b) if, prior to the date hereof, Buyer
has not received all Title Documents required to be delivered to Buyer with
respect to a particular property, twenty-one (21) calendar days from Buyer's
receipt of all Title Documents with respect to a particular property.
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5.11 Delivery of Audited Financial Statements. Seller will use its
reasonable best efforts to deliver to Buyer by March 15, 2005 (i) an audited
statement of assets to be acquired and liabilities to be assumed of the Business
as of December 31, 2002 and 2003, and the related statements of products shipped
and operating expenses of the Business for the fiscal years then ended, together
with the reports thereon of Deloitte & Touche, LLP, Seller's independent
certified public accountants, which reports shall contain no limitations or
qualifications as to scope or otherwise and no exceptions and shall state
specifically that such statements fairly present in all material respects the
financial condition of the Business in accordance with GAAP (including the notes
thereto, the "Audited Annual Financial Statements"), and (ii) an audited
statement of assets to be acquired and liabilities to be assumed of the Business
as of the Interim Date and related statement of products shipped and operating
expenses of the Business as of the Interim Date (the "Audited Interim Financial
Statements" and, collectively, with the Audited Annual Financial Statements, the
"Audited Financial Statements"). Seller will reasonably cooperate with Buyer in
assisting Buyer with the preparation (at Buyer's sole expense) of an audited
statement of assets to be acquired and liabilities to be assumed of the Business
as of December 31, 2004, and the related statement of products shipped and
operating expenses of the Business for the fiscal year then ended (including the
notes thereto, the "Audited 2004 Financial Statements"). The value of the Spares
Inventory will be excluded from the Audited Interim Financial Statements and the
Audited 2004 Financial Statements and the unaudited value of Spares Inventory
(which shall be the unaudited value thereof as of February 17, 2005 as set forth
in Exhibit N) will be set forth on a separate schedule attached to such
financial statements. The notes to the Audited Annual Financial Statements will
indicate that a value for Spares Inventory is not included in such financial
statements.
SECTION 6 ADDITIONAL AGREEMENTS
6.1 Use of Names.
(a) Nothing herein shall be construed as granting Buyer a license in
or to any trademarks, service marks or trade names belonging to Seller or its
Affiliates (collectively, the "Marks"). Except as set forth in the BCA
Intellectual Property License Agreement, Buyer may not use the Marks, or any
portion thereof, or any mark confusingly similar thereto, after the Closing Date
except as set forth in this Section 6.1. If any Marks remain on Assets
transferred to Buyer at Closing, Buyer will have the limited permission to use
such Marks for so long as they remain on such Assets; provided, however, Buyer
will take commercially reasonable steps to promptly remove such Marks within
three (3) months from the Closing Date.
(b) Buyer acknowledges Seller's (or its Affiliates') rights in and
title to the Marks and agrees that it shall not do or cause to be done any act
that in any manner infringes or impairs the validity, scope, or title in the
Marks. Buyer shall not acquire nor claim any title to the Marks adverse to
Seller (or its Affiliates) by virtue of this Agreement, the parties intending
that all use of the Marks by Buyer permitted hereunder shall inure to the
exclusive benefit of Seller or its Affiliates.
(c) In the event Buyer or any Affiliate of Buyer violates any of its
obligations under this Section 6.1, Seller may proceed against it in Law or in
equity for such damages or other relief as a court may deem appropriate. Buyer
acknowledges that a violation of this
53
Section 6.1 may cause Seller irreparable harm which may not be adequately
compensated for by money damages. Buyer therefore agrees that, in the event of
any actual or threatened violation of this Section 6.1, Seller shall be
entitled, in addition to other remedies that it may have, to seek a temporary
restraining order and preliminary and final injunctive relief against Buyer or
such Affiliate of Buyer to prevent any violations of this Section 6.1, without
the necessity of posting a bond.
6.2 Employees; Employee Benefits.
(a) Hiring of Employees. Buyer shall offer employment effective
immediately following the Closing Date to such employees of the Business, except
for certain employees of the Shared Services Group and World Headquarters
function who will be retained by Seller, at the same location where such
employee was employed on the Closing Date, as Buyer determines to hire in its
sole discretion. With respect to each such Business employee who accepts Buyer's
offer of employment (a "Hired Employee"), effective immediately following the
Closing Date and except as may be required pursuant to a collective bargaining
agreement or applicable Law or as otherwise provided by this Section 6.2, Buyer
shall (i) provide compensation and levels of benefits under any Benefit Plan
Buyer establishes for the Hired Employees ("Buyer's Benefit Plans") as
determined by Buyer and (ii) credit periods of service prior to the Closing for
purposes of determining eligibility (and benefit entitlement with respect to
vacations and pension benefits pursuant to Sections 6.2(d) and 6.2(f)) under
Buyer's Benefit Plans so long as Seller furnishes Buyer with all information
necessary to implement this subsection 6.2(a)(ii) pursuant to the other
provisions of this Agreement. Each employee of the Business who is on an
approved leave of absence at the time they accept an offer of employment from
Buyer shall become a Hired Employee as of the date they return from such leave
of absence, so long as such employee returns from such absence within thirty
(30) months after the Closing Date.
(b) Health Coverages; Workers' Compensation. Buyer shall make
available to each Hired Employee (and his or her "eligible dependents", as
defined in the Benefit Plans) following the Closing coverage under a new group
health plan that provides health benefits (within the meaning of Section
5000(b)(1) of the Code) that (i) does not limit or exclude coverage on the basis
of any pre-existing condition of such Hired Employee or dependent (other than
any limitation already in effect under Seller's group health plan), and (ii)
provides each Hired Employee full credit, for the plan year during which the
Closing occurs, for any deductible already incurred by the Hired Employee under
Seller's group health plan and for any other out-of-pocket expenses that count
against any maximum out-of-pocket expense provision of Seller's or Buyer's group
health plan or medical plan. In addition, Buyer shall be responsible for medical
and dental claims incurred by any Hired Employee or his or her eligible
dependents after the Closing, and be responsible for workers' compensation
claims (including medical, disability, permanency and expense claims) incurred
by any Hired Employee or his or her eligible dependents after the Closing, but
only to the extent such injuries or illnesses occurred after the Closing, and
shall take all necessary and appropriate action to adopt or designate a workers'
compensation program to cover Hired Employees in full compliance with applicable
state law. Seller shall remain liable for all amounts payable by reason of or in
connection with any and all medical and dental claims incurred by any Hired
Employee or his or her eligible dependents on or prior to the Closing Date, and
shall remain liable for workers' compensation claims (including
54
medical, disability, permanency and expense claims) incurred by any Hired
Employee on or prior to the Closing Date. For purposes of the foregoing, a
medical/dental claim shall be considered incurred when the medical/dental
services are rendered or medical supplies are provided, and not when the claim
is made or when the condition arose, and a workers' compensation claim shall be
considered incurred when the condition arose. Notwithstanding the foregoing, the
welfare and other fringe benefits to be provided to any Hired Employees who,
pursuant to applicable Law, are determined to be represented by a collective
bargaining representative, shall be established or maintained in accordance with
any legal obligations Buyer may have under any collective bargaining agreement.
Buyer shall inform Seller thirty (30) days prior to Closing of the identity of
its workers' compensation carrier and the identity of appropriate carrier
contacts. Buyer and Seller agree to reasonable cooperation with each other to
resolve disputes where shared exposure may be present (e.g., as when a condition
arose over a period that includes the Closing Date).
(c) WARN and Corresponding State Laws. Seller shall be responsible
for, shall deliver any notices required, and shall indemnify and hold Buyer
harmless against and in respect of, any Liability under WARN or any similar
state Law (collectively, "WARN Liabilities") which arose or arise on or prior to
the Closing Date, in accordance with Section 9.1. Buyer shall be responsible
for, shall deliver any notices required, and shall indemnify and hold Seller
harmless against and in respect of, any WARN Liabilities which arise as a result
of any action by Buyer after the Closing Date, in accordance with Section 9.2.
Within ten (10) days after the Closing Date, Seller shall inform Buyer of the
number of employees of the Business at each site who have been laid off within
the ninety (90) day period on or prior to the Closing Date.
(d) Accrued Vacation. Effective as of the Closing, Buyer agrees to
recognize all accrued vacation pay balances and to assume all Liability therefor
("Accrued Vacation") of Hired Employees and to recognize such employees' service
with Seller for purposes of vacation pay accrual under Buyer's policies
regarding vacation pay. Buyer agrees to either (i) allow all Hired Employees to
utilize Accrued Vacation regardless of any maximums for vacation carryovers
under Buyer's vacation policies or (ii) maintain such maximums, in which case
Buyer shall pay in cash the value of Accrued Vacation in excess of such maximum
to such Hired Employees. Buyer agrees to indemnify, hold harmless, and, at the
option of Seller, to defend Seller from any Liability, including attorneys'
fees, arising from or relating to the payment or non-payment of Accrued
Vacation, in accordance with Section 9.2.
(e) Sick Leave. Effective as of the Closing, Buyer agrees to recognize
all accrued sick leave (including personal time or "PTO" for union-represented
employees) and to assume all Liability therefor ("Accrued Sick Leave") of Hired
Employees and to recognize such employees' service with Seller for purposes of
sick leave or personal time accrual under Buyer's policies regarding sick leave
or personal time. Buyer agrees to continue to pay out unused Accrued Sick Leave
to Hired Employees who are not represented by a collective bargaining agreement
as of the Closing Date in accordance with Seller's existing sick leave policy as
in effect on the Closing Date. In the event Buyer modifies such payout policy
following the Closing Date, Buyer agrees to pay to such of those Hired Employees
who would otherwise have been entitled to a payout of unused Accrued Sick Leave
from Seller as of the Closing Date (i.e., those eligible for retirement) not
less than the amount they would have been entitled to as of the
55
Closing Date, reduced by the amount of such leave used or paid out prior to or
after the Closing Date. Buyer agrees to indemnify, hold harmless, and, at the
option of Seller, to defend Seller from any Liability, including attorneys'
fees, arising from or relating to the payment or non-payment to Hired Employees
of Accrued Sick Leave that is accrued and unused as of the Closing Date, in
accordance with Section 9.2.
(f) Pension Benefits. Effective immediately following the Closing
Date, Buyer shall establish or maintain (i) a defined benefit pension plan
("Buyer's Union Pension Plan I") for the benefit of Hired Employees who are
covered by the collective bargaining agreements listed in Schedule 6.2(f) as
participating groups in The Boeing Company Employee Retirement Plan ("Seller's
Union Pension Plan I") on the Closing Date ("Buyer's Hired Union Employees I"),
(ii) a defined benefit pension plan ("Buyer's Union Pension Plan II") for the
benefit of Hired Employees who are covered by the collective bargaining
agreements listed in Schedule 6.2(f) as participating groups in the Boeing North
American Retirement Plan for Eligible Employees on the Hourly Payroll (a
component of the Boeing North American Retirement Plan) ("Seller's Union Pension
Plan II") on the Closing Date ("Buyer's Hired Union Employees II" and together
with Buyer's Hired Union Employees I, "Hired Union Employees"), and (iii) a
defined benefit pension plan ("Buyer's Non-Union Pension Plan") for the benefit
of Hired Employees ("Hired Non-Union Employees") who are covered by The Pension
Value Plan for Employees of The Boeing Company ("Seller's Non-Union Pension
Plan" and collectively with Seller's Union Pension Plan I and Seller's Union
Pension Plan II the "Seller's Pension Plans") (Buyer's Union Pension Plan I,
Buyer's Union Pension Plan II, and Buyer's Non-Union Pension Plan are
collectively referred to as "Buyer's Pension Plans"). Buyer's Pension Plans
shall include credit for Hired Union Employees' and Hired Non-Union Employees'
past service with Seller for eligibility and vesting and, contingent upon the
transfers of assets in accordance with this Section 6.2(f), early retirement
benefits and benefit accrual previously recognized under Seller's Pension Plans,
except as otherwise provided in Schedule 6.2(f), including paragraph 1(a)
thereof. Buyer's Pension Plans shall further include, indefinitely, credit for
Hired Union Employees' and Hired Non-Union Employees' service with Buyer for
eligibility, vesting, and early retirement.
Subject to Schedule 6.2(f), Seller shall cause assets to be
transferred from each of Seller's Pension Plans to the respective Buyer's
Pension Plans in accordance with Schedule 6.2(f). All transfers shall be in
accordance with the requirements of Section 414(1) of the Code.
Seller and Buyer shall timely file Forms 5310 A in respect to the
transfers contemplated by this Section 6.2(f) if required by Law.
All assets transferred under this Section 6.2(f) or Schedule
6.2(f) shall be in cash or cash equivalents. After the Closing Date until the
initial transfers of assets as determined under Schedule 6.2(f), any benefits
that are payable to Hired Union Employees and Hired Non-Union Employees under
the applicable Buyer's Pension Plans shall be paid or continue to be paid out of
the applicable Seller's Pension Plans, and the amounts to be transferred to the
applicable Buyer's Pension Plan shall be reduced by the amount of such payments.
After the initial transfers of assets, any benefits that are payable to Hired
Union
56
Employees and Hired Non-Union Employees shall be paid under the applicable
Buyer's Pension Plan.
Buyer's Pension Plans shall be liable for benefits with respect
to service recognized under Seller's Pension Plans on or prior to the Closing
Date with respect to Hired Union Employees and Hired Non-Union Employees,
contingent upon the transfers of assets in accordance with this Section 6.2(f).
Buyer agrees that neither Seller nor Seller's Pension Plans shall have any
further responsibility with respect to the assets and Liabilities so
transferred, including without limitation, obligations following such transfers
with respect to the benefits accrued by the Hired Union Employees and Hired
Non-Union Employees under the applicable Seller's Pension Plans.
Notwithstanding the foregoing, Seller shall have no obligation to
transfer assets pursuant to this Section 6.2(f) if one or any of Buyer's Pension
Plans do not provide credit for all such Hired Union Employees' and/or Hired
Non-Union Employees' service with Seller for purposes of benefit accrual.
(g) Retiree Medical. Without limiting the scope of Section 6.2(a), as
of the Closing, Buyer shall be responsible for and shall maintain retiree
medical coverage for the benefit of each Hired Employee who was eligible for or
could have become eligible for (after meeting applicable age and service
requirements) retiree medical coverage maintained by Seller and who is not
receiving retiree medical benefits from Seller, and shall provide each such
Hired Employee full credit for periods of service prior to the Closing for all
purposes thereunder, subject to the provisions of any collective bargaining
agreements between Buyer and the unions. Buyer agrees that Seller and its
retiree medical plans shall have no further responsibilities after the Closing
Date to provide to such Hired Employees retiree medical benefits. This Agreement
does not limit Buyer's ability to make changes in or amendments to any Buyer
retiree medical plan following the Closing.
(h) Supplemental Executive Pension and Savings Benefits. Effective as
of the Closing Date, Buyer shall assume all Liabilities (whether accrued or
arising before, on or after the Closing Date) with respect to Hired Employees
under the Supplemental Executive Retirement Plan for Employees of The Boeing
Company and the Supplemental Benefit Plan for Employees of The Boeing Company
(collectively, "Seller's Supplemental Pension and Savings Plans") pursuant to
(i) separate plans to be established by Buyer immediately following the Closing
Date, or (ii) one or more plans maintained by Buyer. Buyer agrees that neither
Seller nor Seller's Supplemental Pension and Savings Plans shall have any
further responsibility with respect to the Liabilities so transferred, including
without limitation, obligations following such transfers with respect to the
benefits accrued by the Hired Employees under Seller's Supplemental Pension and
Savings Plans.
(i) Flexible Spending Accounts. Effective as of the Closing, Buyer
shall establish flexible spending accounts for health and dependent care
expenses, and Seller shall spin-off and Buyer shall assume the health and
dependent care account balances (and related assets and liabilities) under
Seller's flexible benefits plan with respect to Hired Employees ("Seller's
Cafeteria Plan") to Buyer's flexible benefit plan. As soon as practicable after
the Closing, (i) Seller shall pay to Buyer in cash the amount, if any, by which
aggregate
57
contributions made to accounts under Seller's Cafeteria Plan exceeded the
aggregate benefits provided as of the Closing, or (ii) Buyer shall pay to Seller
in cash the amount, if any, by which aggregate benefits provided from accounts
under Seller's Cafeteria Plan exceeded the aggregate contributions made through
the Closing Date.
(j) COBRA Notices. Seller shall be responsible for providing all
employees of the Business (and their dependents) with any notices required by
the Consolidated Omnibus Budget Reconciliation Act or similar state Law with
respect to qualifying events that occur on or prior to the Closing Date.
(k) No Third Party Beneficiary. Nothing herein is intended to, and
shall not be construed to, create any third party beneficiary rights of any kind
or nature, including, without limitation, the right of any Hired Employee or
other individual to seek to enforce any right to compensation, benefits, or any
other right or privilege of employment with Seller or Buyer.
6.3 Insurance. Seller will keep insurance policies currently
maintained related to the Business, the Assets and current or former employees,
or suitable replacements therefor, in full force and effect through the Closing
Date. Buyer shall become solely responsible for all insurance coverage after the
Closing with respect to the Business and the Assets.
6.4 Release of Guaranties. Effective on the Closing Date, if required
in order to obtain the release of Seller from any guaranty of an Assumed
Liability as set forth on Schedule 6.4, Buyer shall provide the beneficiary of
such guaranty with a guaranty in the same form as Seller's guaranty.
6.5 Intercompany Work Orders. Seller shall cancel any intercompany
work orders related to the Business in existence on the Closing Date. Such
intercompany work orders shall be replaced with purchase orders agreed by Seller
and Buyer pursuant to the terms of the BCA Supply Agreement and the IDS Supply
Agreement.
6.6 Bid Opportunities. Seller, its Affiliates, or its Program Partners
shall provide Buyer with opportunities to bid on new work (the "Bid
Opportunities") that aggregate revenues of fifty million dollars ($50,000,000)
annually, on average, for each twelve (12) month period during the eight (8)
years immediately following the Closing Date.
(a) On each of the fourth and eighth anniversaries of the Closing
Date, if the total work awarded in the immediately preceding four (4) years
generates aggregate revenues in such immediately preceding four (4) years (the
"Four Year Total") of less than two hundred million dollars ($200,000,000),
Seller shall pay Buyer an amount determined as follows:
$25,000,000 x ((200,000,000 - A)/200,000,000)
Where "A" = the Four Year Total. Such amount, if any, shall be paid within sixty
(60) days of the applicable anniversary by means of a wire transfer of
immediately available U.S. funds to one or more accounts previously designated
in writing by Buyer.
(b) Buyer's bids on the Bid Opportunities must be competitive. If
Buyer's bid is not accepted by reason of being uncompetitive, and the Bid
Opportunity was Domestically
58
Suited, such Bid Opportunity shall be counted as new work awarded for the
purposes of determining the Four Year Total pursuant to Section 6.6(a) above.
(c) In order to count as a Bid Opportunity, the new work must not
require material capital investment on the part of Buyer.
6.7 Excluded Supply Contracts/Excluded Equipment Leases/Other Supply
Contracts.
(a) With respect to the Excluded Supply Contracts, Seller shall use
commercially reasonable efforts to assist Buyer in entering into new Contracts
on terms substantially similar to the terms in the Excluded Supply Contracts. If
Buyer is unable to obtain any such new Contracts, Seller shall cooperate with
Buyer in any reasonable arrangement (which shall not require Seller to make any
payments) designed to provide for Buyer the benefits under the relevant
Contract; provided, however, Seller shall only be required to provide such
benefits for Buyer so long as Buyer undertakes to pay or satisfy any
corresponding Liabilities for the enjoyment of such benefit.
(b) With respect to the Excluded Equipment Leases, Seller shall use
commercially reasonable efforts to assist Buyer in entering into new equipment
leases on terms substantially similar to the terms in the Excluded Equipment
Leases.
6.8 Geographical Location. For a period of ten (10) years after the
Closing Date, Buyer shall operate substantial manufacturing operations and shall
maintain its executive offices in Wichita. Despite the foregoing, should Onex
Corporation and its Affiliates no longer effectively control, directly or
indirectly, the Business, such period shall be reduced to five (5) years from
the Closing Date. Notwithstanding the foregoing, Buyer shall be relieved of its
obligations under this Section 6.8 with respect to manufacturing operations for
the products relating to a particular aircraft program, if due to a circumstance
beyond its reasonable control (and despite Buyer's commercially reasonable
efforts to mitigate such circumstances) and without the error or negligence of
Buyer (any such circumstance being hereinafter referred to as "Excusable
Delay"), Buyer in good faith reasonably concludes that it will be unable to
comply with such obligation for a consecutive period of no less than five (5)
months with respect to more than twenty-five percent (25%) of the estimated
shipset value of that aircraft program. Notwithstanding the foregoing, Buyer
shall be relieved of all of its obligations under this Section 6.8, if due to an
Excusable Delay, Buyer in good faith reasonably concludes that it will be unable
to comply with such obligations with respect to the 737 program for a
consecutive period of no less than five (5) months with respect to more than
forty percent (40%) of the estimated shipset value of the 737 program. Excusable
Delays may include, but are not limited to, acts of God, war, terrorist acts,
riots, acts of government, fires, floods, epidemics, quarantine restrictions,
freight embargoes, strikes or unusually severe weather, but shall exclude
Buyer's noncompliance with any Environmental Laws.
6.9 Confidentiality Following the Closing. Except as provided in the
BCA Intellectual Property License Agreement, all confidential proprietary
information and other confidential information and materials set forth on
Schedules 6.9(a) and (b) shall, from and after the Closing, be confidential
information of Buyer. Except to the extent provided otherwise
59
herein, from and after the Closing, Seller and its Affiliates, and their
respective directors, officers, employees or agents shall (a) treat the
information set forth on Schedule 6.9(a) in the same manner as Seller treats its
own confidential information and (b) shall treat and use the information set
forth on Schedule 6.9(b) in the same manner as Seller treats or uses its own
confidential information.
6.10 Personnel Records. Seller agrees to provide Buyer with copies of
Business personnel records (except for personnel records related to medical,
workers' compensation, Employee Assistance Plan or Drug-Free Workplace Act) of
an employee of the Business upon receipt from Buyer of a written consent
executed by such an employee in the form attached hereto as Exhibit M. After
Seller receives an appropriate written consent for a relevant employee
(including any employee on a leave of absence), Seller will provide to Buyer in
reasonably sized batches for efficiency, as promptly as practicable, the
following information for such employee: name; job title; job description; date
of hiring or engagement; date of commencement of employment or engagement; rates
of salary, wages, commissions or other compensation and any change in
compensation in the last twelve (12) months, other than increases in the
ordinary course of business or pursuant to the terms of any collective
bargaining agreement; sick and vacation leave that is accrued but unused; and
service credited for purposes of vesting and eligibility to participate under
any Benefit Plan, or any other employee benefit plan. In the event that Buyer
obtains a consent in the form attached hereto as Exhibit H, Seller will promptly
make available to Buyer, for use and copying, the originals of the relevant
employee's personnel records related to medical, the Employee Assistance Plan
and the Drug-Free Workplace Act after receipt. Seller shall direct its third
party administrator to provide copies of worker's compensation records for Hired
Employee so long as Buyer provides a written consent from the relevant employee
in a form acceptable to Seller's third party administrator. Seller has provided
Buyer a form of written consent that is acceptable to Seller's third party
administrator as of the date hereof. Seller shall cooperate with Buyer in order
to obtain the most recent form from Seller's third party administrator at any
time requested by Buyer between the date hereof and the Closing Date. In no case
shall Buyer receive any workers' compensation records related to Seller's
employees, unless otherwise permitted by Law.
6.11 The IDS Transaction.
(a) The attached Exhibit BB sets forth the boundaries of the portion
of the Wichita Site that will be excluded from the Facilities and retained by
Seller for use by IDS as an industrial campus of Seller after the Closing (such
parcel(s), the "IDS Site"). The process used to separate the Wichita Facility
and the IDS Site shall be referred to herein as the "IDS Transaction." All
costs, expenses, fees and other charges incurred solely in connection with the
consummation of the IDS Transaction shall be borne exclusively by Seller.
(b) Seller shall at or prior to the Closing, subject to the prior
written approval of Buyer, in Buyer's reasonable discretion with respect to each
of the following:
(i) file appropriate applications for or obtained a separate Tax
lot designation for the IDS Site in compliance with all applicable Requirements
of Law; and
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(ii) locate and erect, as mutually determined by the Parties'
transition teams, at Seller's expense and subject to Buyer's reasonable
approval, such perimeter security fences and boundary markers as are reasonably
required in order to delineate the boundaries between the IDS Site and the
portion of the Facilities adjacent thereto.
6.12 Noncompetition, Nonsolicitation and Nondisparagement.
(a) From the Closing Date until such time as the BCA Supply Agreements
are terminated in their entirety in accordance with their terms, Seller shall
not, anywhere in the world, itself manufacture or directly or indirectly own or
control any Person engaged in a business, or manage a business, which engages in
the manufacture of Restricted Products; provided, however, that Restricted
Products shall in no event include any non-proprietary detail component of an
End Item Assembly (as such term is defined in the Special Business Provisions
(Sustaining) or any dual-sourced minor sub-assembly parts (e.g., "Boeing
standards", screws, brackets, clips, etc.).
(b) Notwithstanding anything in Section 6.12(a) to the contrary:
(i) Nothing herein shall be construed so as to preclude Seller
and its Affiliates from owning, controlling or managing a modification,
maintenance, repair or overhaul facility (or any combination of the foregoing)
for aftermarket products.
(ii) Nothing herein shall be construed so as to preclude Seller
and its Affiliates from:
(A) continuing anywhere in the world any type of business
conducted by Seller or its Affiliates on the date hereof, which
is not part of the Business;
(B) entering into any teaming, joint venture, license or
similar agreement or relationship with a Person, except to the
extent Seller owns, controls or manages such Person, but in no
event shall the foregoing preclude the activities provided for in
Section 6.12(b)(i) above; or
(C) providing debt financing to a company, provided that
such debt financing is entered into in the ordinary course of
business by Seller or an Affiliate of Seller whose principal
business includes providing financing to third parties.
(iii) In the event Seller completes an acquisition of the
business or assets of any Person which derived more than ten percent (10%) of
its gross revenue for the immediately prior fiscal year from the sale of
Restricted Products, Seller shall, within twenty-four (24) months from such
investment or acquisition, either (A) divest such portion of the newly acquired
business which manufactures Restricted Products; or (B) cease its manufacturing
of Restricted Products. In the event Seller completes an acquisition of the
business or assets of any Person which derived less than ten percent (10%) of
its gross revenue for the immediately prior fiscal year from the sale of
Restricted Products, Seller shall be entitled to maintain ownership of such
business or assets and continue its business.
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(iv) The covenant not to compete set forth in Section 6.12(a)
shall be deemed null and void (A) as to a Restricted Product, only for such
period of time as pursuant to the terms of the relevant BCA Supply Agreement
Seller is permitted to produce such Restricted Product or obtain such Restricted
Product from an alternative source (including dual sourcing), (B) as to a
Restricted Product, if the relevant BCA Supply Agreement is terminated in
accordance with its terms with respect to such Restricted Product, (C) as to
Restricted Products other than those set forth in Attachment 1 to the Special
Business Provisions (787), if the relevant BCA Supply Agreement is terminated in
accordance with its terms in its entirety, or (D) as to the Restricted Products
set forth in Attachment 1 to the Special Business Provisions (787), to the
extent any product contemplated thereunder (1) is not required to be purchased
from Buyer or (2) is permitted to be dual sourced by Seller; provided, however,
that in the case of (A), the covenant not to compete shall only be deemed null
and void to the extent and for such time as is necessary for Seller to fulfill
its requirements pursuant to the applicable BCA Supply Agreement.
(c) For avoidance of doubt, none of the parts requirements for the
747-400 Special Freight Modification Parts shall be included in the term
Restricted Products.
(d) For a period of two (2) years after the Closing Date, Seller shall
not, directly or indirectly, cause, induce or attempt to cause or induce any
licensor of the Business on the Closing Date to cease doing business with Buyer
or knowingly interfere with its relationship with Buyer.
(e) For a period of two (2) years following the Closing Date, unless
otherwise required by a collective bargaining agreement or Boeing policy
applicable to non-union, non-management employees, Seller shall not solicit the
employment of any employee of Buyer or any Person employed by Buyer at any time
within six (6) months prior to the date of such solicitation, other than any
employee whose employment has been terminated by Buyer; provided, however, that
Seller shall not be prohibited from soliciting employees through general
advertising other than in local newspapers in Wichita or Tulsa.
(f) For a period of two (2) years following the Closing Date, unless
otherwise required by a collective bargaining agreement, Seller shall not hire,
retain or attempt to hire or retain any Person set forth under paragraph (a) of
Schedule 6.12(f) other than any employee whose employment has been terminated by
Buyer. For a period of two (2) years following the Closing Date, unless
otherwise required by a collective bargaining agreement or Boeing policy
applicable to non-union, non-management employees, Seller shall not hire, retain
or attempt to hire any employee described under paragraph (b) of Schedule
6.12(f), which paragraph will be updated prior to the Closing to list specific
names of employees, and employed by Buyer at any time within six (6) months
prior to the date of rehire by Seller; other than any employee whose employment
has been terminated by Buyer; provided that, the provisions of this Section
6.12(f) shall not apply to (A) Seller's business locations that are not on
Seller's Enterprise Staffing System (BESS), (B) employees who are rehired by
Seller as a result of administrative error where such rehiring does not have a
material effect on Buyer's business operations, or (C) employees rehired by
Seller with Buyer's prior consent.
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(g) For a period of two (2) years following Closing Date, neither
party hereto shall prohibit any consultant that performs work for the other from
performing such work, except to the extent of the prohibiting party's conflict
of interest restrictions.
(h) If a final judgment of a court or tribunal of competent
jurisdiction determines that any term or provision contained in Section 6.12(a)
through (g) is invalid or unenforceable, then the parties agree that such
provisions shall automatically be modified to reduce the scope, duration or
geographic area of the term or provision, to delete specific words or phrases or
to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision and a court or
arbitrator is hereby expressly authorized to so modify this Agreement. This
Section 6.12 will be enforceable as so modified after the expiration of the time
within which the judgment may be appealed. This Section 6.12(h) is reasonable
and necessary to protect and preserve Buyer's legitimate business interests and
the value of the Assets and to prevent any unfair advantage conferred on Seller.
6.13 Environmental Matters.
(a) Buyer's Site Assessment of Tulsa, McAlester and Wichita
Facilities.
(i) Buyer, at its expense and in its sole discretion, may engage
a nationally recognized environmental consultant to conduct a Phase I Study with
respect to any of the Facilities, on or prior to the Closing Date, upon at least
three (3) Business Days prior written notice to Seller. Buyer shall promptly
provide copies to Seller of any results (including any written report, technical
data and laboratory reports).
(ii) If, as a result of the Phase I Study, Buyer determines, in
its sole discretion, to conduct a Phase II Study with respect to a particular
Facility, Buyer shall submit a work plan for the scope of such sampling and
related work (the "Scope of Work") to Seller for review and comment. Buyer shall
review and consider Seller's comments, provided they are received by Buyer
within ten (10) Business Days of Seller's receipt of any Scope of Work.
(iii) Buyer agrees to provide to Seller at least three (3)
Business Days of prior written notice before entry of the site for Phase II
Study work conducted on or prior to the Closing Date and at least three (3)
Business Days of advance notice of any onsite work with respect to any Phase II
Study conducted after the Closing Date. Buyer shall allow Seller or its
consultants to observe and to collect split or duplicate samples, at Seller's
expense, of any and all soil, surface water and groundwater samples collected
during any Phase II Study.
(iv) Buyer shall provide copies to Seller of any written reports,
technical data and laboratory reports arising out of any Phase II Study no later
than ten (10) calendar days after Buyer receives a final Phase II Study. No
later than ten (10) calendar days after the date of the receipt of the results
of any sampling (including but not limited to split sampling), Seller shall
provide copies to Buyer of all results (including written reports, technical
data and laboratory reports) of any such sampling taken in connection with the
Phase II Study.
(v) Buyer shall conduct and complete any Phase II Study, at
Buyer's expense, within one hundred and eighty (180) calendar days of the
Closing Date.
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(vi) In accordance with Section 9, Buyer shall indemnify Seller
for any damages (including environmental harm) caused by the negligence of Buyer
or its representatives in conducting the Phase II Study. Environmental harm does
not include the discovery of contamination that existed prior to the Closing.
(vii) Sections 6.13 and 9.5 shall govern the remediation of all
matters that are disclosed by the Phase I or Phase II Studies.
(b) Wichita.
(i) Related Environmental Documents. Buyer shall enter into the
Restrictive Covenant (KDHE) on or prior to the Closing Date. The parties agree
that the Restrictive Covenant (KDHE), the Declaration of Restrictive Covenant
and Easement and the Site Access and Environmental Support Services Agreement
are to be recorded promptly after the Closing Date.
(ii) Buyer Causes or Contributes to Environmental Liability After
the Closing. Buyer is responsible for any environmental Liability to the extent
caused by Buyer, or its representatives, agents or consultants, after the
Closing Date, except to the extent described in Sections 6.13(b)(iv)(A),
(b)(iv)(B) and (b)(v) below. In the event that Buyer, or its representatives,
agents or consultants, contributes to an environmental Liability for which
Seller also has environmental Liability, each party shall be responsible for its
Proportional Allocation. The words "caused" or "contributes to" as used in this
Sections 6.13, 9.5, and 12.1 do not include the discovery of contamination that
existed on or prior to the Closing Date.
(iii) Buyer Interferes with or Damages Remediation Activities.
Buyer is responsible for damage to Seller's onsite remediation activities
resulting from Buyer's or its representative's, agent's or consultant's
interference with or damage to them. Such damage for which Buyer is responsible
(in accordance with the Proportional Allocation, if applicable) includes:
(A) the cost of repairing a damaged well;
(B) the cost of replacing damaged equipment;
(C) the cost of relocating and installing a replacement well
or other equipment;
(D) any fine or penalty, if any, incurred by Seller as the
result of Seller's noncompliance with any KDHE Orders; and
(E) third party claims (including claims for personal injury
or property damage).
The phrases "damage to" and "interference by" as used in this Section
6.13(b)(iii) do not include the discovery by Buyer of contamination that existed
on or prior to the Closing Date.
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(iv) Red Restricted Areas.
(A) Area 1 (440 Landfill).
(1) Buyer agrees not to disturb the 440 Landfill except
to conduct maintenance activities to repair the existing paved areas to their
existing condition and use, as may be reasonably necessary in response to either
normal wear and tear, or an act of God, or except as provided in Section
6.13(b)(iv)(A)(3) below.
(2) To the extent, if any, that Buyer incurs reasonable
disposal costs for Contaminated Soil resulting from environmental contamination
existing on or prior to Closing Date in connection with Buyer's effort to repair
paved areas pursuant to Section 6.13(b)(iv)(A)(1), in excess of CDL Disposal
Costs, Seller agrees to reimburse Buyer for such reasonable disposal costs in
excess of CDL Disposal Costs.
(3) To the extent, if any, that Buyer incurs reasonable
disposal costs for Contaminated Soil in excess of CDL Disposal Costs in
connection with current plans for the new autoclave for the 787 program and/or
for a possible second autoclave, Seller agrees to reimburse Buyer for such
reasonable disposal cost in excess of CDL Disposal Cost; provided: (i) the new
autoclave is installed at the location planned; and (ii) the second autoclave is
located south along the building where the first autoclave is planned to be
located and the second autoclave is not located on the 440 Landfill.
(B) Areas 2 through 7.
(1) Limited Activities. To the extent that in the
course of Buyer undertaking Limited Activities, within or contiguous to the
footprint of an existing Item located in Areas 2 through 7, Buyer incurs
reasonable disposal costs for Contaminated Soil in excess of CDL Disposal Costs
as the result of environmental contamination at the Wichita Facility existing on
or prior to the Closing Date, Seller agrees to reimburse the Buyer for such
reasonable disposal cost in excess of CDL Disposal Costs.
(2) Layered Envelope Concept. Buyer and Seller agree to
the following methodology for apportioning environmental costs related to all
activities that are conducted by Buyer within Areas 2 through 7 and which are
not Limited Activities:
(aa) Top Four (4) Feet From Ground Surface (or
From the Floor of a Building if Measured Inside a Building). Except as set forth
in Section 6.13(b)(iv)(B)(2)(cc) below, in the event that Buyer conducts
activities from ground surface (or from the floor of building if measured inside
the building) to four (4) feet below ground surface which result in disposal
costs for Contaminated Soil, Seller agrees to reimburse Buyer for all reasonable
disposal costs for Contaminated Soil resulting from Buyer's activities in excess
of CDL Disposal Costs.
(bb) From Four (4) Feet or Greater Below Ground
Surface (Or Below the Floor of a Building if Measured Inside a Building) To
Bedrock. In the event that Buyer conducts activities at a depth of four (4) feet
or greater below ground surface (or four (4) feet or greater below the floor of
a building if measured inside a building) to
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bedrock which results in disposal costs for Contaminated Soil, Buyer and Seller
agree to split equally (50/50) (subject to the limits set forth below in Section
6.13(b)(iv)(B)(2)(dd)) all reasonable disposal costs for Contaminated Soil
resulting from Buyer's activities in excess of CDL Disposal Costs.
(cc) Demolition of Existing Buildings. Except as
provided in Section 6.13(b)(iv)(B)(2)(ee) below, in the event Buyer demolishes
an existing building in Areas 2 through 7, Buyer shall be responsible for CDL
Disposal Costs. In the event that a building is completely destroyed as a result
of an act of God or Buyer demolishes an existing building located in Areas 2
through 7 because it is reasonably necessary in order to respond to an act of
God, Seller shall be responsible for all reasonable disposal costs for
Contaminated Soil in excess of CDL Disposal Costs but only to the extent
reasonably incurred in response to the act of God. In the event that Buyer
demolishes an existing building located in Areas 2 through 7 for reasons other
than that it is reasonably necessary in order to respond to an act of God, Buyer
and Seller agree to split equally (50/50) (subject to the limits set forth below
in Section 6.13(b)(iv)(B)(2)(dd)) all reasonable disposal costs for Contaminated
Soil in excess of CDL Disposal Costs.
(dd) Buyer's obligation to share equally (50/50)
all reasonable disposal costs resulting from Buyer's activities in excess of CDL
Disposal Costs pursuant to Sections 6.13(b)(iv)(B)(2)(bb) and (cc) is limited
(as used within this section, a "cap") within a single year as follows:
i. From the Closing Date through the third anniversary of the Closing
Date: $750,000
ii. Thereafter: $2 million
Seller shall pay one hundred percent (100%) of all such costs subject to the
equal (50/50) split in excess of the cap; however, if there are excess costs in
any single year above the relevant amount indicated above, the costs in excess
of the amount indicated above shall carry forward for up to four (4) additional
years and shall be paid by Buyer in any year during this four (4) year period in
which the costs for that particular year do not exceed the cap for that
particular year, but only to the extent that the current year's costs payable by
Buyer and the carried over costs do not exceed the applicable cap. Any carry
over amounts shall be applied in chronological order until the cap is reached in
any year. The cap on Buyer's responsibility for payment in any one (1) year
shall be applicable so long as Buyer has not demolished Plant 2 prior to the
seventh anniversary of the Closing Date (except for such demolition that is
reasonably necessary in order to respond to an act of God).
(ee) Asbestos Abatement. In the event that Buyer's
activities in Areas 2 through 7 result in asbestos abatement, other than if
reasonably necessary in order to respond to an act of God, Buyer shall be
responsible for one hundred percent (100%) of all removal costs related thereto.
In the event that as a result of an act of God it is reasonably necessary for
Buyer to demolish all or a portion of a building in Areas 2 through 7, if
asbestos removal is legally required, Seller shall be responsible for one
hundred percent
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(100%) of the asbestos removal costs related thereto but only to the extent the
demolition is reasonably necessary in order to respond to the act of God.
(ff) Lead Contaminated Demolition Debris. In the
event that Buyer's activities in Areas 2 through 7 result in disposal costs for
demolition debris contaminated with lead, other than if reasonably necessary in
order to respond to an act of God, Buyer shall be responsible for one hundred
percent (100%) of all disposal costs related thereto. In the event that as a
result of an act of God, it is reasonably necessary for Buyer to demolish all or
a portion of a building in Areas 2 through 7, Seller shall be responsible for
all reasonable disposal costs for demolition debris contaminated with lead in
excess of CDL Disposal Costs for such debris but only to the extent reasonably
incurred in response to the act of God.
(v) Outside Red Restricted Areas.
(A) Buyer Responsibility. In the event that Buyer conducts
activities at the Wichita Facility outside of the Red Restricted Areas which
result in disposal costs for Contaminated Soil, Buyer is responsible for
disposal costs equal to the CDL Disposal Costs.
(B) Seller Responsibility. In the event that Buyer conducts
activities at the Wichita Facility outside the Red Restricted Areas which result
in disposal costs for Contaminated Soil, Seller is responsible for disposal
costs in excess of CDL Disposal Costs.
(vi) Conditions to Seller Reimbursement of Buyer. Seller's
obligations to reimburse Buyer under Sections 6.13(b)(iv)(A)(2), (iv)(A)(3),
(iv)(B)(1), (iv)(B)(2)(aa), (iv)(B)(2)(bb), (iv)(B)(2)(cc) and (v)(B) are
subject to the following conditions and obligations:
(A) Buyer Duty to Minimize Disposal Costs. In the event that
Contaminated Soil is encountered, Buyer agrees to review with Seller in advance
of any construction activity which may disturb Contaminated Soil Buyer's
proposal for managing such Contaminated Soil. Buyer agrees to minimize the costs
of disposing of Contaminated Soil by: (1) limiting to the maximum extent
reasonably practicable the size of the disturbance; (2) identifying and
segregating Contaminated Soil and uncontaminated soil to minimize disposal
costs; and (3) identifying other mitigating measures for reducing disposal
costs, including onsite reuse and/or disposal. Buyer also agrees to allow Seller
to observe the construction and segregation activity.
(B) Buyer Duty to Reuse. Buyer agrees to reuse and/or
dispose of excavated soil onsite to the maximum extent reasonably practicable
and in accordance with applicable Law.
(C) Removal of Additional Material. With respect to any soil
excavation project, Seller may request Buyer to remove additional Contaminated
Soil at Seller's expense, which request shall not be unreasonably denied.
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In addition, Seller's obligations do not include the obligation to pay disposal
costs in excess of CDL Disposal Costs to the extent such excess cost was the
result of new or additional contamination caused or contributed to by Buyer, or
its representatives, agents or consultants, after the Closing Date (in which
case the allocation of responsibility shall be the Proportional Allocation.)
Finally, Seller's obligation to pay Buyer pursuant to this Section 6.13 shall be
subject to the provisions of Sections 9.3 through 9.9, as applicable.
(c) Tulsa and McAlester.
(i) Environmental Liabilities Caused or Contributed to
Post-Closing. If Buyer or any of its representatives, agents or consultants,
causes an environmental Liability post-closing at the Facilities located in
Tulsa or McAlester, Oklahoma, Buyer shall be responsible for the environmental
Liability caused. In the event that Buyer, or any of its representatives, agents
or consultants, contributes to any environmental Liability at the Facilities
located in Tulsa or McAlester, Oklahoma, for which Seller also has environmental
Liability, each party shall be responsible for its Proportional Allocation.
(ii) Pre-Closing Environmental Liabilities.
(A) Seller will indemnify Buyer for known pre-Closing
environmental Liabilities and for any Identified Environmental Liabilities from
the Phase I or Phase II environmental site assessment.
(B) Seller will indemnify Buyer for pre-Closing unknown
environmental Liabilities that exist on or prior to the Closing Date for which
notice is given within seven and one-half (7 1/2) years after the Closing Date
and Buyer agrees it will not search for environmental Liabilities (other than as
set forth in Section 6.13(a) above) unless required by Law or discovered in the
ordinary course of Business. Contamination is "discovered in the ordinary course
of business" if the discovery of the contamination is the result of conducting
commercially reasonable operational requirements of the Business, including
conducting a visual inspection of the Facility.
6.14 Actuarial Determination Difference. Schedule 6.2(f) sets forth
procedures to be utilized in calculating the Determination and for Buyer's
actuary to dispute the "Determination" (as defined in Section 3(a) of Schedule
6.2(f)). Seller shall pay to Buyer an amount, if any, equal to the "Actuarial
Determination Difference" determined in accordance with the following provisions
of this Section 6.14. If, thirty (30) days after "Notice" (as defined in Section
3(a) of Schedule 6.2(f)) is received by Seller, there is an amount remaining in
dispute that is less than or equal to two percent (2%) of the aggregate
Determination for all of Seller's Pension Plans, the Actuarial Determination
Difference shall be an amount equal to one half (1/2) of the amount remaining in
dispute after the actuaries for Seller and Buyer have attempted in good faith to
reach agreement to resolve all of the disputes set forth in the Notice;
provided, however, if the assets of any of Seller's Pension Plans are
transferred pursuant to Section 2(a) of Schedule 6.2(f) ("De Minimis
Transfers"), the Actuarial Determination Difference shall be the amount
determined pursuant to the following formula:
(.50 x A) x B
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Where "A" represents the percentage difference between the aggregate
Determination and Buyer's actuary's aggregate determination, (i.e., 2% or less),
each after the actuaries for Seller and Buyer have attempted in good faith to
reach agreement to resolve all of the disputes set forth in the Notice, and "B"
represents the portion of the Determination that consists of liabilities under
those of Seller's Pension Plans that transfer other than as De Minimis
Transfers. The Actuarial Determination Difference shall be paid by Seller to
Buyer within sixty (60) days after "Notice" by a wire transfer of immediately
available U.S. funds to one or more accounts designated in writing by Buyer, or,
if such designation has not occurred by that date, within four (4) days after
such designation of one or more accounts.
6.15 Export Controls. Buyer agrees to comply with and accept all
Liabilities arising out of or relating to any noncompliance with applicable
export control Laws of the United States and of any other country having lawful
jurisdiction over Buyer's export-related activities. Buyer shall not (a) export
any items from the United States or (b) disclose to any foreign entity (not
incorporated in the United States) or to any foreign national who is not a
lawful permanent resident of the United States (i.e., who is not a U.S. citizen
or a "green card" holder), either in the United States or otherwise, any
export-controlled or proprietary information unless Buyer has obtained all
necessary and proper export authorization.
6.16 Future Conveyances. Buyer and Seller shall cooperate to insure
prompt conveyance by (i) Seller to Buyer of an Asset not conveyed to Buyer at
Closing, and (ii) Buyer to Seller of any asset conveyed to Buyer at Closing or
remaining at the Facility that is not an Asset. In addition, Buyer and Seller
shall cooperate to insure that assets subleased pursuant to the Sublease (IRBs)
(i) include assets that, were they owned by Seller and not leased pursuant to
the Lease Agreement (as defined in the Sublease (IRBs)), would be Assets as
determined under the provisions of Section 1.1 hereof (other than Section
1.1(a)(xvii) therein contained), and (ii) do not include other assets.
6.17 Audited 2001 Financials. Promptly after the Closing, Seller shall
deliver to Buyer (at Seller's sole expense) an audited statement of assets to be
acquired and liabilities to be assumed of the Business as of December 31, 2001,
and the related statement of products shipped and operating expenses of the
Business for the fiscal year then ended, together with the report thereon of
Deloitte & Touche, LLP, Seller's independent certified public accountants, which
report shall contain no limitations or qualifications as to scope or otherwise
and no exceptions and shall state specifically that such statements fairly
present in all material respects the financial condition of the Business in
accordance with GAAP, and the notes to such financial statements shall indicate
that a value for Spares Inventory is not included in such financial statements.
6.18 Damaged Assets. If any asset of Seller that would be included in
the Assets is damaged or destroyed as of the date hereof or is damaged between
the date of this Agreement and Closing and is not repaired or replaced on or
prior to the Closing Date, Seller agrees either to promptly repair or replace
such Asset or to provide Buyer with an amount of cash equivalent to the
insurance proceeds Seller would be entitled to receive under its applicable
insurance policy for the damage or destruction.
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6.19 Estoppel Certificates. Seller will use commercially reasonable
efforts to obtain and deliver to Buyer at or prior to Closing an original
executed estoppel certificate from every lessor, ground lessor or sublessor
under each Lease with respect to the Facility in Tulsa, Oklahoma, certifying
that the applicable Lease is in full force and effect without modification
(except as noted therein), the date(s) to which rent and other charges have been
paid, that there is no default thereunder on the part of any party thereto, the
amount of security deposit, if any, being held by lessor thereunder and such
further matters as may be reasonably requested by Buyer or Buyer's lender.
6.20 Buyer's Capital Structure. As of the Closing Date, Buyer shall
have equity in an amount which represents at least thirty percent (30%) of the
sum of Buyer's Liabilities for borrowed money (excluding any Assumed
Liabilities) plus all equity, but in any event equity of no less than three
hundred seventy-five million dollars ($375,000,000). Upon Seller's reasonable
request, Buyer agrees to promptly provide Seller with the information reasonably
necessary in order for Seller to determine Buyer's compliance with the terms of
this covenant.
6.21 Assignment of R&D Inventions.
(a) Buyer shall promptly make full written disclosure to Seller, hold
in trust for the sole right and benefit of Seller, and assign to Seller, as
Seller's sole and exclusive property, all of Buyer's right, title, and interest
in and to any and all inventions, original works of authorship, developments,
concepts, improvements or trade secrets, whether or not patentable or
registrable under copyright or similar laws, which Buyer may solely or jointly
conceive or develop or reduce to practice, or cause to be conceived or developed
or reduced to practice (collectively referred to as "Inventions"), pursuant to
any research and development activities performed by Buyer at Seller's express
request (which may be in writing or oral, and which includes research and
development activities commenced by Seller prior to the Closing Date) and in
respect of which payment is made by Seller, including but not limited to
research and development, manufacturing research and development, etc. (the "R&D
Inventions"), and Buyer hereby assigns all of its right, title and interest in
such R&D Inventions to Seller; provided, however, to the extent another written
agreement between Buyer and Seller (and/or Seller's Affiliates) specifies that
Seller (or Seller's Affiliates) shall not own such Inventions, that other
agreement shall control as to such Inventions and to such extent, such
Inventions shall not be considered R&D Inventions. Buyer further acknowledges
that all original works of authorship which are made by it (solely or jointly
with others) pursuant to such research and development activities and which are
protectible by copyright (collectively referred to as "Projects") are "works
made for hire," as that term is defined in the Copyright Act, and therefore,
Seller shall be the author and copyright owner thereof for all purposes
throughout the universe.
(b) If any provision of Section 6.21(a) does not operate to fully vest
in Seller any or all of the rights set forth in Section 6.21(a), Buyer hereby
irrevocably grants, conveys, and assigns to Seller and Seller's successors,
licensees and assigns all right, title, and interest in and to each Project and
each R&D Invention, and the results and proceeds thereof, including all renewal
and extension periods of such rights, if any, throughout the universe in
perpetuity. Buyer further agrees that it will not seek (i) to challenge, through
the courts, administrative governmental bodies, private organizations, or in any
other manner the rights of Seller to exploit
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the Projects or R&D Inventions by any means whatsoever or (ii) to thwart, hinder
or subvert the intent of the grants and conveyances to Seller herein and/or the
collection by Seller of any proceeds relating to the rights conveyed hereunder.
(c) Buyer shall execute, verify, acknowledge and deliver to Seller or
shall cause to be executed, verified, acknowledged, or delivered to Seller after
receipt of and a reasonable amount of time to review the same, at Seller's
request and expense, such assignments, certificates of authorship or other
documents consistent herewith as Seller may from time to time deem reasonably
necessary or desirable to evidence, establish, maintain, protect, enforce and/or
defend any or all of Seller's rights under this Section 6.21. If Buyer fails for
any reason to execute and deliver any such document within a reasonable time
following Seller's request therefor, Seller shall have the right to execute,
file and record said document in Buyer's name, place and stead, and Buyer hereby
irrevocably appoints Seller as its attorney-in-fact solely for such purposes,
which power is coupled with an interest, with rights of substitution and
delegation. Seller shall deliver to Buyer a copy of any document so executed.
(d) Nothing in this Section 6.21 obligates Buyer to accept a request
by Seller for Buyer to perform research and development activities or to
continue research and development activities in process on the Closing Date
except pursuant to a written agreement between Seller and Buyer.
SECTION 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall, at the option of
Buyer, be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
7.1 No Misrepresentation or Breach of Covenants and Warranties. The
representations and warranties of Seller made in this Agreement shall be true
and correct in all respects, both (i) as of the date hereof and (ii) on and as
of the Closing Date, as though made on such date, (x) except for those
representations and warranties which refer to facts existing at a specific date,
which shall be true and correct as of such specific date, (y) except as
specifically contemplated by this Agreement and (z) except to the extent any
breaches of such representations and warranties, read without giving effect to
the words "material," "materially," "Material Adverse Effect" or words of
similar import, would not be reasonably likely in the aggregate to have a
Material Adverse Effect. Seller shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Seller on or prior to the Closing Date; there
shall not have been any Material Adverse Effect from the date hereof to the
Closing Date; and Seller shall have delivered to Buyer a certificate dated the
Closing Date and signed by an authorized officer of Seller confirming the
foregoing.
7.2 Necessary Governmental Approvals. All Permits and actions of or by
all Governmental Authorities which are necessary to consummate the transactions
contemplated hereby or are necessary to allow Buyer to operate the Business from
and after the Closing as currently conducted shall have been obtained or taken
place, other than those as to which the failure to have been obtained or taken
place would not reasonably be expected to have a Material Adverse Effect.
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7.3 Deliveries by Seller. Seller shall have delivered to Buyer at
Closing all the items specified to be delivered by Seller in Section 2.3.
7.4 No Injunction. There shall not be in effect on the Closing Date
any Court Order restraining or enjoining the carrying out of this Agreement or
the consummation of the transactions contemplated by this Agreement.
7.5 Required Consents. The consents, approvals, waivers and notices
set forth on Schedule 7.5 (collectively, the "Required Consents") shall have
been obtained and delivered to Buyer, and shall be in full force and effect.
7.6 HSR Waiting Period; CFIUS. The waiting period under the HSR Act
shall have expired or been terminated, and Buyer shall have received written
notice from CFIUS of its determination pursuant to the Exon-Florio Amendment not
to undertake an investigation of the transactions contemplated by this
Agreement.
7.7 Title Insurance and Surveys. At the Closing, Lawyer's Title
Insurance Company (the "Title Company") shall have delivered to Buyer policies
of title insurance, or an irrevocable commitment to issue such policies, in
accordance with the following: (a) an owner's title insurance policy with
respect to the Owned Property (exclusive of the IDS Site), insuring that Buyer
has good and marketable fee simple title in and to each parcel of Owned Property
together with all rights, easements and privileges appurtenant thereto
(exclusive of the IDS Site) and (b) a leasehold title insurance policy with
respect to the Leased Property, insuring that Buyer has good and marketable
leasehold title in and to each parcel of Leased Property together with all
rights, easements and privileges appurtenant thereto, in each case free and
clear of all Encumbrances other than Permitted Encumbrances (collectively, the
"Title Policies"). The Title Policies shall contain such endorsements and
affirmative coverages as Buyer shall identify on Schedule 7.7 attached hereto
and, with respect to title matters and surveys not provided to Buyer as of the
date hereof, such additional endorsements and affirmative coverages as Buyer
shall reasonably request in writing. Seller shall provide all such affidavits,
indemnities (in respect of title), memoranda, assignments, documents and
information, whether from Seller or other Persons, in such form as Seller shall
reasonably approve and as the Title Company reasonably shall require in order to
(i) issue the Title Policies with the coverage required herein, (ii) omit from
the Title Policies standard title objections customarily omitted on the basis of
title affidavits and documentation delivered by Seller (including, without
limitation, exceptions as to parties in possession and liens for work performed
at the property), and (iii) evidence Seller's authority, and the authority of
the Person or Persons executing the conveyance documents on behalf of Seller, to
consummate the transactions with respect to the Facilities. Buyer shall bear the
cost of the title premiums for such Title Policies and Seller shall bear the
cost of obtaining and recording such memoranda of leases, lease assignments and
other documents as are required by the Title Company in order to issue the Title
Policies with the coverages and endorsements required herein. Buyer, at Seller's
expense shall have received a current survey from Professional Engineering
Corporation, in a form reasonably acceptable to Buyer, of the Facility located
in McAlester, Oklahoma, or such portion thereof, as deemed advisable by Buyer in
its sole discretion, certified to Buyer, Buyer's lender and the Title Company
(the "Oklahoma Survey"). Seller shall have delivered to Buyer a survey of the
Wichita Site prepared by Professional Engineering Corporation, dated not more
than thirty (30) days prior to the Closing, certified to
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Buyer, Buyer's lender, the Title Company and such other parties as Buyer may
designate (the "Wichita Survey"; together with the Oklahoma Survey, the
"Surveys"). Each Survey shall comply with the minimum detail requirements for
land title surveys as adopted by the American Land Title Association and the
American Congress on Surveying and Mapping. Neither the Wichita Survey nor any
other Survey shall disclose (x) Encumbrances other than Permitted Encumbrances,
(y) material shortages in area or conflicts or discrepancies in boundary lines
or (z) uninsurable encroachments of improvements, facilities or other structures
across or over boundary lines, easement areas or rights-of-way.
7.8 The IDS Transaction. The IDS Transaction shall have been
consummated.
7.9 Litigation. There shall not be pending or threatened against
Seller or Buyer or any of their respective Affiliates (a) any Proceeding by any
Governmental Authority that may have the effect of preventing, hindering,
delaying, or making illegal any of the transactions contemplated by this
Agreement, or limiting or otherwise interfering with the ownership or control of
Buyer by Onex Corporation or Onex Partners, LP, (b) any Proceeding by any
Governmental Authority seeking material damages or other material relief against
Buyer or any of its Affiliates in connection with any of the transactions
contemplated by this Agreement, or (c) any Proceeding by any third party
(excluding any Governmental Authority) (i) involving any challenge to, or
seeking damages or other relief in connection with, any of the transactions
contemplated by this Agreement, which Buyer reasonably believes is likely to
prevail and either have a material and adverse effect on the transactions
contemplated by this Agreement or limit the ownership or control of Buyer by
Onex Corporation or Onex Partners, LP, or (ii) that may have the effect of
preventing, hindering, delaying, making illegal, imposing limitations or
conditions on or otherwise interfering with any of the transactions contemplated
by this Agreement, which Buyer reasonably believes is likely to prevail and
would have a material and adverse effect on the Business.
7.10 Due Diligence. Buyer's findings in its due diligence
investigation of the Business with respect to the items listed on Schedule 7.10
shall be satisfactory to Buyer in its sole discretion, determined in good faith.
7.11 Financing. Buyer shall have received the proceeds of its debt
financing in substantially the amount and form of debt financing described in
the Financing Commitment.
7.12 Collective Bargaining Agreements; Acceptance of Employment
Offers. With respect to each of the unions set forth on Schedule 7.12, either
(i) such union shall have delivered to Buyer a fully ratified and effective
collective bargaining agreement which collective bargaining agreement shall be
satisfactory to Buyer in its sole discretion covering the Hired Employees
represented by such union prior to the Closing, or (ii) a sufficient number of
employees represented by such union to allow Buyer to effectively operate the
Business as conducted as of the Closing Date, as determined by Buyer in its sole
discretion, shall have accepted unconditional offers of employment from Buyer on
terms and conditions of employment determined by Buyer in its sole discretion
without the existence of an effective collective bargaining agreement covering
such employees.
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7.13 Acceptance of Employment Offers. A sufficient number of employees
shall have accepted employment with Buyer to allow Buyer to effectively operate
the Business as conducted as of the Closing Date, as determined by Buyer in its
sole discretion.
7.14 McConnell Air Force Base. Buyer shall have entered into both (a)
a memorandum of understanding regarding Buyer's use of the McConnell Air Force
Base runways and (b) a memorandum of understanding regarding security
requirements for McConnell Air Force Base, each with the Department of the Air
Force in a form reasonably acceptable to Buyer. In addition, Seller shall have
either (a) entered into an amended Air Force Easement for Use of Flight
Activities on McConnell Air Force Base with the Department of the Air Force in a
form reasonably acceptable to Buyer or (b) Buyer shall have received a new Air
Force Easement for Use of Flight Activities on McConnell Air Force Base from the
Department of the Air Force in a form reasonably acceptable to Buyer.
7.15 Utility Infrastructure. Buyer shall have entered into a Lease of
Electrical Distribution Equipment and an Electrical Service Agreement, both with
Westar in a form reasonably acceptable to Buyer. In addition, the Amendment No.
3 to Tenants-In-Common Management Agreement and the Amendment No. 4 to
Tenants-In-Common Management Agreement, both with respect to the natural gas
supply distribution agreement, shall have been entered into by the appropriate
parties.
7.16 Audited Financial Statements. Seller shall have delivered to
Buyer the Audited Financial Statements and the reports of Deloitte & Touche, LLP
required by Section 5.11, and the Audited Financial Statements for each time
period required hereunder shall not differ in the aggregate in any material
respect from the Unaudited Financial Statements for that same time period. Buyer
shall have completed preparation of the Audited 2004 Financial Statements. If
the Closing has not occurred on or prior to April 30, 2005, Seller shall have
delivered to Buyer an unaudited statement of assets to be acquired and
liabilities to be assumed of the business as of March 31, 2005, and the related
statement of products shipped and operating expenses of the Business for the
three (3) month period then ended.
7.17 Export Licenses. Export licenses in the name of Buyer replacing
the export licenses set forth on Schedule 7.17 and export licenses described as
"in work" on Schedule 7.17 shall have been obtained by Buyer.
Notwithstanding the failure of any one or more of the foregoing
conditions in this Section 7, Buyer may proceed with the Closing without
satisfaction, in whole or in part, of any one or more of such conditions and
without written waiver.
SECTION 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement shall, at the option of
Seller, be subject to the satisfaction, on or prior to the
Closing Date, of the following conditions:
8.1 No Misrepresentation or Breach of Covenants and Warranties. The
representations and warranties of Buyer made in this Agreement shall be true and
correct in all respects, both (i) as of the date hereof and (ii) on and as of
the Closing Date, as though made on such date, (x) except for those
representations and warranties which refer to facts existing at a
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specific date, which shall be true and correct as of such specific date, (y)
except as specifically contemplated by this Agreement and (z) except to the
extent any breaches of such representations and warranties, read without giving
effect to the words "material," "materially," "material adverse effect" or words
of similar import, would not be reasonably likely in the aggregate to have a
material adverse effect on Buyer's ability to consummate the transactions
contemplated hereby. Buyer shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Buyer on or prior to the Closing Date; and Buyer
shall have delivered to Seller a certificate dated the Closing Date and signed
by an authorized officer of Buyer confirming the foregoing.
8.2 Necessary Governmental Approvals. All Permits and actions of or by
all Governmental Authorities which are necessary to consummate the transactions
contemplated hereby shall have been obtained or taken place, other than those as
to which the failure to have been obtained or taken place would not reasonably
be expected to have a material adverse effect on Buyer's ability to consummate
the transactions contemplated hereby.
8.3 Payment of Tentative Purchase Price. Buyer shall have paid to
Seller the Tentative Purchase Price, as adjusted pursuant to Section 1.7(a),
required to be paid pursuant to Section 1.3.
8.4 Delivery by Buyer. Buyer shall have delivered to Seller at Closing
all the items specified to be delivered by Buyer in Section 2.2.
8.5 Required Consents. The Required Consents shall have been obtained
and shall be in full force and effect.
8.6 No Injunction. There shall not be in effect on the Closing Date
any Court Order restraining or enjoining the carrying out of this Agreement or
the consummation of the transactions contemplated by this Agreement.
8.7 HSR Waiting Period; CFIUS. The waiting period under the HSR Act
shall have expired or terminated, and Buyer shall have received written notice
from CFIUS of its determination pursuant to the Exon-Florio Amendment not to
undertake an investigation of the transactions contemplated by this Agreement.
8.8 Litigation. There shall not be pending or threatened against
Seller or Buyer or any of their respective Affiliates (a) any Proceeding by any
Governmental Authority that may have the effect of preventing, hindering,
delaying, or making illegal any of the transactions contemplated by this
Agreement, or limiting or otherwise interfering with the ownership or control of
Buyer by Onex Corporation or Onex Partners, LP, (b) any Proceeding by any
Governmental Authority seeking material damages or other material relief against
Seller or any of its Affiliates in connection with any of the transactions
contemplated by this Agreement, or (c) any Proceeding by any third party
(excluding any Governmental Authority) (i) involving any challenge to, or
seeking damages or other relief in connection with, any of the transactions
contemplated by this Agreement, which Seller reasonably believes is likely to
prevail and either have a material and adverse effect on the transactions
contemplated by this Agreement or limit the ownership or control of Buyer by
Onex Corporation or Onex Partners, LP, or (ii) that may
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have the effect of preventing, hindering, delaying, making illegal, imposing
limitations or conditions on or otherwise interfering with any of the
transactions contemplated by this Agreement, which Seller reasonably believes is
likely to prevail and would have a material and adverse effect on the Business.
8.9 Sufficient Employees. A sufficient number of employees shall have
accepted employment with Buyer to allow Buyer to effectively operate the
Business as conducted as of the Closing Date, as determined by Seller in its
sole discretion.
8.10 McConnell Air Force Base. Seller shall have entered into both (a)
a memorandum of understanding regarding Seller's use of the McConnell Air Force
Base runways and (b) a memorandum of understanding regarding security
requirements for McConnell Air Force Base, each with the Department of the Air
Force in a form reasonably acceptable to Seller.
8.11 Utility Infrastructure. Seller shall have entered into an
Electrical Service Agreement with Westar and Buyer shall have entered into a
Lease of Electrical Distribution Equipment with Westar, both in a form
reasonably acceptable to Seller. In addition, the Amendment No. 3 to
Tenants-In-Common Management Agreement and the Amendment No. 4 to
Tenants-In-Common Management Agreement, both with respect to the natural gas
supply distribution agreement shall have been entered into by the appropriate
parties.
8.12 Buyer's Capital Structure. On the Closing Date, Buyer shall have
equity in an amount which represents at least thirty percent (30%) of the sum of
Buyer's Liabilities for borrowed money (excluding any Assumed Liabilities) plus
all equity, but in any event equity of no less than three hundred seventy-five
million dollars ($375,000,000).
8.13 Export Licenses. Export licenses in the name of Buyer replacing
the export licenses set forth on Schedule 7.17 and export licenses described as
"in work" on Schedule 7.17 shall have been obtained by Buyer.
8.14 Total Leverage Ratio. Seller, in its sole discretion, shall be
satisfied with the Total Leverage Ratio (as defined in the Financing Commitment)
agreed to by Buyer and Citicorp North America, Inc.
Notwithstanding the failure of any one or more of the foregoing
conditions in this Section 8, Seller may proceed with the Closing without
satisfaction, in whole or in part, of any one or more of such conditions and
without written waiver.
SECTION 9 INDEMNIFICATION
9.1 Indemnification by Seller.
(a) After the Closing Date, and subject to the limitations set forth
herein and except with respect to the matters that are the subject of Section
9.5, Seller agrees to indemnify, defend and hold harmless each Buyer Group
Member from and against any and all losses, Liabilities, damages, costs and
expenses, including costs of investigation and defense and reasonable fees and
expenses of lawyers, experts and other professionals (collectively,
"Indemnifiable Damages"), incurred by such Buyer Group Member in connection with
or arising
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from: (i) any breach of any warranty or the inaccuracy of any representation of
Seller contained in this Agreement or any certificate delivered by or on behalf
of Seller pursuant hereto, (ii) the IDS Transaction, (iii) any breach by Seller
of, or failure by Seller to perform, any of its covenants or obligations
contained in this Agreement, (iv) the Excluded Liabilities, or (v) any
noncompliance with any bulk sales Laws or fraudulent transfer Laws in respect of
the transactions contemplated hereby. Notwithstanding the foregoing, Seller
shall not be required to indemnify and hold harmless Buyer Group Members in
respect of any claim under clause (i) of this Section 9.1(a) (and that does not
involve fraud or willful breach by Seller) or pursuant to a breach of the
covenant set forth in Section 5.3(b)(xix), (A) unless and until Indemnifiable
Damages in an aggregate amount greater than ten million dollars ($10,000,000)
(the "Deductible") have been incurred, paid or accrued, in which case the
applicable Buyer Group Member(s) may make claims for indemnification for only
Indemnifiable Damages that exceed the Deductible or (B) for any individual claim
for which Indemnifiable Damages do not exceed fifteen thousand dollars ($15,000)
(the "De Minimis Amount"), which shall not be applied against the Deductible (if
a claim exceeds the De Minimis Amount, the entire amount of such claim is
applied against the Deductible); provided, however, that the De Minimis Amount
limitation shall be applied collectively to repetitive or multiple claims from
the same source; and provided, further, that the aggregate amount required to be
paid by Seller pursuant to Section 9.1(a)(i) or pursuant to a breach of the
covenant set forth in Section 5.3(b)(xix) shall not exceed one hundred million
dollars ($100,000,000) (the "Maximum Amount"). Notwithstanding the foregoing,
the Deductible and the Maximum Amount shall not apply to a claim to recover
Indemnifiable Damages arising out of any breach of any warranty or the
inaccuracy of any representation contained in Sections 3.5, 3.8, 3.12(a), 3.13,
3.14(b)(i) and 3.14(c) or the breach of the covenant set forth in Section
5.3(b)(xix) with respect to such representations.
(b) The period for making claims under Section 9.1(a)(i) and Section
5.3(b)(xix) shall terminate eighteen (18) months after the Closing Date (and no
claims shall be made by any Buyer Group Member under Section 9.1(a)(i) or
Section 5.3(b)(xix) thereafter), except that the indemnification by Seller shall
continue as to (i) the representations and warranties of Seller set forth in
Sections 3.5, 3.14(b)(i) and 3.14(c), until thirty (30) days after the
expiration of the relevant statutory period of limitations applicable to the
underlying claim, giving effect to any waiver, mitigation or extension thereof,
(ii) the representations and warranties of Seller set forth in Sections 3.12(a),
until seven (7) years after the Closing Date, (iii) the representation and
warranty of Seller set forth in Section 3.13, indefinitely, (iv) the covenant
set forth in Section 5.3(b)(xix), until the expiration of the period to bring
claims with respect to the relevant representation and warranty, and (v) any
claims asserted by Buyer prior to the expiration of such eighteen (18) month
period.
9.2 Indemnification by Buyer.
(a) After the Closing Date, and subject to the limitations set forth
herein and except with respect to the matters that are the subject of Section
9.5, Buyer agrees to indemnify, defend and hold harmless each Seller Group
Member from and against any and all Indemnifiable Damages incurred by such
Seller Group Member in connection with or arising from: (i) any breach of any
warranty or the inaccuracy of any representation of Buyer contained in this
Agreement or in any certificate delivered by or on behalf of Buyer pursuant
hereto, (ii) any breach by Buyer of, or failure by Buyer to perform, any of its
covenants and obligations
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contained in this Agreement, (iii) the Assumed Liabilities, (iv) Buyer's
operation of the Business after the Closing or (v) Buyer's employment decisions
that were or are made with respect to current or former employees of the
Business which relate or allegedly relate to the involvement of, or consultation
with, employees of Seller in such employment decisions. Notwithstanding the
foregoing, Buyer shall not be required to indemnify and hold harmless Seller
Group Members in respect of any claim under clause (i) of this Section 9.2(a)
(and that does not involve fraud or willful breach by Buyer), (A) unless and
until Indemnifiable Damages in an aggregate amount greater than the Deductible
have been incurred, paid or accrued, in which case the applicable Seller Group
Member(s) may make claims for indemnification for only Indemnifiable Damages
that exceed the Deductible or (B) for any individual claim for which
Indemnifiable Damages do not exceed the De Minimis Amount, which shall not be
applied against the Deductible (if a claim exceeds the De Minimis Amount, the
entire amount of such claim is applied against the Deductible; provided,
however, that the De Minimis Amount limitation shall be applied collectively to
repetitive or multiple claims from the same source; and provided, further, that
the aggregate amount required to be paid by Buyer pursuant to Section 9.2(a)(i)
shall not exceed the Maximum Amount. Notwithstanding the foregoing, the
Deductible and the Maximum Amount shall not apply to a claim to recover
Indemnifiable Damages arising out of any breach of any warranty or the
inaccuracy of any representation contained in Sections 4.5, 4.7, 4.9 and 4.10.
(b) The period for making claims under Section 9.2(a)(i) shall
terminate eighteen (18) months years after the Closing Date (and no claims shall
be made by any Seller Group Member under Section 9.2(a)(i) thereafter), except
that the indemnification by Buyer as to the representations and warranties of
Buyer set forth in Sections 4.5, 4.9 and 4.10 shall survive indefinitely.
9.3 Notice of Claims.
(a) Any Buyer Group Member or Seller Group Member seeking
indemnification hereunder (the "Indemnified Party") shall give promptly to the
party obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") a written notice (a "Claim Notice") describing in reasonable
detail the facts giving rise to the claim for indemnification hereunder and
shall include in such Claim Notice (if then known) the amount or the method of
computation of the amount of such claim, and a reference to the provision of
this Agreement or any other agreement, document or instrument executed hereunder
or in connection herewith upon which such claim is based; provided, however,
that the failure of any Indemnified Party to give the Claim Notice as required
by this Section 9.3(a) shall not affect such Indemnified Party's rights under
this Section 9 except if such failure resulted in a claim being made after the
time periods provided for in Sections 9.1(b) and 9.2(b), if applicable, or to
the extent such failure is actually prejudicial to the rights and obligations of
the Indemnitor.
(b) In calculating any Indemnifiable Damages there shall be deducted
(i) any insurance benefits and proceeds actually collected (collectively,
"Insurance Benefits") in respect thereof (and no right of subrogation shall
accrue hereunder to any insurer) with an offset for any demonstrable premium
increase; (ii) any indemnification, contribution or other similar payment
actually recovered by the Indemnified Party from any third party with respect
thereto; and (iii) any Tax benefit or refund actually received or enjoyed by,
the applicable Indemnified Party as a result of such Indemnifiable Damages net
of any Tax cost to be borne by the Indemnified
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Party as a result of such indemnification payment. Any such amounts or benefits
received by an Indemnified Party with respect to any indemnity claim after it
has received an indemnity payment hereunder shall be promptly paid over to the
Indemnitor, but not in excess of the amount paid by the Indemnitor to the
Indemnified Party with respect to such claim.
(c) After the giving of any Claim Notice pursuant hereto, the amount
of indemnification to which an Indemnified Party shall be entitled under this
Section 9 shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any
court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have expired
and no appeal shall have been taken or when all appeals taken shall have been
finally determined. The Indemnified Party shall have the burden of proof in
establishing the amount of Indemnifiable Damages suffered by it. All amounts due
to the Indemnified Party as so finally determined shall be paid by wire transfer
within five (5) Business Days after such final determination.
9.4 Third Person Claims.
(a) An Indemnified Party must notify the Indemnitor in writing, and in
reasonable detail, of a third Person claim for which the Indemnified Party is
seeking indemnification hereunder promptly after receipt by such Indemnified
Party of written notice of the third Person claim; provided, however, that the
failure of any Indemnified Party to give such notice as required by this Section
9.4(a) shall not affect such Indemnified Party's rights under this Section 9,
except if such failure resulted in a claim being made after the time periods
provided in Sections 9.1(b) or 9.2(b), if applicable, or to the extent such
failure is actually prejudicial to the rights and obligations of the Indemnitor.
Thereafter, the Indemnified Party shall deliver to the Indemnitor, within five
(5) calendar days after the Indemnified Party's receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnified Party
relating to the third Person claim. Notwithstanding the foregoing, should a
party be physically served with a complaint with regard to a third Person claim,
the Indemnified Party must notify the Indemnitor with a copy of the complaint
within five (5) calendar days after receipt thereof and shall deliver to the
Indemnitor within five (5) calendar days after the receipt of such complaint
copies of notices and documents (including court papers) received by the
Indemnified Party relating to the third Person claim (or in each case such
earlier time as may be necessary to enable the Indemnitor to respond to the
court Proceedings on a timely basis); provided, however, that the failure of any
Indemnified Party to give such notice promptly as required by this Section
9.4(a) shall not affect such Indemnified Party's rights under this Section 9,
except if such failure resulted in a claim being made after the time periods
provided in Sections 9.1(b) or 9.2(b), if applicable, or to the extent such
failure is actually prejudicial to the rights and obligations of the Indemnitor.
(b) In the event of the initiation of any legal Proceeding against the
Indemnified Party by a third Person, the Indemnitor shall have the sole and
absolute right after the receipt of notice, at its option and at its own
expense, to be represented by counsel of its choice that Indemnitor selects
using the same standard of care and processes that it uses for selecting counsel
in any other similar matters and to control, defend against, negotiate, settle
or otherwise deal with any Proceeding which relates to any Indemnifiable
Damages; provided,
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however, that the Indemnified Party may participate in any such Proceeding with
counsel of its choice and at its expense. If the Indemnitor elects to assume
control of the defense of a third Person claim, and diligently pursues such
defense, any fees and expenses of legal counsel employed by the Indemnified
Party with respect to such third Person claim shall be considered Indemnifiable
Damages for which the Indemnified Party may be entitled to indemnification under
this Section 9 only if the named parties in such third Person claim include both
the Indemnitor and the Indemnified Party and the Indemnified Party has
determined in good faith upon written advice of counsel that a conflict of
interest exists, in which case the fees and expenses of its counsel, together
with appropriate local counsel, shall be paid by the Indemnitor (provided that
in such situation, the Indemnified Party shall not be entitled to employ more
than one law firm, other than appropriate local counsel, each at Indemnitor's
expense). The parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any such legal
Proceeding. Such cooperation shall include the retention and the provision of
records and information which is reasonably relevant to such third Person claim,
and making employees available in a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. To
the extent the Indemnitor elects not to defend such Proceeding, or does not
notify the Indemnified Party in writing of its election to assume the defense
thereof, and the Indemnified Party defends against or otherwise deals with any
such Proceeding, the Indemnified Party may retain counsel, at the expense of the
Indemnitor, and control the defense of such Proceeding until and unless
Indemnitor subsequently gives notice of its election to defend; provided that
the Indemnified Party shall be entitled to indemnification for counsel fees and
expenses incurred during the initial twenty (20) days after notice of such
Proceeding is given to the Indemnitor only to the extent that the Indemnified
Party in good faith believed that incurrence of such fees and expenses was
necessary. Neither the Indemnitor nor the Indemnified Party may settle any such
Proceeding, which settlement obligates the other party to pay money, to perform
obligations or to admit liability without the written consent of the other
party, such consent not to be unreasonably withheld or delayed; provided that
the consent of the Indemnified Party shall not be required if (i) there is no
finding or admission of any violation of any Requirements of Law or any
violation of the rights of any Person; (ii) the sole relief provided is monetary
damages that are paid in full by the Indemnitor; and (iii) the Indemnified Party
shall have no liability with respect to any compromise or settlement effected
without its consent. After any final judgment or award shall have been rendered
by a court, arbitration board or administrative agency of competent jurisdiction
and the time in which to appeal therefrom has expired, or a settlement shall
have been consummated, or the Indemnified Party and the Indemnitor shall arrive
at a mutually binding agreement with respect to each separate matter alleged to
be indemnifiable by the Indemnitor hereunder, the Indemnified Party shall
forward to the Indemnitor notice of any sums due and owing by it with respect to
such matter and the Indemnitor shall pay all of the sums so owing to the
Indemnified Party by wire transfer within five (5) Business Days after the date
of such notice.
(c) The provisions of Section 1.5(c) shall, with respect to the
matters described therein, control to the exclusion of the provisions of Section
9.4(b) (except to the extent a third Person, including a Governmental Authority,
makes the Indemnified Party a party to a Proceeding to collect Taxes from the
Indemnified Party for which Taxes the Indemnified Party is entitled to be
indemnified under this Section 9, and to that extent the provisions of Section
9.4(b) shall apply to the exclusion of Section 1.5(c) hereof).
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9.5 Environmental Indemnification.
(a) After the Closing Date, and subject to the provisions set forth in
Sections 9.3, 9.4 and 9.6 through 9.9, Seller agrees to indemnify, defend and
hold harmless Buyer from and against any and all Indemnifiable Damages relating
to the operation of the Business incurred by Buyer in connection with, or
arising from:
(i) Any breach of any representation or warranty of Seller set
forth in Section 3.15 (subject to the limitations set forth in Section 9.1(b));
(ii) Any act, omission or condition occurring or existing on or
prior to the Closing Date, including the presence of any Hazardous Substance,
which has resulted or in the future results in Liability under any Environmental
Law with respect to the Facilities and any other properties or facilities
currently or formerly owned, operated or used by Seller or the Business, to the
extent that Buyer does not have any indemnity obligation therefore pursuant to
Sections 6.13 or 9.5(b);
(iii) Any Liability of Seller pursuant to Section 6.13; or
(iv) All Liabilities of Seller and the Business arising under
Environmental Law with respect to the offsite disposal of waste generated from
the Business on or prior to the Closing Date.
(b) After the Closing Date, and subject to the provisions set forth in
Sections 9.3, 9.4 and 9.6 through 9.9, Buyer agrees to indemnify, defend and
hold harmless Seller from and against any and all Indemnifiable Damages relating
to the operation of the Business incurred by such Seller in connection with or
arising from:
(i) Any act, omission or condition including the presence of any
Hazardous Substance arising from post-closing operation of the Business which
has resulted or may result in Liability under Environmental Law with respect to
the Facilities to the extent caused or contributed to (within the meaning
described in Section 6.13(b)(ii)) by Buyer (in accordance with the Proportional
Allocation, if applicable), its representative or consultants and to the extent
that Seller does not have any indemnity obligation therefor pursuant to Section
6.13 or 9.5(a);
(ii) Any Liability of Buyer pursuant to Section 6.13;
(iii) Any Liability under applicable Law resulting from Buyer's
breach of the Restrictive Covenant (KDHE), the Declaration of Restrictive
Covenant and Easement and the Site Access and Environmental Support Services
Agreement; or
(iv) All Liabilities of Buyer and the Business arising under
Environmental Law with respect to the offsite disposal of waste generated from
the Business after the Closing Date except to the extent Seller is responsible
for such disposal costs in excess of CDL Disposal Costs under Section 6.13.
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(c) Seller shall have the right to enter onto the Facilities at
reasonable times to implement any environmental investigation, monitoring,
remediation, abatement, excavation or other response or removal action relating
to any matter arising under or pursuant to Environmental Law for which Seller
has accepted an indemnification or other obligation under this Agreement. The
foregoing actions shall be taken only on reasonable notice to Buyer, in a manner
which does not interfere with the normal operations of the Business, and subject
to Buyer's reasonable approval. Buyer shall use best efforts to accommodate
Seller's implementation of such foregoing actions. Seller shall regularly inform
Buyer of its plans and actions on such matters and provide copies of
investigative and remedial reports and related correspondence. Buyer retains the
right to perform required investigative and remedial action, and to obtain
indemnity reimbursement therefor under this Agreement, for matters which Seller
declines to undertake in violation of its indemnity obligation under this
Section 9.5.
(d) Seller's indemnification obligation to any Buyer Group Member
under this Agreement shall be limited to the cost of the least restrictive
standard (including engineering or institutional controls or any lesser clean-up
standards resulting from any site-specific risk assessment acceptable under
Environmental Law in effect as of the date the activity or response action is
implemented based on the use (as of the Closing Date) of the relevant Facility
or property), provided that any such standard is accepted and continues to be
accepted by the cognizant Governmental Authority as fulfilling all requirements
of Environmental Law.
(e) Seller's indemnification obligation to any Buyer Group Member
under Section 9.5 shall, with respect to the Tulsa and McAlester Facilities,
continue with respect to known pre-Closing environmental Liabilities and
Identified Environmental Liabilities (i) requiring remedial action, until the
remedial action is complete in accordance with Section 9.5(j)(ii); and (ii) not
requiring remedial action, shall survive indefinitely. In addition, for
pre-Closing unknown environmental Liabilities Seller's indemnification
obligation to any Buyer Group Member under this Section 9.5 shall, with respect
to the Tulsa and McAlester Facilities, be limited to matters of which Buyer
provides Seller written notice within seven and one-half (7 1/2) years following
the Closing Date, except in no event shall Seller have an indemnification
obligation under Section 6.13 or 9.5(a) to the extent the Indemnifiable Damages
result from or would not have arisen but for any intrusive investigation or
disclosure by Buyer, its representatives, agents or consultants for purposes of
indemnification under this Agreement, provided however the following activities
are not considered to be an intrusive investigation or disclosure for purposes
of this Section 9.5: (i) the Phase I and Phase II Study conducted in accordance
with Section 6.13(a); and (ii) a search for environmental Liabilities permitted
under Section 6.13(c)(ii)(B) shall not be deemed an intrusive investigation or
disclosure for purposes of this Section 9.5. Any dispute between Buyer and
Seller regarding the necessity for further investigation or requirements of
disclosure to a Governmental Authority may be submitted to an arbitrator
pursuant to Section 9.5(k).
(f) Except with respect to claims by third Persons, the parties
acknowledge and agree that Sections 6.13 and 9.5(a) and (b) set forth the sole
and exclusive remedies of the parties with respect to Indemnifiable Damages
arising out of or relating to Environmental Laws to the extent relating to the
Facilities.
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(g) In the event of the discovery of the presence of a previously
unknown Hazardous Substance at a Facility, at levels that would require remedial
action under applicable Environmental Laws, for which Buyer believes that Seller
has an indemnity obligation, Buyer shall provide written notice to Seller of
such discovery within thirty (30) calendar days after the date of such
discovery. The failure of any Indemnified Party to give the Claim Notice as
required by this Section 9.5 shall not affect such Indemnified Party's rights
under this Section 9.5 except to the extent such failure is actually prejudicial
to the rights and obligations of the Indemnitor's. Nothing in the foregoing
sentence shall be used to extend the relevant limitation period for an
indemnification obligation set forth in this Agreement. Buyer and Seller shall
meet and confer as to whether the discovered Hazardous Substance constitutes a
Liability for which Seller is required to indemnify Buyer pursuant to Section
9.5(a). If Buyer and Seller are unable to agree, either Buyer or Seller may
submit the review of the presence of the Hazardous Substance and whether it
constitutes such a Liability to an arbitrator pursuant to Section 9.5(k).
(h) If the Liabilities for which Seller has an indemnification
obligation pursuant to Section 9.5(a) involve the implementation of a remedial
action at the Facilities, Buyer shall have the right to review, and provide
Seller with written comments in advance of, and object to (such objection to not
be unreasonably made or delayed) (i) Seller's selection of consultants and
contractors designated to perform the remedial action and (ii) the development
of any plan or Scope of Work for, type of, and clean-up standard for, the
remedial action to be implemented. Seller shall review and reasonably consider
Buyer's comments. Seller shall provide all plans, reports and submissions to any
Governmental Authority regarding any such remedial action in draft form to Buyer
at least ten (10) Business Days prior to transmission of such items to such
Governmental Authority and Seller shall review and reasonably consider any of
Buyer's comments on such plans, reports and submissions. In the event that any
deadlines set by any Governmental Authority do not allow Seller to provide Buyer
with such drafts at least ten (10) Business Days in advance of the transmittal
date, Seller shall provide such drafts to Buyer as soon as reasonably possible
prior to the transmittal date.
(i) If the Liabilities for which Buyer has an indemnification
obligation pursuant to Section 9.5(b) involve the implementation of a remedial
action at the Facilities, Seller shall have the right to review, and provide
Buyer with written comments in advance of, and object to (such objection to not
be unreasonably made or delayed) (i) Buyer's selection of consultants and
contractors designated to perform the remedial action and (ii) the development
of any plan or Scope of Work for, type of, and clean-up standard for, the
remedial action to be implemented. Buyer shall review and reasonably consider
Seller's comments. Buyer shall provide all plans, reports and submissions to any
Governmental Authority regarding any such remedial action in draft form to
Seller at least ten (10) Business Days prior to transmission of such items to
such Governmental Authority and Buyer shall review and reasonably consider any
of Seller's comments on such plans, reports and submissions. In the event that
any deadlines set by any Governmental Authority do not allow Buyer to provide
Seller with such drafts at least ten (10) Business Days in advance of the
transmittal date, Buyer shall provide such drafts to Seller as soon as
reasonably possible prior to the transmittal date.
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(j) Notwithstanding anything to the contrary in this Agreement:
(i) To the extent that Seller may have an indemnification
obligation under Section 9.5(a), Seller shall (A) comply with Buyer's reasonable
security requirements and (B) take all reasonable measures to minimize or avoid
interference with Buyer's operation of its business, including providing
reasonable notice at least seventy-two (72) hours prior to entry (except with
respect to exigent circumstances, in which case such notice shall be provided as
soon as reasonably possible prior to entry). Buyer shall not unreasonably delay
or deny Seller's request for entry.
(ii) To the extent that Seller may have an obligation to conduct
a remedial action pursuant to an indemnification obligation under Section
9.5(a), Seller's obligations with respect to such remedial action undertaken in
connection with such indemnification obligation shall terminate upon (A) receipt
from a state or federal Governmental Authority or a local Governmental Authority
with lead agency status of a form of approval of the termination or
discontinuation of such remedial action or (B) in the event that approval of a
Governmental Authority is not required, upon receipt of a determination by
Seller's consultant or contractor that the terms of an applicable Scope of Work
or workplan have, subject to Section 9.5 herein, been satisfied pursuant to
applicable Environmental Law; provided however, in the case of (B) above, Buyer
shall be permitted to review and reasonably approve such determination. In the
event that Buyer and Seller do not agree, either party may submit such matter to
an environmental arbitrator in accordance with Section 9.5(k).
(k) Arbitration.
(i) If a disagreement arises concerning any matter under Section
6.13 or this Section 9.5, either Buyer or Seller may timely notify the other
party in writing of the nature of the dispute. If Buyer and Seller are unable to
reach agreement on any issue within forty-five (45) days of the notice of
dispute, or if the parties sooner agree that they are at an impasse, the dispute
shall be finally resolved by arbitration in accordance with the CPR Rules for
Non-Administered Arbitration in effect on the date of this Agreement, by a sole
independent and impartial arbitrator selected in accordance with Rule 6 (all
references rules in this clause 9.5(l) are to the CPR Rules). The arbitrator
shall be a Person with experience in environmental matters and otherwise
qualified to act as an arbitrator.
(ii) Within twenty (20) days after the expiration of the
forty-five (45) day period for informal dispute resolution set out above, or
within twenty (20) days after the parties agree that they are at an impasse,
either party may trigger arbitration by the submission of a notice of
arbitration under Rule 3 of the CPR Rules. Buyer and Seller agree that they
shall use best efforts, and request that the arbitrator use best efforts to
conclude the arbitration within sixty (60) days of appointment of the
arbitrator, unless the parties agree to a longer period for the arbitration of a
particular dispute. Unless the parties otherwise agree, the place of arbitration
shall be Delaware.
(iii) The determination of the arbitrator shall be final and
binding on the Buyer and Seller for purposes of Section 6.13 and this Section
9.5. Judgment upon the award rendered by the arbitrator may be entered by any
court having jurisdiction thereof. Any costs
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incurred in any arbitration proceedings shall be divided equally between the
parties, except that each party shall bear its own attorney fees and costs of
witnesses.
9.6 Limitations.
(a) Any indemnity payment hereunder shall be treated for Tax purposes
as an adjustment of the Final Purchase Price to the extent such characterization
is proper or permissible under relevant Tax Law, including court decisions,
statutes, regulations and administrative promulgations.
(b) Except as provided in Sections 5.6 and 11.7(e), the ability of a
party to seek indemnification under this Section 9 shall not be affected or
limited in any way because of any Knowledge of, investigation by or waiver of
any condition by such party.
(c) Except for remedies that cannot be waived as a matter of Law and
injunctive and provisional relief, claims under Section 3.8 (for which Buyer's
sole remedy, if any Asset represented to be present at a Facility is not so
present at Closing, shall be in Seller's discretion, Seller providing the
specified item or a comparable replacement item, except in the event Buyer
reasonably determines that it is a commercial necessity to replace such item
before Seller provides the specified item or a comparable replacement item, in
which case Seller shall reimburse Buyer for the amount Buyer reasonably expended
on the replacement item) and claims for Indemnifiable Damages or contribution
arising under any Environmental Law, if the Closing occurs, this Section 9 (and
the provisions of Sections 5.2, 6.1, 6.2 and 6.13 with respect to the matters
covered therein) shall be the exclusive remedy for breaches of this Agreement
(including any covenant, obligation, representation or warranty contained in
this Agreement or in any certificate delivered pursuant to this Agreement) or
otherwise in respect of the sale of the Assets contemplated hereby. With respect
to claims for which this Section 9 is the exclusive remedy, Buyer and Seller
hereby waive and release on their own behalf and on behalf of each other
applicable Indemnified Party, to the fullest extent permitted under applicable
Law, any and all rights, claims and causes of action it or they may have against
Seller or Buyer, as the case may be, arising under or based upon common Law or
any federal, foreign, state or local Law.
(d) No party hereto shall have any Liability for any incidental,
special, exemplary, multiple, punitive or consequential damages (including loss
of profit or revenues) or any equitable equivalent thereof or substitute
therefor suffered or incurred by any Buyer Group Member or Seller Group Member,
as the case may be, except for any such damages awarded to a third party against
an Indemnified Party for which an Indemnitor would otherwise have responsibility
for pursuant to this Section 9.
9.7 Mitigation. Each of the parties agrees to take all reasonable
steps to mitigate their respective Indemnifiable Damages upon and after becoming
aware of any event or condition which could reasonably be expected to give rise
to any Indemnifiable Damages that are indemnifiable hereunder.
9.8 Subrogation. Upon making any payment to the Indemnified Party for
any indemnification claim pursuant to this Section 9, the Indemnitor shall be
subrogated, to the extent of such payment, to any rights which the Indemnified
Party may have against any third-
85
parties with respect to the subject matter underlying such indemnification claim
and the Indemnified Party shall assign any such rights to the Indemnitor.
9.9 No Offset. The obligations hereunder of Seller, on the one hand,
and Buyer, on the other hand, are independent of the obligations of the other
hereunder and shall not be subject to any right of offset, counterclaim or
deduction.
SECTION 10 TERMINATION
10.1 Termination.
(a) Notwithstanding anything contrary in this Agreement, this
Agreement may be terminated at any time prior to the Closing Date:
(i) by Buyer or Seller by written notice to the other upon
receipt of a Governmental Authority's final, non-appealable order permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby;
(ii) by mutual written agreement of Seller and Buyer; or
(iii) by Buyer or Seller by giving written notice to the other if
the Closing has not occurred on or before one hundred twenty (120) days after
the date of this Agreement, as such date may be extended pursuant to Section 5.6
or 11.7(e) of this Agreement, unless the Closing has been frustrated or made
impossible by any act or failure to act by the party wishing to terminate this
Agreement.
(b) In the event of termination of this Agreement pursuant to Section
10.1(a) above:
(i) Each party shall return to the other party or destroy all
documents concerning confidential information of the other party (and, upon
request, certify as to the destruction thereof);
(ii) No party shall have any Liability or further obligation to
the other party hereunder, except for obligations of confidentiality and non-use
with respect to the other party's confidential information, which shall survive
the termination of this Agreement and except in respect of such obligations, no
party shall be entitled to any monetary damages or injunctive relief (including
specific performance) or any indemnification under Section 9 as a result of any
termination in accordance with Section 10.1, other than any damages arising out
of a willful breach of this Agreement;
(iii) The provisions of this Section 10.1(b), as well as Sections
5.5, 11.2, 11.3, 11.6, 11.7, 11.10, 11.13, 11.14, 11.15, 11.17 and 11.21 hereof
shall remain in full force and effect; and
(iv) In no event shall any termination of this Agreement limit or
restrict the rights and remedies of any party hereto against any other party
which has willfully
86
breached any of the agreements or other provisions of this Agreement prior to
termination thereof.
SECTION 11 GENERAL PROVISIONS
11.1 Survival of Covenants. No covenant or agreement contained herein
to be performed on or prior to the Closing Date shall survive the Closing Date
unless otherwise expressly agreed by the parties and any covenant and agreement
to be performed after the Closing Date shall survive the Closing until the
expiration of the applicable statute of limitations, except as otherwise
provided herein.
11.2 No Public Announcement. From the date of this Agreement, neither
Buyer nor Seller shall, without the written approval of the other (such approval
not to be unreasonably withheld or delayed), make any press release or other
public announcement concerning the transactions contemplated by this Agreement,
except as and to the extent that any such party shall be so obligated by
applicable Requirements of Law, in which case such party shall allow the other
party reasonable time to comment on such release or announcement and the parties
shall use their reasonable efforts to cause a mutually agreeable release or
announcement to be issued; provided, however, that the foregoing shall not
preclude communications or disclosures necessary to implement the provisions of
this Agreement or to comply with any accounting or Securities and Exchange
Commission or Canadian securities disclosure obligations or the rules of any
stock exchange or national market system, provided that, to the extent
practicable, the disclosing party shall provide the other party reasonable time
and opportunity to comment on such disclosure.
11.3 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
(a) when delivered personally against written receipt, (b) if sent by registered
or certified mail, return receipt requested, postage prepaid, upon receipt, (c)
when sent by facsimile transmission if confirmed by another means described in
clause (a) or (b), and (d) one Business Day after deposited for delivery with a
nationally recognized overnight courier service, prepaid, and shall be addressed
as follows:
If to Seller, to:
The Boeing Company
Corporate Headquarters M/C 5003-1001
100 N. Riverside
Chicago, IL 60606-1596
Attention: General Counsel
Facsimile: (312) 544-2829
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with a copy to:
Sheppard, Mullin, Richter & Hampton LLP
333 South Hope St., 48th Floor
Los Angeles, CA 90071
Attention: Lawrence M. Braun, Esq.
Facsimile: (213) 620-1398
If to Buyer, to:
Mid-Western Aircraft Systems, Inc.
c/o Onex Investment Corp.
712 Fifth Avenue
New York, New York 10019
Attention: Seth Mersky
Nigel Wright
Facsimile: (212) 582-0909
with a copy to:
Kaye Scholer LLP
425 Park Avenue
New York, New York 10022-3598
Attention: Joel I. Greenberg, Esq.
Facsimile: (212) 836-8689
or to such other address as such party may indicate by a written notice
delivered to the other parties hereto.
11.4 Successors and Assigns. The rights of a party under this
Agreement shall not be assignable by such party without the written consent of
the other party hereto; provided, subject to the condition that Buyer shall bear
all transfer Taxes incurred as a result of any such assignment, Buyer shall be
entitled to assign its rights under this Agreement to acquire certain Assets
located in Oklahoma to one additional entity, without the consent of Seller, to
the extent that such assignment is reasonably necessary to segregate Assets to
perform Classified Work; and provided further, that Buyer shall remain
responsible for all of its obligations hereunder notwithstanding any assignment.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their successors and permitted assigns. Nothing in this Agreement,
expressed or implied, is intended or shall be construed to confer upon any
Person, other than the parties and successors and assigns permitted by this
Section 11.4, and the Indemnified Parties under Section 9, any right, remedy or
claim under or by reason of this Agreement.
11.5 Records and Other Assistance after Closing.
(a) Access. For a period of seven (7) years after the Closing Date,
Seller and its representatives shall have reasonable access to all of the books
and records of the Business (including any books and records relating to Taxes
and Tax Returns of the Business), other than
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any books and records created after the Closing Date which are subject to the
attorney-client privilege, to the extent that such access may reasonably be
required by Seller in connection with matters relating to or affected by the
operations of the Business on or prior to the Closing Date, including Excluded
Liabilities and/or Excluded Assets, the preparation of Seller's financial
reports or Tax Returns, any Tax audits, the defense or prosecution of litigation
(including arbitration or mediation), and any other reasonable need of Seller to
consult such books and records. Such access shall be afforded by Buyer upon
receipt of reasonable advance notice and during normal business hours in a
manner so as to not unreasonably interfere with the conduct of the Business. As
to any books or records created on or prior to the Closing Date that may be left
at the Facilities, the right to invoke or waive any legal privileges pertaining
to such books or records, including the attorney-client privilege, remains
exclusively with Seller. Seller shall be exclusively responsible for any costs
or expenses incurred by it pursuant to this Section 11.5(a). If any such books
or records, or any other documents related to the Business on or prior to the
Closing Date which Seller has the right to have access to pursuant to this
Section 11.5(a) are produced by Buyer to an actual or potentially adverse party
(e.g., in litigation or in connection with a government investigation), Buyer
shall use reasonable efforts to promptly make all such books, records and/or
documents produced available for inspection and copying by Seller concurrently
with the production of such books, records and/or documents. In addition, if
Buyer shall desire to dispose of any of such books or records prior to the
expiration of such seven (7) year period, Buyer shall, prior to such
disposition, give Seller a reasonable opportunity, at Seller's expense, to
segregate and remove such books and records as Seller may select. Buyer shall
provide Seller with reasonable assistance, and charge Seller at Buyer's actual
unburdened expense, by providing employees to act as witnesses and preparing
documents, reports and other information requested by Seller in support of the
activities described in this Section 11.5(a).
(b) Access by Buyer to Certain Information.
(i) With respect to the Assets referenced in Section 1.1(a)(vii)
above that are not physically located at the Facilities or are in electronic
form, Buyer and its representatives may request Seller to take reasonable
commercial efforts to deliver such information and records, or copies thereof,
so long as, to the extent known by Buyer, Buyer reasonably specifies, with
respect to such Assets that are not in electronic form, their physical location,
and with respect to such Assets in electronic form, their location on the Boeing
System (as defined in the Transition Services Agreement) through which
electronic versions may be accessed, but in the event Buyer cannot specify,
Seller shall be under no obligation to search for such item unless such item is
retained by Seller pursuant to PRO-251, in which case Seller shall take
commercially reasonable efforts to locate such item. Seller agrees to keep such
information and records confidential pursuant to the provisions of Section 6.9.
Buyer hereby agrees and acknowledges that, except for the foregoing
confidentiality obligation, so long as Seller retains such Assets, Seller shall
have no obligation to Buyer with respect to such Assets, and shall be entitled
to commingle them with their other properties, and purge or destroy such Assets
pursuant to PRO-251.
(ii) With respect to information and records related (but not
primarily related) to the Business (other than Intellectual Property) and not
physically located at the Facilities (including Tax Returns other than income
Tax Returns), Buyer and its representatives shall have reasonable access to such
information and records of the Business, including the right
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to make copies thereof, so long as, to the extent known by Buyer, Buyer
reasonably specifies, with respect to such Assets that are not in electronic
form, their physical location, and with respect to such Assets in electronic
form, their location on the Boeing System (as defined in the Transition Services
Agreement) through which electronic versions may be accessed, but in the event
Buyer cannot specify, Seller shall be under no obligation to search for such
item unless such item is retained by Seller pursuant to PRO-251, in which case
Seller shall take commercially reasonable efforts to locate such item; provided,
however, Seller shall have the right to redact information from such information
and records to the extent that it is not related to the Business; and, provided,
further, Buyer shall keep all such information and records confidential and
shall limit the use and circulation of such information and records to
employees, advisers, attorneys, accountants, and financial advisors having an
actual and legitimate need to know and only to the extent reasonably necessary
and who are informed of the confidential nature of the information and records
and are required to keep it confidential in accordance with this provision,
except with respect to such confidential information that (A) was known to Buyer
before its disclosure by Seller, (B) is, or shall become, generally known in the
Buyer's industry, (C) shall be disclosed to the Buyer by a third party not known
by Buyer to be under any obligation to keep such information confidential, or
(D) Buyer is required or compelled by Law to disclose (whether by oral
questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or other similar process or as necessary for Buyer to
disclose in connection with filing Tax Returns or registering securities or
filing documents with regulatory authorities under applicable securities laws);
provided, however, that if Buyer is required or compelled by Law to produce any
such confidential information, Buyer will provide Seller with prompt written
notice. The access referenced herein shall be afforded to Buyer and its
representatives upon receipt of reasonable advance notice and during normal
business hours (except as otherwise provided in the Transition Services
Agreement). Buyer shall be solely responsible for any costs or expenses incurred
by it pursuant to this Section 11.5(b)(ii).
(c) Retention. Buyer agrees that Seller may retain (i) copies of all
materials made available to Buyer in the course of its investigation of the
Business, together with a copy of all documents referred to in such materials,
(ii) all books and records prepared in connection with the transactions
contemplated by this Agreement, including bids received from others and
information relating to such bids, (iii) copies of any books and records which
may be relevant in connection with the defense of (A) the matters referred to in
Section 9 or (B) disputes or Proceedings arising under the transactions
contemplated by this Agreement, with Governmental Authorities or with other
third Persons, and (iv) all financial information and all other accounting books
and records prepared or used in connection with the preparation of financial
statements of Seller.
(d) Tax Audits. Buyer and Seller shall provide reasonable assistance
to each other in connection with any Tax audits or other administrative or
judicial Proceedings involving the Business. Neither party shall, without the
prior written consent of the other, unless required by applicable Law, initiate
any contact or voluntarily enter into any agreement with, or volunteer any
information to, any Taxing authorities with regard to Tax Returns or
declarations of the other party. A change by either party in the method of Tax
reporting or the contents of Tax Returns shall not be considered a voluntary
disclosure of information regarding Tax Returns or declarations of the other
party.
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(e) Tax Return Information. Buyer and Seller shall furnish, at no cost
to the other, (i) such data relating to the Purchased Assets as the other party
may reasonably require to prepare Tax Returns; and (ii) such other data
(including reproduction of tax assessments and records) that is reasonably
required by Seller or Buyer for preparation of Tax Returns or Tax examinations.
Notwithstanding anything to the contrary in this Agreement, Buyer and its
Affiliates shall not be entitled to inspect, examine, copy or discover any Tax
Return of Seller or any of its Affiliates, other than (i) non-income,
site-specific Tax Returns relating to the Assets and listed on Schedule 11.5(e)
or (ii) transfer Tax Returns relating to the transactions contemplated by this
Agreement and listed on Schedule 11.5(e) (copies of which Seller will furnish to
Buyer when filed).
(f) Financial Statements. Upon Buyer's written request during the
first thirty-six (36) months following the Closing Date, Seller shall provide
Buyer with access to data and personnel reasonably requested by Buyer in
connection with the preparation of any audited or unaudited financial statements
for any period, at least a portion of which occurs prior to Closing, that would
be required to be included in a Securities and Exchange Commission registration
statement or similar disclosure document. Buyer shall reimburse Seller for its
actual unburdened expenses incurred in complying with this Section 11.5(f).
11.6 Entire Agreement. This Agreement, the Schedules and the Exhibits
referred to herein and the documents delivered pursuant hereto and the
Confidentiality Agreement contain the entire understanding of the parties hereto
with regard to the subject matter contained herein or therein, and supersede all
other prior agreements, understandings, term sheets, heads of terms or letters
of intent between or among any of the parties hereto (including, without
limitation, the Memorandum).
11.7 Interpretation.
(a) Titles and headings to sections and subsections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
(b) The Schedules referred to herein shall be construed with and as an
integral part of this Agreement to the same extent as if they were set forth
verbatim herein. Disclosure of any fact or item in any Schedule hereto
referenced by a particular in this Agreement shall be deemed to have been
disclosed with respect to other Sections in this Agreement only to the extent
the relevance to such other Sections is readily apparent from the actual text of
such disclosure. Neither the specification of any dollar amount in any
representation or warranty contained in this Agreement nor the inclusion of any
specific item in any Schedule hereto is intended to vary the definition of
"Material Adverse Effect" or to imply that such amount, or higher or lower
amounts, or the item so included or other items, are or are not material, and no
party shall use the fact of the setting forth of any such amount or the
inclusion of any such item in any dispute or controversy between the parties as
to whether any obligation, item or matter not described herein or included in
any Schedule is or is not material for purposes of this Agreement. Unless this
Agreement specifically provides otherwise, neither the specification of any item
or matter in any representation or warranty contained in this Agreement nor the
inclusion of any specific item in any Schedule hereto is intended to imply that
such item or matter, or other items
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or matters, are or are not in the ordinary course of business, and no party
shall use the fact of the setting forth or the inclusion of any such item or
matter in any dispute or controversy between the parties as to whether any
obligation, item or matter not described herein or included in any Schedule is
or is not in the ordinary course of business for purposes of this Agreement.
(c) Seller may, from time to time prior to or at the Closing, by
notice in accordance with the terms of this Agreement, supplement, amend or
create any Schedule, in order to (i) add information that relates to events or
circumstances arising after the date hereof (any such Schedule, an "Additive
Schedule") or (ii) correct previously supplied information or add information
omitted from a Schedule that should have been included in the Schedules provided
Buyer on the date hereof (any such Schedule, "Corrective Schedule" and, together
with any Additive Schedules, the "Amending Schedules"). No such Amending
Schedule shall be evidence, in and of itself that the representations and
warranties in the corresponding Section are no longer true and correct in all
material respects. It is specifically agreed that such Amending Schedules may be
amended to add immaterial, as well as material, items thereto.
(d) With respect to any Corrective Schedule that Seller delivers, if
the information on such Corrective Schedule constitutes a breach of a
representation or warranty but would not entitle Buyer not to consummate the
Closing pursuant to Section 7.1 above, and the Closing occurs, Buyer shall be
entitled to indemnification, if any, for such breach in accordance with Section
9.1.
(e) If the information set forth on any Corrective Schedule, or on any
number of Corrective Schedules in the aggregate, would entitle Buyer not to
consummate the Closing pursuant to Section 7.1 above and if Seller so notifies
Buyer in writing, it shall be conclusively established that Buyer is entitled
not to consummate the Closing pursuant to Section 7.1 above. If, however, the
Closing occurs, any such Corrective Schedule will be effective to cure and
correct for all other purposes any breach(es) of any representation, warranty or
covenant which would have existed if Seller had not delivered such Corrective
Schedule, and all references to any Schedule hereto which is supplemented or
amended as provided in this Section 11.7(e) shall for all purposes after the
Closing be deemed to be a reference to such Schedule as so supplemented or
amended. In such case, Buyer shall be deemed to have waived any and all rights,
remedies or other recourse against Seller to which Buyer might otherwise be
entitled in respect of such breach(es), including any rights or remedies under
Section 9. If the information set forth on any Corrective Schedule would entitle
Buyer not to consummate the Closing pursuant to Section 7.1 above and if Seller
does not notify Buyer of such in writing, then any and all rights, remedies or
other recourse against Seller to which Buyer is entitled with respect to the
information on the original Schedule, including any rights or remedies under
Section 7.1 or Section 9, shall be deemed not to have been waived and shall not
be affected or impaired. If Seller delivers a notice to Buyer pursuant to this
Section 11.7(e) more than one hundred ten (110) days after the date of this
Agreement, the date provided for in Section 10.1(a)(iii) shall be extended to
the date which is ten (10) days following the date of such delivery.
(f) With respect to any Additive Schedule, if the Closing occurs, any
such Additive Schedule will be effective to cure and correct for all other
purposes any breach of any representation, warranty or covenant which would have
existed if Seller had not made such supplement, amendment or addition, and all
references to any Schedule hereto which is
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supplemented or amended as provided in this Section 11.7(f) shall for all
purposes after the Closing be deemed to be a reference to such Schedule as so
supplemented or amended. In such case, Buyer shall be deemed to have waived any
and all rights, remedies or other recourse against Seller to which Buyer might
otherwise be entitled in respect of such breach, including any rights or
remedies under Section 9.
(g) For the purposes of this Agreement, (i) words in the singular
shall be held to include the plural and vice versa and words of one gender shall
be held to include the other gender as the context requires, (ii) the terms
"hereof", "herein" and "herewith" and words of similar import shall be construed
to refer to this Agreement in its entirety and to all of the Schedules and not
to any particular provision, unless otherwise stated, and (iii) the term
"including" shall mean "including without limitation."
(h) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
(i) Pursuant to the terms of this Agreement, Seller is required to
deliver documentation to the Title Company in connection with the Title Policies
and Survey. In no event shall such documentation alter in any manner the
allocation of Liabilities or Indemnifiable Damages as allocated among the
Parties in this Agreement.
(j) All Schedules of Seller with respect to the representations and
warranties in Section 3 ("Seller's Rep Schedules") shall be deemed delivered by
Seller and effective February 18, 2005 and not on the date of execution of this
Agreement. Solely for purposes of Section 11.7(c) with respect to any supplement
or amendment to any of Seller's Rep Schedules, date or time references in such
section with respect to any Seller's Rep Schedule to "after the date hereof' or
"on the date hereof' shall be deemed to be references to February 18, 2005. In
addition, the reference in Section 1.2(a)(iii) to "after the date hereof" shall
be to dates after February 18, 2005.
11.8 Amendments and Waivers. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by each of the parties or, in the case of a
waiver, by the party waiving compliance. Any such waiver, including any waiver
of this Section 11.8, shall be validly and sufficiently authorized for the
purposes of this Agreement if, as to any party, it is authorized in writing by
an authorized representative of such party. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
11.9 Bulk Sales Laws. The parties hereby waive compliance with the
bulk sales Laws of any state in which the Assets are located or in which
operations related to the Business are conducted.
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11.10 Expenses. Except as set forth elsewhere in this Agreement, each
party hereto will pay all costs and expenses incident to its negotiation and
preparation of this Agreement and to its performance and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel,
accountants, advisors and consultants.
11.11 Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such a manner as to be effective and valid under
applicable Law. In case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision or provisions shall be ineffective to the extent, but
only to the extent, of such invalidity, illegality or unenforceability without
invalidating the remainder of such invalid, illegal or unenforceable provision
or provisions or any other provisions hereof, unless such a construction would
be unreasonable.
11.12 Execution in Counterparts; Facsimile. This Agreement may be
executed in two or more counterparts and via facsimile, each of which shall be
considered an original instrument, but all of which shall be considered one and
the same agreement, and shall become binding when one or more counterparts have
been signed by each of the parties hereto and delivered to Seller and Buyer.
11.13 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal Laws (as opposed to the conflicts of Law
provisions) of the State of Delaware.
11.14 Jurisdiction. The parties hereby agree that any Proceeding
arising out of or related to this Agreement shall be conducted only in
Wilmington, Delaware. Without limiting Section 11.21, each party hereby
irrevocably consents and submits to the exclusive personal jurisdiction of and
venue in the federal and state courts located in Wilmington, Delaware.
11.15 Attorneys' Fees. Except as otherwise expressly provided in this
Agreement, if any Proceeding for the enforcement of this Agreement is brought,
or because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions hereof, the successful or prevailing party
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that Proceeding, in addition to any other relief to which it may be entitled.
11.16 Time of Essence. Time is of the essence for each and every
provision of this Agreement.
11.17 Disclaimer of Warranties. Seller make no representations or
warranties with respect to any projections, forecasts or forward-looking
information provided to Buyer. There is no assurance that any projected or
forecasted results will be achieved. EXCEPT AS TO THOSE MATTERS EXPRESSLY
COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT AND THE
CERTIFICATE DELIVERED BY SELLER PURSUANT TO SECTION 2.3(X), SELLER IS SELLING
THE ASSETS AND THE BUSINESS OF SELLER AND ASSIGNING THE ASSUMED LIABILITIES ON
AN "AS IS, WHERE IS" BASIS AND SELLER DISCLAIMS ALL OTHER WARRANTIES,
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REPRESENTATIONS AND GUARANTIES WHETHER EXPRESS OR IMPLIED. SELLER MAKES NO
REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE AND NO IMPLIED WARRANTIES WHATSOEVER. Without limiting the generality of
the foregoing, Buyer is thoroughly familiar with the physical condition and
state of repair of each of the Facilities and agrees to take title to the
Facilities "AS IS" "WHERE IS" in its current condition and state of repair,
subject to the representations and warranties set forth in this Agreement and
the certificate delivered by Seller pursuant to Section 2.3(x) and subject to
reasonable use, wear and tear and natural deterioration between the date hereof
and the Closing Date, without any reduction in the Final Purchase Price or claim
of any kind except as provided for in this Agreement. Buyer acknowledges that
neither Seller nor any of their representatives nor any other Person has made
any representation or warranty, express or implied, as to the accuracy or
completeness of any memoranda, charts, summaries, presentation or Schedules
heretofore made available by Seller or its representatives to Buyer or any
Affiliate of Buyer or any other information which is not included in this
Agreement, the Schedules or the Exhibits hereto, and neither Seller nor any of
its representatives nor any other Person will have or be subject to any
Liability to Buyer, any Affiliate of Buyer or any other Person resulting from
the distribution of any such information to, or use of any such information by,
Buyer, any Affiliate of Buyer or any of their agents, consultants, accountants,
counsel or other representatives.
11.18 References to U.S. Dollars. All references in this Agreement to
amounts of money expressed in dollars are references to United States dollars,
unless otherwise indicated.
11.19 Further Assurances.
(a) At and after the Closing Date, and without further consideration
therefor, (i) Seller shall execute and deliver to Buyer such further instruments
and certificates of conveyance and transfer as Buyer may reasonably request in
order to more effectively convey and transfer the Assets from Seller to Buyer
and to put Buyer in operational control of the Business, or for aiding,
assisting, collecting and reducing to possession any of the Assets and
exercising Buyer's rights with respect thereto, and (ii) Buyer shall execute, or
shall arrange the execution of, and deliver to Seller such further instruments
and certificates of assumption, novation and release as Seller may reasonably
request in order to effectively make Buyer responsible for all Assumed
Liabilities and release Seller and its Affiliates therefrom to the fullest
extent permitted under applicable Law.
(b) In addition, Buyer and Seller shall cooperate to insure prompt
conveyance by (i) Seller to Buyer of any Asset not conveyed to Buyer at Closing
and (ii) Buyer to Seller of any asset conveyed to Buyer at Closing or remaining
at the Facilities that is not an Asset.
(c) In the event that Seller later determines that Seller transferred
to Buyer certain Government Furnished Equipment that does not relate to any
Assigned Contract and thus is an Excluded Asset pursuant to Section 1.1(b)(xiv),
Seller shall notify Buyer, and Seller shall be responsible for removing such
equipment at Seller's cost.
11.20 No Rescission. Neither Buyer nor Seller shall be entitled to
rescind the purchase of the Business and the Assets by Buyer by virtue of any
failure of any party's
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representations and warranties herein to have been true or any failure by any
party to perform its obligations hereunder.
11.21 Dispute Resolution.
(a) Except with respect to the matters described in Sections 1.6, 1.7
and 9.5(k), which shall be resolved in accordance with the terms thereof, from
and after the Closing, the resolution of any and all disputes arising from or in
connection with this Agreement, whether based on contract, tort, or otherwise
(collectively, "Disputes"), shall be exclusively governed by and settled in
accordance with the provisions of this Section 11.21; provided, however, that
this Section 11.21 shall not preclude any party from seeking injunctive relief
in a court of competent jurisdiction without complying with the following
provisions of this Section 11.21.
(b) The parties hereto shall use all commercially reasonable efforts
to settle all Disputes without resorting to mediation, arbitration or otherwise.
(c) The party asserting a Dispute shall deliver to the other party a
written notice setting forth the basis for the issue in detail, and identifying
the section of this Agreement (the "Dispute Notice"). Within ten (10) Business
Days of receipt of a Dispute Notice, the issue shall be elevated to a designated
panel of four individuals, two representatives from each party familiar with the
Business (one who shall be a business representative, and the other who shall be
a technical or accounting representative, as appropriate). The panel may be
assisted by other advisors, including accountants, attorneys, and employees, in
its discussions and review. Such representatives shall be empowered and
authorized to bind their respective companies with respect to the matter in
dispute, and to settle the issue on behalf of their respective companies. These
representatives shall for thirty (30) Business Days after receipt of the Dispute
Notice, confer and in good faith make a reasonable effort to resolve the issue.
(d) In the event that the Dispute involves whether any Assets are
intended to be transferred to Buyer or whether any Liability is intended to be
assumed by Buyer, in each case consistent with the terms hereof (an "Asset or
Liability Dispute"), and the panel is unable to reach an agreement under Section
11.21(c) above within thirty (30) Business Days of receipt of the Dispute
Notice, then each of Buyer and Seller shall call for a higher level resolution
discussion, pursuant to which each of Buyer and Seller shall designate in
writing by notice to the other party within ten (10) Business Days after the
expiration of such thirty (30) Business Day period a higher level management
employee which shall be the Vice President - Supplier Management, BCA of Seller
and Nigel Wright of Buyer, or an equivalent position or individual, as the case
may be, to discuss and attempt to resolve the dispute. Such higher level
management employees may be assisted by other advisors, including accountants,
attorneys, and employees, in their discussions and negotiations with the other
party. Buyer and Seller agree to negotiate in good faith with one another for an
additional period ending sixty (60) Business Days after receipt of the Dispute
Notice.
(e) In the event that any Asset or Liability Dispute remains unsettled
after the procedures set forth in Section 11.21(d) or in the event any other
Dispute remains unsettled after the procedures set forth in Section 11.21(c), a
party hereto may commence Proceedings hereunder in any court specified in
Section 11.14.
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11.22 Code Section 6043A Reporting. Seller shall control, or shall set
the standards for, the preparation of any report Buyer may be required to file
under Code Section 6043A; provided, however, that Buyer shall not be required to
execute or file any report that it reasonably believes is in violation of
applicable rule or regulation.
SECTION 12 DEFINITIONS
12.1 Definitions. In this Agreement, the following terms have the
meanings specified or referred to in this Section 12.1 and shall be equally
applicable to both the singular and plural forms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from time
to time to the extent permitted by the applicable provisions thereof and by this
Agreement.
"440 Landfill" means the area depicted as Area 1 on Exhibit 1
Restricted Areas Map (dated 01-20-2005) to the Declaration of Restrictive
Covenant and Easement.
"787 Assets" is defined in Section 1.3(b).
"Accounting Arbitrator" is defined in Section 1.6(e).
"Accrued Sick Leave" is defined in Section 6.2(e).
"Accrued Vacation" is defined in Section 6.2(d).
"Actual 787 Book Value" is defined in Section 1.6(a)(ii).
"Actual 787 Book Value Statement" is defined in Section 1.6(a)(ii).
"Additive Schedule" is defined in Section 11.7(c).
"Administrative Agreement" means the administrative agreement
substantially in the form of Exhibit V.
"Affiliate" means, with respect to any Person, any other Person, which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"Agreement" means this Asset Purchase Agreement, together with the
Schedules and Exhibits attached hereto.
"Allocation Schedule" is defined in Section 1.4(a).
"Amending Schedules" is defined in Section 11.7(c).
"Areas 2 through 7" means, collectively, the areas depicted as Area 2
through 7 on Exhibit I Restricted Areas Map (dated 01-20-2005) to the
Declaration of Restrictive Covenant and Easement.
"Asset or Liability Dispute" is defined in Section 11.21(d).
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"Assets" is defined in Section 1.1(a).
"Assigned Contracts" is defined in Section 1.1(a)(v).
"Assignment and Assumption Agreement" means an assignment and
assumption agreement substantially in the form of Exhibit A.
"Assignment and Assumption of Real Property Leases" means an
assignment and assumption of real property leases in the form mutually agreed
upon by Buyer and Seller.
"Assumed Liabilities" is defined in Section 1.2(a).
"Audited 2004 Financial Statements" is defined in Section 5.11.
"Audited Annual Financial Statements" is defined in Section 5.11.
"Audited Financial Statements" is defined in Section 5.11.
"Audited Interim Financial Statements" is defined in Section 5.11.
"Authorized Representative of Seller" means any of John E. Borst,
Bryan E. Gerard or Luis O. Valdes, or any Person designated in writing by any of
them.
"Available Bin Spares Inventory" means the remaining bin quantity less
any inventory due out.
"BCA" means Boeing's Commercial Airplanes.
"BCA Hardware Material Services General Terms Agreement" means a
hardware material services general terms agreement substantially in the form of
Exhibit C.
"BCA Intellectual Property License Agreement" means the BCA Hardware
Material Services General Terms Agreement and the BCA Supplemental License
Agreement.
"BCA Supplemental License Agreement" means the Supplemental License
Agreement (Ancillary Maintenance Repair and Overall - Aircraft), the
Supplemental License Agreement (Ancillary Maintenance Repair and Overall -
Components), the Supplemental License Agreement (Know-How) and the Supplemental
License Agreement (Spare Parts).
"BCA Supply Agreement" means the Special Business Provisions
(Sustaining), the General Terms Agreement (Sustaining), the Special Business
Provisions (787), the General Terms Agreement (787), the Special Business
Provisions (Spares), the Special Business Provisions (Tech Support) and the
Special Business Provisions (Repair Support).
"Beneficial Easements" is defined in Section 3.7(h).
"Benefit Plan" means each compensation or benefit plan, program or
arrangement (including, but not limited to, those that constitute an "employee
benefit plan," as defined in Section 3(3) of ERISA, employment agreements, cash
or equity-based bonus or incentive
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arrangements, severance arrangements, vacation policies, fringe benefit plans
and programs and relocation benefits for expatriate employees) sponsored,
maintained or contributed to or by Seller for the benefit of any Business
employee or former Business employee.
"BID" is defined in Section 5.3(b)(xvii).
"Bid Opportunities" is defined in Section 6.6.
"Bill of Sale" means a bill of sale substantially in the form of
Exhibit J.
"Boeing Landfill" is defined in Section 1.1(b)(xxii).
"Boeing/Emery Landfill" is defined in Section 1.1(b)(xxii).
"Boeing Site Real Estate License" means the Boeing site real estate
license in the form mutually agreed upon by Buyer and Seller.
"Business" is defined in the recitals of this Agreement.
"Business Agreements" means the Contracts set forth on, or required to
be set forth on, Schedules 3.7, 3.9(a), 3.11(a) and 3.16(a).
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of New York are authorized or obligated to
close.
"Buyer" is defined in the recitals of this Agreement.
"Buyer Group Member" means Buyer and its directors, officers,
employees, agents, attorneys and consultants and their successors and assigns
and each Person, if any, who controls or may control Buyer within the meaning of
the Securities Act.
"Buyer's Benefit Plans" is defined in Section 6.2(a).
"Buyer's Hired Union Employees I" is defined in Section 6.2(f).
"Buyer's Hired Union Employees II" is defined in Section 6.2(f).
"Buyer's Legal Opinion" means Buyer's legal opinion given by Kaye
Scholer LLP in the form mutually agreed upon by Buyer and Seller.
"Buyer's Non-Union Pension Plan" is defined in Section 6.2(f).
"Buyer's Pension Plans" is defined in Section 6.2(f).
"Buyer's Site Real Estate Lease" means the Buyer's site real estate
lease in the form mutually agreed upon by Buyer and Seller.
"Buyer's Title Notice" is defined in Section 5.10.
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"Buyer's Union Pension Plan I" is defined in Section 6.2(f).
"Buyer's Union Pension Plan II" is defined in Section 6.2(f).
"Buyer Transaction Agreements" means this Agreement and all
agreements, instruments and documents being or to be executed and delivered by
Buyer under this Agreement or in connection herewith.
"Capital Expenditures Budget" is defined in Section 3.4(c)(ii).
"CDL Disposal Costs" means the cost of disposing of waste at a
commercial CDL Landfill, but not including a hazardous waste landfill.
"CDL Landfill" means a commercial landfill that accepts CDL debris,
but does not include a hazardous waste landfill.
"CFIUS" means the Committee on Foreign Investment in the United
States.
"Claim Notice" is defined in Section 9.3(a).
"Classified Work" is defined in Section 6.17.
"Closing" means the consummation of the transactions contemplated by
this Agreement.
"Closing Date" is defined in Section 2.1.
"Closing Net Working Capital" means an amount equal to the Net Working
Capital of the Business as of the Closing Date.
"Closing Working Capital Statement" is defined in Section 1.6(a)(i).
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the Confidentiality Agreement dated
April 19, 2004 by and between Buyer and Seller.
"Contaminated Soil" means soil that cannot be accepted at a CDL
Landfill.
"Contract" means any written contract, agreement, license, mortgage,
note, guarantee, sublicense, consensual obligation, commitment, lease, sales or
purchase order or other legally binding commitment (whether written or oral) in
the nature of a contract.
"Copyright Act" means the United States Copyright Act of 1976, as
amended.
"Corrective Schedule" is defined in Section 11.7(c).
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"Court Order" means any judgment, order, injunction, award or decree
of any foreign, federal, state, local or other court or tribunal or other
Governmental Authority and any ruling or award in any arbitration Proceeding.
"Declaration of Restrictions (Boeing Industrial District)" means the
declaration of restrictions for the Boeing industrial district in the form
mutually agreed upon by Buyer and Seller.
"Declaration of Restrictive Covenant and Easement" means the
declaration of restrictive covenant and easement in the form of Exhibit AA.
"Deductible" is defined in Section 9.1(a).
"De Minimis Amount" is defined in Section 9.1(a).
"De Minimis Transfers" is defined in Section 6.14.
"Discovered Breach(es)" is defined in Section 5.6.
"Disputes" is defined in Section 11.21(a).
"Dispute Notice" is defined in Section 11.21(c).
"Domestically Suited" means work that would be included in requests
for proposal typically sent to domestic suppliers (but not exclusively).
"DOJ" is defined in Section 5.7(a).
"Drug-Free Workplace Act" means the Drug-Free Workplace Act of 1988
(41 U.S.C. 701 et seq.).
"EAR" means the Export Administration Regulations (15 C.F.R. Sections
734 et seq.).
"EEOC" is defined in Section 3.16(b).
"Electronic Access Agreement" means the electronic access agreement
substantially in the form of Exhibit Y.
"Emery Landfill" is defined in Section 1.1(b)(xxii).
"Employee Assistance Plan" means the Seller's voluntary Employee
Assistance Program (EAP) provided to all United States employees of Seller.
"Encumbrance" means any lien, encumbrance, claim, assessment,
indenture, equitable interest, option, right of first refusal, mortgage, deed of
trust, pledge, charge, security interest, title retention device, conditional
sale or other security arrangement, collateral assignment, claim, charge,
adverse claim of title, ownership or right to use, restriction, encroachment,
right-of-way, defect in title or other encumbrance of any kind in respect of an
101
Asset (including any restriction on (i) the transfer or use of any Asset, (ii)
the receipt of any income derived from any Asset, or (iii) the possession or
exercise of any other attribute of ownership of any Asset).
"Environmental Laws" means all federal, state, local or foreign Laws,
statutes, ordinances, regulations, rules, including common law rules, judgments,
orders, notice requirements, court decisions, agency guidelines or principles of
Law, restrictions and licenses, which (a) regulate or relate to the protection
or clean-up of the environment; the use, treatment, storage, transportation,
handling, disposal or release of Hazardous Substances, the preservation or
protection of waterways, groundwater, drinking water, air, wildlife, plants or
other natural resources; or (b) impose Liability with respect to any of the
foregoing, including without limitation the Federal Water Pollution Control Act
(33 U.S.C. Section 1251 et seq.), Resource Conservation & Recovery Act (42
U.S.C. Section 6901 et seq.), Safe Drinking Water Act (21 U.S.C. Section 349, 42
U.S.C. Sections 201, 300f), Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.), Clean Air Act (42 U.S.C. Section 7401 et seq.), and Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.), or any other similar federal, state or local Law of similar effect,
each as amended.
"Equipment" is defined in Section 1.1(a)(i).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Estimated 787 Book Value" is defined in Section 1.3(b).
"Estimated Adjusted Liabilities" is defined in Section 1.7(a)(i).
"Estimated Closing Net Working Capital" is defined in Section 1.3(b).
"Excluded Assets" is defined in Section 1.1(b).
"Excluded Equipment Leases" is defined in Section 1.1(b)(xvi).
"Excluded Liabilities" is defined in Section 1.2(b).
"Excluded Supply Contracts" is defined in Section 1.l(b)(xv).
"Excluded Tooling" is defined in Section 1.1(b)(xxi).
"Excusable Delay" is defined in Section 6.8.
"Exon-Florio Amendment" means Section 721 of the Defense Production
Act of 1950, as amended, and any successor thereto and the regulations issued
pursuant thereto or in consequence thereof.
"Facilities" means the Owned Property and the Leased Property.
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"Facility" means any specific facility that comprises part of the
Owned Property or Leased Property.
"Final Purchase Price" is defined in Section 1.3(a).
"Financing Commitment" is defined in Section 4.6.
"Fire and Emergency Response Services Agreement" is the Fire and
Emergency Response Services Agreement in the form mutually agreed upon by Buyer
and Seller.
"Foreign Corrupt Practices Act" means the Foreign Corrupt Practices
Act of 1977, as amended (15 U.S.C. Sections 78dd-1, et seq.).
"Four Year Total" is defined in Section 6.6.
"FTC" is defined in Section 5.7(a).
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"General Terms Agreement (787)" means the general terms agreement with
respect to the 787 program contemplated to be executed pursuant to the terms of
the Memorandum of Agreement (787).
"General Terms Agreement (Sustaining)" means the general terms
agreement substantially in the form of Exhibit U.
"Government Bid" means any quotation, bid or proposal by Seller that,
if accepted or awarded, would lead to a Contract with the United States
government, any foreign government or any other entity, including a prime
contractor or a higher tier subcontractor to the United States government or any
foreign government, for the design, manufacture or sale of products or the
provision of services by Seller.
"Government Contract" means any Contract that (a) is between Seller
and a Governmental Authority or (b) is entered into by Seller as a subcontractor
(at any tier) in connection with a Contract between another entity and a
Governmental Authority.
"Government Furnished Equipment" means all personal property,
equipment and fixtures loaned, built or otherwise furnished to Seller by any
Governmental Authority, title to which is vested in such Governmental Authority
by operation of the title vesting provision of the relevant Contract.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, court, commission, board, bureau, agency or instrumentality, or any
regulatory, administrative or other department, agency, or any political or
other subdivision, department or branch of any of the foregoing.
"Governmental Permits" is defined in Section 3.6.
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"Hazardous Substances" shall mean any quantity of asbestos in any
form, urea formaldehyde, PCB'S, radon gas, crude oil or any fraction thereof,
all forms of natural gas, petroleum products or by-products, any radioactive
substance, any pollutant or contaminant, any toxic, infectious, reactive,
corrosive, ignitable or flammable chemical or chemical compound and any other
hazardous substance, material or waste (as defined in or for purposes of any
Environmental Law), whether solid, liquid or gas.
"Hired Employee" is defined in Section 6.2(a).
"Hired Non-Union Employees" is defined in Section 6.2(f).
"Hired Union Employees" is defined in Section 6.2(f).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Identified Environmental Liabilities" means an environmental
Liability relating to contamination existing prior to the Closing Date that is
demonstrated by documented environmental sampling, but does not include
speculative assertions.
"IDS" means Integrated Defense Systems.
"IDS Business" means the Integrated Defense Systems business, a
division of Seller dedicated to providing aerospace products and services to the
United States Government and its customers.
"IDS Easements" are defined in Section 2.2(ee).
"IDS Site" is defined in Section 6.11(a).
"IDS Supply Agreement" means the IDS Basic Supply and Services
Agreement substantially in the form of Exhibit I.
"IDS Transaction" is defined in Section 6.11(a).
"Income Taxes" means Taxes imposed on or measured with respect to net
income.
"Indemnifiable Damages" is defined in Section 9.1(a).
"Indemnified Party" is defined in Section 9.3(a).
"Indemnitor" is defined in Section 9.3(a).
"Industrial Revenue Bonds" means the Bonds (as defined in the Sublease
(IRBs)), to the extent outstanding principal balances of such Bonds relate to
Assets.
"Insurance Benefits" is defined in Section 9.3(b).
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"Intellectual Property" consists of all items that are either (a) the
Software and all related documentation; (b) worldwide web pages and the contents
thereof; or (c) Patents, trademarks, copyrights, trade secrets, know-how,
processes, procedures, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial, marketing, and business data,
pricing and cost information, business and marketing plans, customer and
supplier lists and information, other confidential and proprietary information,
manufacturing and production processes and techniques, molds, dies, casts and
product configurations, except that with respect to the Business it does not
consist of (u) supplier lists and records (supplier financial information to the
extent permitted pursuant to the confidentiality provisions in the Assigned
Contracts), (v) manufacturing research and development reports and records, (w)
production reports and records, (x) service and warranty records, equipment
logs, operating guides and manuals directly relating to the Equipment at the
Facilities, (y) financial, accounting and Tax records (but no such items with
respect to third party customers and specifically not including pricing
information or data or income Tax Returns) and (z) studies, reports,
correspondence and other similar documents and records (but only to the extent
directly related to the immediately foregoing excepted items).
"Interim Date" means September 30, 2004.
"Inventions" is defined in Section 6.21(a).
"Inventory" is defined in Section 1.1(a)(ii).
"IRBs" means the Industrial Revenue Bonds.
"IRS" means the United States Internal Revenue Service.
"ITAR" means the International Traffic in Arms Regulation (22 C.F.R.
Section 120.15).
"Item" means existing utility services conduits, footings and
foundations.
"Joint Filing" is defined in Section 5.7(b).
"KDHE" means the Kansas Department of Health and Environment.
"KDHE Orders" means the KDHE Order in Case Nos. 86-E-3 (January 10,
1986), Consent Order in Case No. 87-E-12 (April 16, 1987), Amended Consent Order
in Case No. 87-E-12 (1992), Second Amendment to Consent Order in Case No.
87-E-12 (2001) and any amendments thereto.
"Knowledge" means, as to a particular Person (other than Seller) the
actual current knowledge of such Person (without any duty of inquiry).
"Knowledge of Seller" means, as to a particular fact or other matter,
the actual current knowledge of Jeffrey Turner, Mike Williams, Ronald Brunton,
Dan Wheeler, Lana McCutchen, John Borst, Bryan Gerard or Luis Valdes (without
any duty of inquiry).
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"Law" means any law, statute, treaty, rule, writ, injunction,
regulation or principle of common law, ordinance, order, decree, consent decree
or similar instrument or determination or award of an arbitrator or a court or
any other Governmental Authority.
"Leases" is defined in Section 3.7(a)(i).
"Leased Property" is defined in Section 1.1(a)(xiii).
"Liabilities" means all indebtedness, obligations and other
liabilities (or contingencies that have not yet become liabilities), whether
absolute, accrued or unaccrued, matured, contingent (or based upon any
contingency), known or unknown, disputed or undisputed, liquidated or
unliquidated, fixed or otherwise, or whether due or to become due, including
without limitation, any fines, penalties, judgments, awards or settlements
respecting any judicial, administrative or arbitration Proceedings or any
damages, losses, claims or demands with respect to any Law.
"Limited Activities" means only the following specifically identified
activities conducted within Areas 2 through 7 and within or contiguous to the
footprint of the existing Item so long as such Limited Activities are conducted
no deeper than twenty (20) feet from the ground surface (or from the floor of a
building if measured inside the building):
- Routine and emergency repair and maintenance of
existing utility services conduits;
- Routine and emergency repair and maintenance of the
footing for existing machines;
- Routine and emergency repair and maintenance of
existing building foundations; and
- Repairs to and/or replacement of existing utility
services conduits, footings or foundations which are
necessary as the result of damage caused by an act of
God.
The phrase "routine and emergency repair and maintenance" as used in this
definition includes replacement of an Item if continued repair of such Item is
impracticable, but only to the extent necessary to address the needed repair.
"Management Presentation" means the management presentation given to
Buyer from June 2, 2004 to June 4, 2004 and includes any materials disseminated
to Buyer and its representatives on such date.
"Marks" is defined in Section 6.1(a).
"Material Adverse Effect" means any change, circumstance or effect
that has a material adverse effect on the Business, financial condition, affairs
or results of operations of the Business or on the Assets taken as a whole, or
on the ability of Buyer to use the Assets taken as a whole, in a manner
consistent with the current use of such Asset by Seller, provided, however,
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that Material Adverse Effect shall exclude any adverse changes or conditions as
and to the extent such changes or conditions relate to or result from public or
industry knowledge of the transactions contemplated by this Agreement (including
but not limited to any action or inaction by the Business' employees and
vendors). Seller may, however, at its option, include in the Schedules of this
Agreement items that would not have a Material Adverse Effect within the meaning
of the previous sentence in order to avoid any misunderstanding, and such
inclusion shall not be deemed to be an acknowledgement by Seller that such items
would have a Material Adverse Effect or further define the meaning of such term
for the purposes of this Agreement.
"Maximum Amount" is defined in Section 9.1(a).
"McConnell AFB Access Easement" is defined in Section 2.2(ee).
"Memorandum" means that certain Confidential Offering Memorandum dated
March, 2004 furnished by Goldman, Sachs & Co. Incorporated to prospective
acquirers of the Business.
"Memorandum of Agreement (787)" means the Memorandum of Agreement for
the 787 program substantially in the form of Exhibit Q.
"National Industrial Security Program Operating Manual" means the
Industrial Security Manual for Safeguarding Classified Information and all
supplements thereto published by the United States Department of Defense (DoD
5220.22-M) prescribing the specific requirements, restrictions, and other
safeguards necessary in the interest of national security for the safeguarding
of classified information.
"Net Working Capital" means the difference between the value of the
current Assets and the current Assumed Liabilities as of specific date,
excluding Accrued Sick Leave, determined on a basis consistent with the
methodology and principles employed in the preparation of the Audited Financial
Statements, the calculation of which is set forth on Exhibit N. For dates before
the Closing Date, current Assets shall include an unaudited value of Spares
Inventory as of February 17, 2005 and for dates from and after the Closing Date,
current Assets shall include an unaudited value of Spares Inventory as of that
date.
"Neutral Accounting Firm" means Ernst & Young LLP or, in the event
Ernst & Young LLP is unable to perform the services requested of it hereunder,
KPMG LLP. In the event neither is available, a nationally recognized accounting
firm mutually selected by the parties thereto.
"No-Build Easement" means the no-build easement in the form mutually
agreed upon by Buyer and Seller.
"Non-Annexation Agreement (BID)" is defined in Section 5.3(b)(xvii).
"Note Documents" means the documents contemplated pursuant to the Note
Term Sheet.
"Note Term Sheet" means the term sheet attached as Exhibit P.
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"Number of Employees" is defined in Section 1.6(a)(iii)(A).
"Option to Acquire Property (Boeing Industrial District)" means the
option to acquire property for the Boeing Industrial District in the form
mutually agreed upon by Buyer and Seller.
"Oklahoma Survey" is defined in Section 7.7.
"Owned Property" is defined in Section 1.1(a)(iii).
"Parking Access Easement" means the parking access easement in the
form mutually agreed upon by Buyer and Seller.
"Patents" means issued U.S. and foreign patents and pending patent
applications, patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extensions thereof, any
counterparts claiming priority therefrom, utility models, patents of
importations/confirmation, certificates of invention and similar statutory
rights.
"Permit No. 234 Landfill" is defined in Section 1.1(b)(xxii).
"Permits" means all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any Governmental
Authority, or any other Person, necessary for the past, present or anticipated
conduct of, or relating to the operation of the Business or ownership or use of
the Assets.
"Permitted Encumbrances" means the following Encumbrances and no
others: (a) liens for Taxes and other governmental charges and assessments which
are not yet due and payable or which are being contested in good faith by
appropriate Proceedings, (b) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen and other like liens arising in the
ordinary course of business for sums not yet due and payable or which are being
contested in good faith by appropriate Proceedings, (c) Encumbrances that are
disclosed in a Title Policy (exclusive of monetary encumbrances and judgments)
which are acceptable to Buyer's lender (provided that this requirement of
acceptability to Buyer's lender shall not apply if the Closing occurs) and which
do not, individually or in the aggregate, materially impair the use of the
Facilities affected thereby in a manner consistent with Seller's use thereof as
of the date hereof or materially detract from the value of the property affected
by such Encumbrances, (d) liens relating to deposits made in the ordinary course
of business consistent with past practice in connection with workers'
compensation, unemployment insurance and other types of social security or to
secure the performance of leases, trade contracts or other similar agreements,
(e) liens securing executory obligations under any lease that constitutes a
"capital lease" under GAAP, (f) any and all Requirements of Law including those
affecting the Facilities relating to zoning and land use, (g) Encumbrances that
will be released and, as appropriate, removed of record at or prior to Closing
by Seller, in accordance with the terms of this Agreement, (h) recorded utility
company rights, easements and franchises which are not violated by existing
improvements, buildings or structures, (i) the state of facts disclosed on the
Surveys, provided however, that such Surveys are in the form required pursuant
to Section 7.7 and, with respect to any additional state of facts that would be
disclosed on a Survey, updated through the date of
108
Closing, any such additional fact that does not materially impair the value or
use of the Facilities or any portion thereof in a manner consistent with the use
by Seller as of the date hereof and (j) Encumbrances set forth on Schedule 12.1.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
labor union, Governmental Authority or other entity of whatever nature.
"Phase I Study" means a Phase I site assessment, as defined in ASTM
Standard E 1527-00, or comparable site investigation.
"Phase II Study" means a Phase II site assessment, as defined in ASTM
Standard E19030-97 (2002) or comparable protocol, to include media sampling and
intrusive investigations or disclosures.
"Plans" is defined in Section 3.14(a).
"Plant 2" means the area labeled as Area 3 - Plant 2 on Exhibit 1
Restricted Areas Map (dated 01-20-2005) to the Declaration of Restrictive
Covenant and Easement.
"PRO-251" means Seller's Procedure PRO-251 as it changes from
time-to-time or any successor policy thereto.
"Proceeding" means any claim, action, suit, demand, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, inquiry, audit, examination or
investigation commenced, brought, conducted or heard by or before any court or
other Governmental Authority or any arbitrator or arbitration panel.
"Program Partners" means any Boeing Tier I or Tier II supplier.
"Projects" is defined in Section 6.21(a).
"Proportional Allocation" means with respect to an environmental
Liability each party's proportionate contribution to such environmental
Liability.
"Purchase Price Adjustment Statements" is defined in Section
1.6(a)(iii).
"Purchase Price Differential" is defined in Section 1.6(h)(iii).
"R&D Inventions" is defined in Section 6.21(a).
"Real Property Right of First Refusal Agreement" means the real
property right of first refusal agreement in the form mutually agreed upon by
Buyer and Seller.
"Reciprocal Access Agreement" means the reciprocal access agreement in
the form mutually agreed upon by Buyer and Seller.
"Red Restricted Areas" means, collectively, the 440 Landfill and Areas
2 through 7.
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"Required Consents" is defined in Section 7.5.
"Requirements of Law" means any foreign, federal, state and local
laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued
or promulgated by any Governmental Authority.
"Restricted Products" means all of the products set forth on Schedule
6.12(a) and all of the products referenced in the statement of work attached to
the Memorandum of Agreement (787), as will be superseded in its entirety by
Attachment 1 to the Special Business Provisions (787) on the date it is
executed, and any products manufactured for Derivatives (as such term is defined
in the relevant BCA Supply Agreement with respect to the applicable products).
"Restrictive Covenant (KDHE)" means the restrictive covenant with the
KDHE substantially in the form of Exhibit Z.
"Scope of Work" is defined in Section 6.13(a)(ii).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Seller" is defined in the recitals of this Agreement.
"Seller Group Member" means Seller and its directors, officers,
employees, agents, attorneys and consultants and their successors and assigns
and each Person, if any, who controls or may control Seller within the meaning
of the Securities Act.
"Seller Transaction Agreements" means this Agreement and all
agreements, instruments and documents being or to be executed and delivered by
Seller under this Agreement or in connection herewith.
"Seller's Cafeteria Plan" is defined in Section 6.2(i).
"Seller's Legal Opinion" means Seller's legal opinion given partially
by in-house counsel and partially by Sheppard, Mullin, Richter & Hampton LLP in
the forms mutually agreed upon by Buyer and Seller.
"Seller's Non-Union Pension Plan" is defined in Section 6.2(f).
"Seller's Pension Plans" is defined in Section 6.2(f).
"Seller's Rep Schedules" is defined in Section 11.7(j).
"Seller's Supplemental Pension and Saving Plans" is defined in Section
6.2(h).
"Seller's Union Pension Plan I" is defined in Section 6.2(f).
"Seller's Union Pension Plan II" is defined in Section 6.2(f).
110
"Severance Statement" is defined in Section 1.6(a)(iii).
"Shared Parking Agreement" means the shared parking agreement in the
form mutually agreed upon by Buyer and Seller.
"Shared Services Group" means a division of Seller dedicated to
providing internal company support and infrastructure.
"Site Access and Environmental Support Services Agreement" means the
site access and environmental support services agreement substantially in the
form of Exhibit O.
"Software" means computer programs, source code, object code,
executable code, firmware, and related documentation.
"Spares Inventory" means the Available Bin Spares Inventory in 108,
112 and kitting stores for the in production parts listed in the Special
Business Provisions (Sustaining) excluding any standard parts (like BACx-xxxx,
10-xxxx, etc.), vendor design parts, lease and insurance parts and any parts for
which there has not been any sales since December 31, 1997.
"Special Business Provisions (Repair Services)" means the special
business provisions for component repair hardware substantially in the form of
Exhibit EE.
"Special Business Provisions (787)" means the Special Business
Provisions with respect to the 787 program contemplated to be executed pursuant
to the terms of the Memorandum of Agreement (787).
"Special Business Provisions (Spares)" means the special business
provisions (spares) substantially in the form of Exhibit R.
"Special Business Provisions (Sustaining)" means the special business
provisions substantially in the form of Exhibit S.
"Special Business Provisions (Tech Services)" means the special
business provisions services substantially in the form of Exhibit DD.
"Storm Water Detention and Maintenance Closing Agreement" means the
storm water detention and maintenance closing agreement in the form mutually
agreed upon by Buyer and Seller.
"Strategic Alliance Agreement" means the strategic alliance agreement
substantially in the form of Exhibit T.
"Sublease (IRBs)" means the Sublease with respect to the assets
covered by the Industrial Revenue Bonds substantially in the form of Exhibit W.
"Substation Installation and Maintenance Easement" means the
substation installation and maintenance easement in the form mutually agreed
upon by Buyer and Seller.
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"Supplemental License Agreement (Ancillary Maintenance Repair and
Overall - Aircraft)" means the Ancillary Maintenance, Repair and Overhaul of
Aircraft Supplemental License Agreement No. 05-029 substantially in the form of
Exhibit F.
"Supplemental License Agreement (Ancillary Maintenance Repair and
Overall - Components)" means the Ancillary Maintenance, Repair and Overhaul of
Aircraft Parts Supplemental License Agreement No. 05-030 substantially in the
form of Exhibit E.
"Supplemental License Agreement (Know-How)" means the Ancillary
Know-How Supplemental License Agreement No. WS-004C substantially in the form of
Exhibit G.
"Supplemental License Agreement (Spare Parts)" means the Ancillary
Spares Supplemental License Agreement No. 05-028C substantially in the form of
Exhibit D.
"Surveys" is defined in Section 7.7.
"Target Net Working Capital Amount" means the Net Working Capital of
the Business as set forth in the Audited Interim Financial Statements including
an unaudited value of Spares Inventory as of February 17, 2005 as set forth on a
schedule attached to the Audited Interim Financial Statements.
"Tax" (and, with correlative meaning, "Taxes" and "Taxing") means any
federal, state, local or foreign income, gross receipts, property, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, transfer or excise tax, or any other tax, custom,
duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, imposed by any Governmental
Authority.
"Tax Arbitrator" is defined in Section 1.4(c).
"Tax Purchase Price" is defined in Section 1.4(b).
"Tax Return" means any return, report or similar statement required to
be filed with respect to any Tax (including any attached Schedules), including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax and any affiliated, consolidated, combined, unitary
or similar return.
"Tentative Purchase Price" is defined in Section 1.3(c).
"Title Company" is defined in Section 7.7.
"Title Document" is defined in Section 5.10.
"Title Policies" is defined in Section 7.7.
"Transition Real Estate Lease" is the transition real estate lease in
the form mutually agreed upon by Buyer and Seller.
112
"Transition Services Agreement" means a transition services agreement
substantially in the form of Exhibit B.
"Tulsa Airport Use Agreements" is defined in Section 3.7(k).
"Unaudited Annual Financial Statements" is defined in Section 3.3(a).
"Unaudited Financial Statements" is defined in Section 3.3(a).
"Unaudited Interim Financial Statements" is defined in Section 3.3(a).
"Utility Support Services Agreement" is the utility support services
agreement in the form mutually agreed upon by Buyer and Seller.
"WARN" means the Workers Adjustment, Retraining and Notification Act,
29 U.S.C. Section 2101, et seq.
"WARN Liabilities" is defined in Section 6.2(c).
"Warranty Deed" means a warranty deed with covenants against Seller's
acts in the form mutually agreed upon by Buyer and Seller.
"Westar" is Kansas Gas & Electric.
"Wichita Facility" means the Facility in Wichita, Kansas.
"Wichita Site" means the real property consisting of the IDS Site and
the Wichita Facility.
"Wichita Survey" is defined in Section 7.7.
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IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be executed as of the day and year first above written.
THE BOEING COMPANY
By: /s/ Bryan Gerard
------------------------------------
Name: Bryan Gerard
Title: Director-New Business Ventures
MID-WESTERN AIRCRAFT SYSTEMS, INC.
By: /s/ Nigel Wright
------------------------------------
Name: Nigel Wright
Title:
---------------------------------