Delaware
3728
20-2436320
(State or Other Jurisdiction of
Incorporation or Organization)
(Primary Standard Industrial
Classification Code No.)
(I.R.S. Employer
Identification No.)
Joel I. Greenberg, Esq.
Mark S. Kingsley, Esq. Kaye Scholer LLP 425 Park Avenue New York, New York 10022 (212) 836-8000 |
Gloria Farha Flentje, Esq.
General Counsel Spirit AeroSystems, Inc. 3801 South Oliver Wichita, Kansas 67210 (316) 526-9000 |
William J. Whelan, III, Esq.
Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, New York 10019 (212) 474-1000 |
Title of Each Class of | Proposed Maximum | Amount of | ||||
Securities to be Registered | Aggregate Offering Price | Registration Fee | ||||
Class A Common Stock, par value $0.01 per share
|
$500,000,000(1) | $53,500 | ||||
(1) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended. |
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
Proceeds | ||||||||||||||||
Underwriting | to Spirit | Proceeds to | ||||||||||||||
Price to | Discounts and | AeroSystems | Selling | |||||||||||||
Public | Commissions | Holdings, Inc. | Stockholders | |||||||||||||
Per Share
|
$ | $ | $ | $ | ||||||||||||
Total
|
$ | $ | $ | $ |
Credit Suisse | Goldman, Sachs & Co. | Morgan Stanley |
i
ii
| our ability to continue to grow our business and execute our growth strategy; | |
| the build rates of certain Boeing aircraft including, but not limited to, the B737 program, the B747 program, the B767 program and the B777 program and build rates of the Airbus A320 and A380 programs; | |
| our ability to enter into supply arrangements with additional customers and to satisfy performance requirements under existing supply contracts with Boeing and Airbus; | |
| any adverse impact on Boeings production of aircraft resulting from reduced orders by Boeings customers; | |
| the success and timely progression of Boeings new B787 aircraft program, including receipt of necessary regulatory approvals; | |
| future levels of business in the aerospace and commercial transport industries; | |
| competition from original equipment manufacturers and other aerostructures suppliers; | |
| the effect of governmental laws, such as U.S. export control laws, environmental laws and agency regulation, in the U.S. and abroad; | |
| the effect of new commercial and business aircraft development programs, their timing and resource requirements that may be placed on us; | |
| the cost and availability of raw materials; | |
| our ability to recruit and retain highly skilled employees and our relationships with the unions representing many of our employees; | |
| spending by the United States and other governments on defense; | |
| our continuing ability to operate successfully as a stand alone company; | |
| the outcome or impact of ongoing or future litigation and regulatory actions; and | |
| our exposure to potential product liability claims. |
iii
iv
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2
3
4
5
6
7
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
8
9
10
11
Class A common stock offered by us
shares
Class A common stock offered by the selling stockholders
shares
Common stock outstanding after this offering
shares
of class A common stock
and shares
of class B common stock
Voting rights of class A
common stock
Our class A common stock is entitled to one vote per share.
Our class B common stock, which is not being offered in
this offering but votes together with our class A common
stock as a single class, is entitled to ten votes per share
(reducing to one vote per share under certain limited
circumstances). Our class B common stock, which is
convertible into shares of our class A common stock on a
1-for-1
basis, is
identical to our class A common stock in all other respects.
Use of proceeds
We estimate that the net proceeds from the sale of shares of our
class A common stock in this offering will be approximately
$ million.
We will not receive any proceeds from the sale of the shares by
the selling stockholders.
We intend to use the net proceeds from this offering to repay
approximately
$ million
of debt under our senior secured credit facility and to pay
approximately
$ million
of the obligations which will become due upon the closing of the
offering under our union equity participation program. The
remaining
$ million
will be used for working capital, capital expenditures and
general corporate purposes. See Use of Proceeds.
Dividend policy
We currently do not intend to pay cash dividends and, under
conditions in which our cash is below specified levels, are
prohibited from doing so under credit agreements governing our
credit facilities.
Risk factors
See Risk Factors on page 12 of this prospectus
for a discussion of factors you should carefully consider before
deciding to invest in our class A common stock.
Proposed NYSE symbol
SPR
no exercise by the underwriters of their option to purchase
additional shares;
the
anticipated -for- stock
split of our common stock that will occur immediately prior to
the consummation of this offering;
the issuance
of shares
of class A common stock pursuant to our union equity
participation program upon the closing of this offering; and
exclusion
of shares
issued to certain members of our management and to certain
directors of Spirit which are subject to vesting requirements
under our benefit plans.
Table of Contents
Table of Contents
Spirit Holdings
Predecessor
Unaudited Pro Forma As
Adjusted for this Offering
Period
Period from
from
Three
June 17,
Three
Period from
January 1,
Months
2005
Months
June 17,
2005
Fiscal Year Ended
Ended
through
Ended
2005 through
through
March 30,
December 29,
March 30,
December 29,
June 16,
December 31,
December 31,
2006
2005
2006
2005
2005
2004
2003
(Dollars in millions)
transferred
$
671
$
1,208
$
$
$
N/A
$
N/A
$
N/A
533
1,057
1,164
2,074
2,064
77
188
91
173
144
610
1,245
1,254
2,247
2,208
60
(37
)
N/A
N/A
N/A
(11
)
(25
)
N/A
N/A
N/A
8
17
N/A
N/A
N/A
57
(45
)
N/A
N/A
N/A
(25
)
(14
)
N/A
N/A
N/A
$
32
$
(59
)
$
$
$
N/A
$
N/A
$
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$
$
$
$
$
N/A
$
N/A
$
N/A
$
78
$
(5
)
$
$
$
N/A
$
N/A
$
N/A
94
145
48
54
43
$
236
$
241
$
$
$
1
$
3
$
4
479
437
431
481
474
1,848
1,654
1,020
1,044
1,093
720
726
N/A
N/A
N/A
374
326
N/A
N/A
N/A
$
32
$
(59
)
$
$
$
N/A
$
N/A
$
N/A
25
14
N/A
N/A
N/A
11
25
N/A
N/A
N/A
(7
)
(15
)
amortization(2)
17
30
40
91
97
$
78
$
(5
)
$
$
$
N/A
$
N/A
$
N/A
$
123
$
107
$
$
$
N/A
$
N/A
$
N/A
(1)
Ending balance of accounts receivable, inventory and accounts
payable on net basis.
(2)
Excludes financing fee amortization.
(3)
EBITDA represents net income before interest
expense, interest income, income tax provision and depreciation
and amortization. EBITDA does not represent and should not be
considered as an alternative to net income or cash flow from
operations, as determined in accordance with U.S. GAAP, and our
calculations thereof may not be comparable to similarly entitled
measures reported by other
Table of Contents
companies. We present EBITDA because we believe it is a useful
indicator of our operating performance. Our management uses
EBITDA principally as a measure of our operating performance and
believes that EBITDA is useful to investors because it is
frequently used by securities analysts, investors and other
interested parties in their evaluation of companies in
industries similar to ours. We also believe EBITDA is useful to
our management and investors as a measure of comparative
operating performance between time periods and among companies
as it is reflective of changes in pricing decisions, cost
controls and other factors that affect operating performance.
Our management also uses EBITDA for planning purposes, including
the preparation of our annual operating budget and financial
projections. EBITDA, as presented, may not be comparable to
similarly titled measures of other companies.
EBITDA does not represent and should not be considered as an
alternative to results of operations under U.S. GAAP and has
significant limitations as an analytical tool. Although we use
EBITDA as a measure to assess the performance of our business,
the use of EBITDA is limited because it excludes certain
material costs. For example, it does not include interest
expense, which is a necessary element of our costs and ability
to generate revenue, because we have borrowed money in order to
finance our operations. Because we use capital assets,
depreciation expense is a necessary element of our costs and
ability to generate revenue. EBITDA also does not include the
payment of taxes, which is also a necessary element of our
operations. Because EBITDA does not account for these expenses,
its utility as a measure of our operating performance has
material limitations. Because of these limitations management
does not view EBITDA in isolation or as a primary performance
measure and also uses other measures, such as net income, net
sales, bookings and operating income, to measure operating
performance.
(4)
The following table shows certain items which are included in
EBITDA. We believe this table, when reviewed in connection with
our presentation of EBITDA, provides another useful tool to our
management and investors for measuring comparative operating
performance between time periods and among companies. In
addition to EBITDA, our management assesses the adjustments
presented in this table when preparing our annual operating
budget and financial projections. Adjusted EBITDA, as presented,
may not be comparable to similarly titled measures of other
companies.
Spirit Holdings
Period from
Three Months
June 17, 2005
Ended
through
March 30, 2006
December 29, 2005
(Dollars in millions)
$
78
$
(5
)
39
76
6
36
45
112
$
123
$
107
(a)
Represents B787 research and development costs which are
expensed and defined as an allowable addback for the purpose of
calculating EBITDA in the credit agreement governing one of
Spirits credit facilities.
(b)
Represents non-recurring costs associated with establishing a
stand alone business.
Table of Contents
12
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14
15
16
17
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| changes in regulatory requirements; | |
| domestic and foreign government policies, including requirements to expend a portion of program funds locally and governmental industrial cooperation requirements; | |
| fluctuations in foreign currency exchange rates; | |
| the complexity and necessity of using foreign representatives and consultants; | |
| uncertainties and restrictions concerning the availability of funding credit or guarantees; | |
| imposition of tariffs or embargoes, export controls and other trade restrictions; | |
| the difficulty of management and operation of an enterprise spread over various countries; | |
| compliance with a variety of foreign laws, as well as U.S. laws affecting the activities of U.S. companies abroad; and | |
| economic and geopolitical developments and conditions, including international hostilities, acts of terrorism and governmental reactions, inflation, trade relationships and military and political alliances. |
19
| We did not maintain effective internal control over the quarterly closing and consolidation process, including the account reconciliation and review process and accuracy of certain accounts receivable transactions. Specifically, controls over the reconciliation of the accounts receivable subsidiary ledger to its associated general ledger balances, application of certain cash payments from customers and the investigation and resolution of customer payment discrepancies were ineffective to appropriately record certain accounts receivable transactions. This control deficiency resulted in adjustments to the accounts receivable, revenue and cash accounts. If not remediated, this deficiency could result in a material misstatement of accounts receivable or related accounts. | |
| We did not maintain effective controls over our income tax provision and the related balance sheet accounts. Specifically, controls over the accuracy of the income tax provision and related deferred tax accounts as well as our related financial statement disclosures in accordance with Statement of Financial Accounting Standards, or SFAS, No. 109, Accounting for Income Taxes , were ineffective to appropriately apply SFAS No. 109 in evaluating our required valuation allowance and establishing the tax basis of the acquired assets and assumed liabilities of the Boeing Acquisition. This control deficiency resulted in adjustments to the deferred tax, valuation allowance and income tax provision accounts as well as our related SFAS No. 109 financial statement disclosures. | |
| We did not maintain effective controls over the accuracy and completeness of our interim financial statements of our Tulsa, Oklahoma facility. Specifically, there were ineffective controls over the reconciliation of certain general ledger accounts and the aggregation and reporting of those accounts into our financial statements which could have resulted in a material misstatement in our financial statements. |
20
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| demands on management related to the increase in size after the transaction; | |
| the diversion of managements attention from the management of daily operations to the integration of operations; | |
| difficulties in the assimilation and retention of employees; | |
| difficulties in the assimilation of different cultures and practices, as well as in the assimilation of geographically dispersed operations and personnel, who may speak different languages; | |
| difficulties combining operations that use different currencies or operate under different legal structures; |
22
| difficulties in the integration of departments, systems (including accounting systems), technologies, books and records and procedures, as well as in maintaining uniform standards, controls (including internal accounting controls), procedures and policies; and | |
| constraints (contractual or otherwise) limiting our ability to consolidate, rationalize and/or leverage supplier arrangements to achieve integration. |
| our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or other general corporate purposes may be impaired; | |
| we must use a significant portion of our cash flow for payments on our debt, which will reduce the funds available to us for other purposes; | |
| we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited; | |
| our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt; and | |
| our ability to borrow additional funds or to refinance debt may be limited. |
23
| incur additional debt or issue our preferred stock; | |
| pay dividends or make distributions to our stockholders; | |
| repurchase or redeem our capital; | |
| make investments; | |
| incur liens; | |
| enter into transactions with our stockholders and affiliates; | |
| sell certain assets; | |
| acquire the assets of, or merge or consolidate with, other companies; and | |
| incur restrictions on the ability of our subsidiaries to make distributions or transfer assets to us. |
24
| multi-vote shares of common stock, which are owned by the Onex entities and management stockholders; | |
| advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings; and | |
| the authority of the board of directors to issue, without stockholder approval, up to 10 million shares of preferred stock with such terms as the board of directors may determine and an additional shares of common stock. |
25
| actual or anticipated fluctuations in our operating results; | |
| changes in aerostructures pricing; | |
| our competitors and customers announcements of significant contracts, acquisitions or strategic investments; | |
| changes in our growth rates or our competitors and customers growth rates; | |
| the timing or results of regulatory submissions or actions with respect to our business; | |
| our inability to raise additional capital; | |
| conditions of the aerostructure industry or in the financial markets or economic conditions in general; and | |
| changes in stock market analyst recommendations regarding our class A common stock, other comparable companies or the aerospace industry generally. |
26
27
| breaches by Boeing of its representations, warranties, covenants and agreements contained in the Asset Purchase Agreement; | |
| damages relating to separating the portion of Boeings Wichita facilities not acquired by us from the portion acquired by us; | |
| damages relating to noncompliance with certain laws by Boeing prior to closing; | |
| liability for defective manufacture of products shipped by Boeing prior to closing; | |
| certain environmental liabilities, as more fully described under Business Environmental Matters; and | |
| tax liabilities for periods prior to closing. |
28
29
30
| approximately $ million to repay debt outstanding under our senior secured credit facility, including $ million under our Term Loan B; | |
| approximately $ million to pay a portion of the obligations which will become due upon the closing of this offering under our union equity participation program; and | |
| the balance for working capital, capital expenditures and other general corporate purposes. |
31
32
| our consolidated capitalization on an actual basis, | |
| our consolidated capitalization on a pro forma basis to give effect to the sale of shares of class A common stock by us in this offering at an assumed initial public offering price of $ per share, and the application of those proceeds as described in Use of Proceeds. |
As of March 30, 2006 (1) | ||||||||||
Actual | Pro Forma | |||||||||
(Dollars in millions) | ||||||||||
(Unaudited) | ||||||||||
Long-term debt, including current portion:
|
||||||||||
Revolving credit facility(2)
|
$ | | $ | |||||||
Term loan
|
696.5 | |||||||||
Capital leases and other debt
|
23.3 | |||||||||
Total senior debt
|
719.8 | |||||||||
Subordinated secured delayed draw credit facility
|
| |||||||||
Total debt
|
$ | 719.8 | $ | |||||||
Shareholders equity
|
||||||||||
Preferred stock, $0.01 par value per share,
10,000,000 shares authorized; no shares issued and
outstanding
|
| |||||||||
Class A common stock, $0.01 par value per
share, shares
authorized; shares
issued and outstanding,
actual; shares
issued and outstanding, as adjusted
|
| |||||||||
Class B common stock, $0.01 par value per
share, shares
authorized; shares
issued and outstanding,
actual; shares
issued and outstanding, as adjusted
|
0.4 | |||||||||
Additional paid-in capital
|
385.5 | |||||||||
Other comprehensive income
|
15.0 | |||||||||
Retained earnings (deficit)
|
(27.2 | ) | ||||||||
Total equity
|
373.7 | |||||||||
Total capitalization
|
$ | 1,093.5 | $ | |||||||
(1) | Excludes cash payment of $139.0 million for the BAE Acquisition on April 1, 2006. |
(2) | The revolving credit facility provides for availability of borrowings and issuances of letters of credit for up to $175.0 million. As of March 30, 2006, we had $175.0 million of availability under the revolving credit facility, net of $4.2 million of letters of credit outstanding. |
33
Assumed initial public offering price per share
|
$ | ||||||||
Pro forma net tangible book value per share at March 30,
2006
|
$ | ||||||||
Increase in pro forma net tangible book value per share
attributable to new investors
|
|||||||||
Pro forma adjusted net tangible book value per share after this
offering
|
|||||||||
Dilution per share to new investors
|
$ | ||||||||
Shares Purchased | Total Consideration | ||||||||||||||||||||
Average Price | |||||||||||||||||||||
Number | Percent | Amount | Percent | Per Share | |||||||||||||||||
Existing stockholders
|
% | $ | % | $ | |||||||||||||||||
New investors
|
$ | ||||||||||||||||||||
Total
|
100 | % | $ | $ | 100 | % | |||||||||||||||
34
| the pro forma consolidated balance sheet as of March 30, 2006, assuming this offering occurred on March 30, 2006 and the proceeds were applied as described in Use of Proceeds; | |
| the pro forma consolidated statement of operations for the three months ended March 30, 2006, assuming this offering occurred on January 1, 2005 and the proceeds were applied as described in Use of Proceeds; and | |
| the pro forma consolidated statement of operations for the fiscal year ended December 29, 2005 assuming the Boeing Acquisition, this offering and the application of proceeds as described in Use of Proceeds all occurred on January 1, 2005. |
35
Pro Forma
Adjustments
for the
Pro Forma
March 30,
Offering
March 30,
2006
Transactions
2006
(Dollars in millions)
$
236
175
537
10
958
596
294
$
1,848
$
321
13
20
354
707
300
113
0
386
15
(27
)
$
374
$
1,848
(1) | Includes accrued fringe benefits and other accrued liabilities. |
36
Pro Forma
Adjustments
Pro Forma
Three Months
for the
Three Months
Ended
Offering
Ended March 30,
March 30, 2006
Transactions
2006
(Dollars in millions, except per share amounts)
$
671
$
$
533
35
43
611
60
(11
)
7
1
57
(25
)
$
32
$
$
37
| adjustments for revenues recorded as a stand alone business, based on actual deliveries for the period prior to the Boeing Acquisition with pricing as determined under our supply agreements with Boeing, rather than as a captive division whose costs are absorbed; | |
| adjustments to compensation and benefits as a result of new union wage rates, incentive programs and benefit plans that became effective at the time of the Boeing Acquisition; | |
| adjustments to interest, depreciation and amortization expense resulting from the $700 million Term Loan B, valuation of the assets under purchase accounting and the allocation of negative goodwill; and | |
| adjustments for certain costs, including service fees payable to Onex, taxes and the recalculation of accreted income related to Spirits non-interest bearing long-term receivable from Boeing in the aggregate amount of $277 million. |
38
Spirit Holdings
Predecessor
Predecessor
Actual Results
Actual Results
Pro Forma
Period From
Spirit Holdings
Period From
Period From
February 7, 2005
Pro Forma
January 1, 2005
Pro Forma Adjustments
January 1, 2005
through
Year Ended
through
through
December 29,
December 29,
June 16, 2005 (a)
Acquisition (b)
Labor (c)
June 16, 2005
2005(1)
2005
(Dollars in millions, except per share amounts)
$
$
1,165.3
$
$
1,165.3
$
1,208.4
$
2,373.7
Cost of products transferred (Predecessor)
1,163.9
(141.3
)
(31.4
)
991.2
1,056.8
2,048.0
(0.2
)
(0.2
)
(0.2
)
90.7
97.9
188.6
188.5
377.1
(1,254.4
)
1,208.7
31.4
(14.3
)
(36.9
)
(51.2
)
(19.9
)
(19.9
)
(19.4
)
(39.3
)
8.2
8.2
11.0
19.2
(17.4
)
(17.4
)
(13.9
)
(31.3
)
$
(1,254.4
)
$
1,179.6
$
31.4
$
(43.4
)
$
(59.2
)
$
(102.6
)
(1) | Spirit Holdings was formed on February 7, 2005 as a holding company of Spirit. Spirits operations commenced on June 17, 2005, following the closing of the Boeing Acquisition. |
(2) | For purposes of the Pro Forma Net Sales adjustment for the period from January 1, 2005 through June 16, 2005, sales were recorded upon the transfer of airplane units to Boeing. After the Boeing Acquisition, we adopted the use of contract accounting for profit recognition. The pro forma statement of operations data presented for the period from January 1, 2005 through June 16, 2005 does not include an adjustment to convert Boeing Wichitas historical accounting methodology to contract accounting. |
39
Spirit Holdings
Predecessor
Pro Forma
Pro Forma
Adjustments for
Adjustment for
Predecessor Pro
Spirit Holdings
the Offering
Spirit Holdings
Predecessor
the Offering
Forma as
Actual Results
Transactions
Pro Forma as
Spirit Holdings
Pro Forma
Transactions
Adjusted Period
Period From
Period From
Adjusted Period
Pro Forma as
Period From
Period From
From
June 17, 2005
January 1, 2005
From June 17,
Adjusted Year
January 1, 2005
January 1, 2005
January 1, 2005
through
through
2005 through
Ended
through
through June 16,
through
December 29,
December 29,
December 29,
December 29,
June 16, 2005
2005
June 16, 2005
2005(1)
2005(1)
2005(1)
2005
(Dollars in millions, except per share amounts)
$
1,165.3
$
1,208.4
Cost of products transferred (Predecessor)
991.2
1,056.8
(0.2
)
188.6
188.5
(14.3
)
(36.9
)
(19.9
)
(19.4
)
8.2
11.0
(17.4
)
(13.9
)
$
(43.4
)
$
(59.2
)
(1) | Spirit Holdings was formed on February 7, 2005 as a holding company of Spirit. Spirits operations commenced on June 17, 2005, following the closing of the Boeing Acquisition. |
(2) | For purposes of the Pro Forma Net Sales adjustment for the period from January 1, 2005 through June 16, 2005, sales were recorded upon the transfer of airplane units to Boeing. After the Boeing Acquisition, we adopted the use of contract accounting for profit recognition. The pro forma statement of operations data presented for the period from January 1, 2005 through June 16, 2005 does not include an adjustment to convert Boeing Wichitas historical accounting methodology to contract accounting. |
40
The historical financial data is presented to reflect the operation of Boeing Wichita as a cost center of BCA, not a separate legal entity. Historically, Boeing Wichita was an internal supplier of parts and assemblies for the B737, B747, B757, B767 and B777 airplane programs of BCA, with few sales to third party customers. Boeing Wichita included the manufacturing operations of BCA located in Wichita, Kansas; Tulsa, Oklahoma and McAlester, Oklahoma along with certain shared assets and operations of Boeings Shared Services Group. This historical financial information reflects the actual financial statements of Boeing Wichita. Certain amounts have been allocated from Boeings consolidated financial statements. | |
Pursuant to the Asset Purchase Agreement, Spirit acquired Boeing Wichita (including the assumption of certain liabilities). Boeing Wichita is the predecessor entity of Spirit Holdings for the periods prior to the Boeing Acquisition. The historical financial statements for the period from January 1, 2005 through June 16, 2005 present the associated historical assets, liabilities and operating costs of Boeing Wichita. | |
Since Boeing Wichita was operated as a cost center, costs incurred and allocated to Boeing Wichita were absorbed by BCA and revenues were not recorded in Boeing Wichitas historical financial statements. Cost of products transferred includes manufacturing labor, material and non-labor and site overhead costs. Fringe benefit costs are allocated to the cost of products transferred through the fringe rate as a percentage of labor dollars. Fringe costs include elements such as vacation, holiday, sick leave, medical, pension and postretirement medical, as described in the notes to our historical financial statements. Costs administered by Boeing are not allocated to the cost of products transferred. | |
Transactions with Boeing were conducted on a non-cash basis, and generally involved performance under intra-company arrangements between Boeing Wichita and Boeing. | |
Certain costs were incurred by Boeing on behalf of Boeing Wichita. To the extent practical, these costs were discretely transferred to Boeing Wichita, but in some cases, an allocation methodology was used to transfer the costs to Boeing Wichita. Management believes that these allocations are reasonable, but may not be indicative of costs that would have been incurred had Boeing Wichita been operated on a stand alone basis. These costs fall into the following three major categories and all such costs have been included in Boeing Wichitas historical financial statements. | |
First, the historical financial statements include costs directly related to the activities of Boeing Wichita, which were incurred by Boeing and transferred to Boeing Wichita for administrative purposes, including payroll, accounts payable, travel and employee benefits such as pension costs, and medical coverage. These costs are primarily included in cost of products transferred and the balance is included in SG&A, R&D and other period costs. | |
Second, costs incurred by Boeing on behalf of Boeing Wichita represented the purchase of parts from Boeing that are incorporated into the products of Boeing Wichita. The cost of these parts is treated the same as the cost of parts acquired from third parties and is included in cost of products transferred. | |
Third, costs incurred by Boeing on behalf of Boeing Wichita are either general and administrative or relate to support services provided by Boeing for the benefit of Boeing Wichita. These costs, except for those identified as general and administrative, are included in cost of products transferred. |
41
The Boeing Acquisition represents the impact of the following items: | |
(i) Net Sales. |
The adjustments to produce total net sales are outlined as follows: |
1/1/2005- | |||||
6/16/2005 | |||||
Program Revenue at Supply Agreement Prices(1)
|
$ | 1,073.3 | |||
Other Sales at Supply Agreement Prices(1)
|
47.4 | ||||
B787 Revenue(1)
|
21.3 | ||||
Spares Sales at Supply Agreement Prices(1)
|
33.7 | ||||
Amortization of Intangibles and Depreciation of Tooling Related
to Exclusivity Agreement(2)
|
(10.4 | ) | |||
Total Revenue
|
$ | 1,165.3 |
(1) | This adjustment reflects the application of the contractually-determined pricing from our supply agreements with Boeing to the actual products and services transferred to Boeing during the period from January 1, 2005 through June 16, 2005. See Business Our Relationship with Boeing. |
(2) | This adjustment reflects the reduction of revenue related to the amortization of intangibles and tooling depreciation in accordance with EITF No. 01-3, Accounting in a Business Combination for Deferred Revenue of an Acquiree and EITF No. 01-9, Accounting for Consideration Given by a Vendor to a Customer (including a Reseller of the Vendors Products). |
(ii) Cost of Sales/ Costs of Products Transferred. |
The adjustments to cost of products transferred are as follows: |
1/1/2005- | |||||
6/16/2005 | |||||
B787 Reclassification(1)
|
$ | (56.2 | ) | ||
G&A Reclassification(2)
|
(38.3 | ) | |||
Capitalized Tooling(3)
|
(18.5 | ) | |||
Depreciation Expense(4)
|
(28.3 | ) | |||
Total
|
$ | (141.3 | ) | ||
(1) | Cost of products transferred has been reduced by $56.2 million to reflect the reclassification of certain B787 related cost of products transferred as SG&A to conform to Spirits classification. Historically, Boeing Wichita included these expenses in cost of products transferred. Spirit classifies these expenses as SG&A. |
(2) | Cost of products transferred has been reduced by $38.3 million to eliminate costs associated with accounting, human resources, payroll, security and other period expenses that were historically recorded by Boeing Wichita as a cost of products transferred. These costs were reclassified as SG&A to conform to Spirits classification. |
(3) | Cost of products transferred has been reduced by $18.5 million to eliminate the costs associated with tooling expenses. Historically, Boeing Wichita expensed certain tooling assets. Spirit capitalized these tooling assets after the closing of the Boeing Acquisition. |
(4) | Cost of products transferred was reduced for depreciation expense of $28.3 million due to the lower asset values resulting from the Boeing Acquisition, including the recognition and allocation of negative goodwill. |
42
(iii) SG&A, R&D and Other Period Costs. |
SG&A, R&D and other period costs are outlined as follows: |
1/1/2005- | |||||
6/16/2005 | |||||
B787 Reclassification(1)
|
$ | 56.2 | |||
SG&A Reclassification(2)
|
38.3 | ||||
Other(3)
|
3.4 | ||||
Total
|
$ | 97.9 | |||
(1) | SG&A has been increased by $56.2 million to reflect the reclassification of certain B787-related cost of products transferred as SG&A to conform to Spirits classification of costs. Historically, Boeing Wichita included these costs in cost of products transferred. Spirit classifies these expenses as SG&A. |
(2) | SG&A has been adjusted by $38.3 million to add costs associated with accounting, human resources, payroll, security and other period costs that were reclassified from costs of products transferred to SG&A to conform to Spirits classification of costs. |
(3) | Other period costs were increased by $3.4 million, including (a) amortization of favorable leasehold interest and other identified intangibles resulting from the Boeing Acquisition and (b) the Onex service fee ($2 million on annual basis, prorated for five and a half months). |
(iv) Interest Expense and Financing Fee Amortization. The pro forma adjustments to interest expense and financing fee amortization are based on the borrowings to finance the Boeing Acquisition as presented below: |
1/1/2005- | ||||
6/16/2005 | ||||
Term Loan B(1)
|
$ | 17.5 | ||
Amortization of Loan Fees(2)
|
2.4 | |||
Interest Expense and Financing Fee Amortization
|
$ | 19.9 | ||
(1) | The Term Loan Bs interest rate was determined as LIBOR plus 225 basis points. The following rates were used for calculating the interest for the Term Loan B during the months set forth below: |
Interest | ||||
Rate | ||||
January 2005
|
5.00 | % | ||
February 2005
|
5.17 | % | ||
March 2005
|
5.37 | % | ||
April 2005
|
5.46 | % | ||
May 2005
|
5.59 | % | ||
June 2005
|
5.68 | % |
The effect of a 0.125% change in the interest rate on the Term Loan B would increase or decrease annual pro forma interest expense by $0.8 million. |
(2) | Deferred financing amortization expense for the period from January 1, 2005 through June 16, 2005 is based on monthly amortization of deferred financing fees incurred due to the debt borrowed to fund the Boeing Acquisition. |
(v) Other Income and Expense, Net. Other income and expense, net has been adjusted to account for the estimated accretion income related to Spirits non-interest bearing long-term receivable from Boeing in the aggregate amount of $277 million payable in 2007, 2008 and 2009 attributable to the acquisition of title of various tooling and other capital assets. |
43
(vi) Income Taxes. The pro forma tax adjustment of $17.4 million to income taxes reflects the tax effect of the pro forma adjustment to operating income. Tax expense was based on the following assumptions: (1) all actual temporary and permanent book versus tax differences as recognized by Spirit Holdings in the post-Boeing Acquisition period in 2005 were applied to the pre-Boeing Acquisition period in 2005 and (2) 100% of the actual valuation allowance recorded on net deferred tax assets utilized by Spirit in the post-Boeing Acquisition period in 2005 was assumed to be consistent with valuation allowance on net deferred tax assets for the pre-Boeing Acquisition period in 2005. |
New union wage rates took effect upon, and pension, health and welfare benefits, post-retirement and incentive plans were adjusted as a result of, the Boeing Acquisition. The historical costs incurred have been adjusted by $11.6 million as a result of wage changes and $19.8 million as a result of fringe rate changes. The wage reduction adjustment was calculated using the average number of union employees as of each of January 1, 2005 and June 16, 2005 and the difference between the actual wage rates in effect as of each of January 1, 2005 and June 30, 2005. | |
Actual fringe rates as a percentage of labor incurred by us for the period from June 17, 2005 through December 29, 2005 were applied to the lower base labor cost to calculate the fringe rate adjustment. |
44
Spirit Holdings | Predecessor | ||||||||||||||||||||||||||||
Three | Period from | Period from | |||||||||||||||||||||||||||
Months | June 17, 2005 | January 1, | Fiscal Year Ended | ||||||||||||||||||||||||||
Ended | through | 2005 through | |||||||||||||||||||||||||||
March 30, | December 29, | June 16, | December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||
2006 | 2005 | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||
Statement of Income Data:
|
|||||||||||||||||||||||||||||
Net sales
|
$ | 670.8 | $ | 1,208.4 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Cost of sales
|
533.0 | 1,056.8 | $ | 1,163.9 | $ | 2,074.3 | $ | 2,063.9 | $ | 2,350.7 | $ | 2,945.0 | |||||||||||||||||
Selling, general & administrative expenses
|
35.3 | 110.2 | 79.7 | 155.1 | 116.7 | 135.1 | 138.1 | ||||||||||||||||||||||
Research & development
|
42.4 | 78.3 | 11.0 | 18.1 | 17.3 | 18.5 | 21.9 | ||||||||||||||||||||||
Special charges(1)
|
0.0 | 0.0 | 0.0 | 0.0 | 10.3 | 0.0 | 49.0 | ||||||||||||||||||||||
Operating income (loss)
|
60.1 | (36.9 | ) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Interest expense and financing fee amortization
|
(11.2 | ) | (25.1 | ) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Other income (loss)
|
8.5 | 16.7 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Income (loss) before income taxes
|
57.4 | (45.3 | ) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Income taxes
|
(25.4 | ) | (13.9 | ) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Net income (loss)
|
32.0 | (59.2 | ) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Net income (loss) per share, basic
|
N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
Shares used in per share calculation, basic
|
N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
Net income (loss) per share, diluted
|
N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
Shares used in per share calculation, diluted
|
N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
Other Financial Data:
|
|||||||||||||||||||||||||||||
Cash flow provided by (used in) operating activities
|
90.0 | 223.8 | (1,177.8 | ) | (2,164.9 | ) | (2,081.8 | ) | (2,281.8 | ) | (3,034.3 | ) | |||||||||||||||||
Cash flow provided by (used in) investing activities
|
(93.8 | ) | (1,030.3 | ) | (48.2 | ) | (54.4 | ) | (43.3 | ) | (50.4 | ) | (61.3 | ) | |||||||||||||||
Cash flow provided by (used in) financing activities
|
(1.3 | ) | 1,047.8 | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Capital expenditures
|
(93.8 | ) | (144.6 | ) | (48.2 | ) | (54.4 | ) | (43.3 | ) | (50.4 | ) | (61.3 | ) |
45
Spirit Holdings
Predecessor
As of
As of
March 30,
December 29,
December 31,
December 31,
December 31,
December 31,
2006
2005
2004
2003
2002
2001
(Dollars in millions)
$
236.2
$
241.3
$
3.0
$
3.6
$
1.3
$
1.7
175.0
99.6
2.0
2.0
1.6
1.6
537.2
505.7
524.6
529.4
535.1
683.9
595.9
518.8
511.0
555.3
611.8
667.1
1,847.9
1,654.3
1,043.6
1,093.3
1,153.1
1,358.1
719.8
721.6
N/A
N/A
N/A
N/A
706.7
710.0
N/A
N/A
N/A
N/A
373.7
326.4
N/A
N/A
N/A
N/A
(1) | In 2001, a special charge was allocable to Boeing Wichita in connection with the terrorist attacks of September 11, 2001. In 2003, a charge was allocable to Boeing Wichita in connection with the close-out of the Boeing B757 program. |
(2) | Prior to the Boeing Acquisition, the Predecessor was part of Boeings cash management system, and consequently, had no separate cash balance. Therefore, at December 31, 2004, December 31, 2003, December 31, 2002 and December 31, 2001, the Predecessor had negligible cash on the balance sheet. |
46
47
2001 | 2002 | 2003 | 2004 | 2005 | 2006 | ||||||||||||||||||||
Boeing
|
527 | 381 | 281 | 285 | 290 | 395 | |||||||||||||||||||
Airbus
|
325 | 303 | 305 | 320 | 378 | 430 | |||||||||||||||||||
Total
|
852 | 684 | 586 | 605 | 668 | 825 | |||||||||||||||||||
48
49
50
51
Revenue and Profit Recognition |
Delivered | ||||||||||||||
June 17, 2005 to | To Be | Final Delivery | ||||||||||||
Program | March 30, 2006 | Delivered | Total | Date(1) | ||||||||||
B737
|
183 | 1,230 | 1,413 | December 2009 | ||||||||||
B747
|
10 | 52 | 62 | December 2009 | ||||||||||
B767
|
8 | 37 | 45 | January 2009 | ||||||||||
B777
|
38 | 299 | 337 | December 2009 | ||||||||||
B787
|
| | (2) | | (2) | N/A |
(1) | Represents the month and year in which the final production units included in the contract accounting quantity are expected to be delivered. The contract may continue in effect beyond this date. |
(2) | The accounting quantity for the B787 program will be determined in the year in which we first ship production units to Boeing. |
52
Inventory |
Income Taxes |
53
Pensions and Other Post-Retirement Benefits |
Stock Compensation Plans |
54
55
Fair value | Pro-rata allocation | Book value, | |||||||||||
June 16, | of excess of fair | June 16, | |||||||||||
2005 | value over cost | 2005 | |||||||||||
(Dollars in millions) | |||||||||||||
Cash
|
$ | 1.3 | $ | 1.3 | |||||||||
Accounts receivable
|
0.4 | 0.4 | |||||||||||
Inventories
|
479.2 | 479.2 | |||||||||||
Other current assets
|
0.3 | 0.3 | |||||||||||
Property, plant and equipment(1)
|
902.3 | $ | (526.2 | ) | 376.1 | ||||||||
Intangible assets(1)
|
85.2 | (54.5 | ) | 30.7 | |||||||||
Other assets
|
6.8 | 6.8 | |||||||||||
Accounts payable and accrued liabilities
|
(128.8 | ) | (128.8 | ) | |||||||||
Pension and post-retirement liabilities(1)
|
(93.5 | ) | (93.5 | ) | |||||||||
Net assets acquired
|
$ | 1,253.2 | $ | (580.7 | ) | $ | 672.5 | ||||||
|
(1) | Does not include adjustments to reflect final pension asset transfer from Boeing received in May 2006. |
56
Accounting Changes and Pronouncements |
| change from discrete unit or block costing to the use of long-term contract accounting; | |
| reclassification of certain costs from cost of sales to selling, general and administrative costs, or SG&A; | |
| change from accelerated depreciation methods for most personal property to straight line depreciation methods for all property, plant and equipment; | |
| implementation of accounting for new activities that were not performed by or otherwise recognized by the Predecessor; and | |
| establishment of a lower dollar threshold for capitalization of internal use software. |
57
Spirit Holdings | Predecessor | ||||||||||||||||||||||||
Period From | |||||||||||||||||||||||||
Three Months | June 17, | Three Months | Period From | ||||||||||||||||||||||
Ended | 2005 through | Ended | January 1, 2005 | Year Ended | Year Ended | ||||||||||||||||||||
March 30, | December 29, | March 31, | through | December 31, | December 31, | ||||||||||||||||||||
2006 | 2005 | 2005 | June 16, 2005 | 2004 | 2003 | ||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Net sales
|
$ | 670.8 | $ | 1,208.4 | N/A | N/A | N/A | N/A | |||||||||||||||||
Cost of sales (Spirit Holdings)/cost of products transferred
(Predecessor)
|
533.0 | 1,056.8 | 602.4 | 1,163.9 | 2,074.3 | 2,063.9 | |||||||||||||||||||
SG&A, R&D, other period costs
|
77.7 | 188.5 | 36.9 | 90.7 | 173.2 | 144.3 | |||||||||||||||||||
Operating income (loss)
|
$ | 60.1 | $ | (36.9 | ) | N/A | N/A | N/A | N/A | ||||||||||||||||
Interest expense and financing fee amortization
|
(11.2 | ) | (25.1 | ) | N/A | N/A | N/A | N/A | |||||||||||||||||
Other income (expense), net
|
8.5 | 16.7 | N/A | N/A | N/A | N/A | |||||||||||||||||||
Income tax (expense)
|
(25.4 | ) | (13.9 | ) | N/A | N/A | N/A | N/A | |||||||||||||||||
Net income (loss)
|
$ | 32.0 | $ | (59.2 | ) | N/A | N/A | N/A | N/A | ||||||||||||||||
58
Three Months Ended March 30, 2006 as Compared to Three Months Ended March 31, 2005 |
Spirit Holdings | Predecessor | |||||||||
Three Months Ended | ||||||||||
March 30, 2006 | March 31, 2005 | |||||||||
(Dollars in millions) | ||||||||||
Net sales
|
$ | 670.8 | N/A | |||||||
Cost of sales (Spirit Holdings)/cost of products transferred
|
||||||||||
(Predecessor)
|
533.0 | 602.4 | ||||||||
SG&A, R&D, other period costs
|
77.7 | 36.9 | ||||||||
Operating income
|
$ | 60.1 | N/A | |||||||
Interest expense and financing fee amortization
|
(11.2 | ) | N/A | |||||||
Other income (expense), net
|
8.5 | N/A | ||||||||
Income tax (expense)
|
(25.4 | ) | N/A | |||||||
Net income (loss)
|
$ | 32.0 | N/A | |||||||
Segment Revenues
|
|||||
Fuselage Systems
|
$ | 353.7 | |||
Propulsion Systems
|
216.5 | ||||
Wing Systems
|
92.0 | ||||
All Other
|
8.6 | ||||
Total
|
$ | 670.8 | |||
Spirit Holdings | Predecessor | |||||||||
Three Months Ended | ||||||||||
Model | March 30, 2006 | March 31, 2005 | ||||||||
B737
|
64 | 56 | ||||||||
B747
|
3 | 4 | ||||||||
B767
|
3 | 2 | ||||||||
B777
|
14 | 12 | ||||||||
Total
|
84 | 74 | ||||||||
59
Segment Operating Income
|
|||||
Fuselage Systems
|
$ | 60.1 | |||
Propulsion Systems
|
29.8 | ||||
Wing Systems
|
5.5 | ||||
All Other
|
0.5 | ||||
Total
|
$ | 95.9 | |||
Year Ended December 29, 2005 as Compared to Year Ended December 31, 2004 |
60
Combined | Predecessor | ||||||||
Period From | Period From | ||||||||
January 1, 2005 to | January 1, 2004 to | ||||||||
Model | December 29, 2005 | December 31, 2004 | |||||||
B737
|
233 | 201 | |||||||
B747
|
15 | 13 | |||||||
B757
|
0 | 9 | |||||||
B767
|
11 | 10 | |||||||
B777
|
49 | 37 | |||||||
Total
|
308 | 270 | |||||||
Period from June 17, 2005 through December 29, 2005 |
Segment Revenues
|
|||||
Fuselage Systems
|
$ | 637.8 | |||
Propulsion Systems
|
372.3 | ||||
Wing Systems
|
170.6 | ||||
All Other
|
27.7 | ||||
Total
|
$ | 1,208.4 | |||
61
Spirit Holdings | |||||
Period From | |||||
June 17, 2005 through | |||||
Model | December 29, 2005 | ||||
B737
|
119 | ||||
B747
|
7 | ||||
B757
|
0 | ||||
B767
|
5 | ||||
B777
|
24 | ||||
Total
|
155 | ||||
62
Segment Operating Income
|
|||||
Fuselage Systems
|
$ | 43.7 | |||
Propulsion Systems
|
24.5 | ||||
Wing Systems
|
5.6 | ||||
All Other
|
(1.2 | ) | |||
Total
|
$ | 72.6 | |||
Period from January 1, 2005 through June 16, 2005 as Compared to Year Ended December 31, 2004 |
Predecessor | ||||||||
Period From | ||||||||
January 1, 2005 through | Year Ended | |||||||
June 16, 2005 | December 31, 2004 | |||||||
(Dollars in millions) | ||||||||
Cost of products transferred
|
$ | 1,163.9 | $ | 2,074.3 | ||||
SG&A, R&D, other period costs
|
$ | 90.7 | $ | 173.2 | ||||
SG&A, R&D, other period costs as a percentage of cost of
products transferred
|
7.8 | % | 8.3 | % |
63
Year Ended December 31, 2004 as Compared to Year Ended December 31, 2003 |
Predecessor | ||||||||
Year Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
(Dollars in millions) | ||||||||
Cost of products transferred
|
$ | 2,074.3 | $ | 2,063.9 | ||||
SG&A, R&D, other period costs
|
173.2 | 144.3 |
Predecessor | |||||||||
Period From | Period From | ||||||||
January 1, 2004 to | January 1, 2003 to | ||||||||
Model | December 31, 2004 | December 31, 2003 | |||||||
B737
|
201 | 169 | |||||||
B747
|
13 | 18 | |||||||
B757
|
9 | 14 | |||||||
B767
|
10 | 16 | |||||||
B777
|
37 | 38 | |||||||
Total
|
270 | 255 | |||||||
64
65
66
67
Three Months Ended March 30, 2006 |
Period from June 17, 2005 through December 29, 2005 |
Contractual Obligations |
2012 and | |||||||||||||||||||||||||||||||||
Contractual Obligations | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | After | Total | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||||
Principal Payment on Term Loan B(1)
|
$ | 10.1 | $ | 7.0 | $ | 7.0 | $ | 7.0 | $ | 7.0 | $ | 497.9 | $ | 165.4 | $ | 701.4 | |||||||||||||||||
Non-Cancelable Operating Lease Payments(2)
|
2.3 | 2.3 | 2.3 | 1.2 | 1.2 | 0.6 | | 9.9 | |||||||||||||||||||||||||
Non-Cancelable Capital Lease Payments(3)
|
6.3 | 6.4 | 6.9 | 5.5 | | | | 25.1 | |||||||||||||||||||||||||
Total
|
$ | 18.7 | $ | 15.7 | $ | 16.2 | $ | 13.7 | $ | 8.2 | $ | 498.5 | $ | 165.4 | $ | 736.4 | |||||||||||||||||
68
(1) | Does not include repayment of B787 advances to Boeing, which is reflected in our balance sheet as a long-term liability. |
(2) | Reflects our intention to renew a building lease on July 1, 2006 for five years. |
(3) | Treats the financing of software license purchases as a capital lease. |
2012 and | ||||||||||||||||||||||||||||||||
Contractual Obligations | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | After | Total | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Principal Payment on Term Loan B
|
$ | $ | $ | $ | $ | $ | $ | $ |
69
70
71
| an effective fixed interest rate of 6.59% from June 2005 to July 2008 on $100 million of the Term Loan B; | |
| an effective fixed interest rate of 6.65% from June 2005 to July 2009 on $300 million of the Term Loan B; and | |
| an effective fixed interest rate of 6.72% from June 2005 to July 2010 on $100 million of the Term Loan B. |
72
| We did not maintain effective internal control over the quarterly closing and consolidation process, including the account reconciliation and review process and accuracy of certain accounts receivable transactions. Specifically, controls over the reconciliation of the accounts receivable subsidiary ledger to its associated general ledger balances, application of certain cash payments from customers and the investigation and resolution of customer payment discrepancies were ineffective to appropriately record certain accounts receivable transactions. This control deficiency resulted in adjustments to the accounts receivable, revenue and cash accounts. If not remediated, this deficiency would result in a material misstatement of accounts receivable and related accounts. | |
| We did not maintain effective controls over our income tax provision and the related balance sheet accounts. Specifically, controls over the accuracy of the income tax provision and related deferred tax accounts as well as the Companys related financial statement disclosures in accordance with SFAS No. 109 were ineffective to appropriately apply SFAS No. 109 in evaluating its required valuation allowance and establishing the tax basis of the acquired assets and assumed liabilities of the Boeing Acquisition. This control deficiency resulted in adjustments to the deferred tax, valuation allowance and income tax provision accounts as well as our related SFAS No. 109 financial statement disclosures. |
73
| We did not maintain effective controls over the accuracy and completeness of our interim financial statements of our Tulsa, Oklahoma facility. Specifically, there were ineffective controls over the reconciliation of certain general ledger accounts and the aggregation and reporting of those accounts into our financial statements which could have resulted in a material misstatement in our financial statements. |
| During 2005 and the first quarter of 2006, we remediated the material weakness associated with our quarterly closing and reconciliation process and accounts receivable accounting by strengthening supervisory reviews by management personnel and implementing monthly procedures to reconcile our accounts receivable subsidiary ledger to our associated general ledger accounts. Additionally, we developed monitoring procedures to identify customer payment discrepancies and implemented cash application and collection activities to investigate and resolve such discrepancies. This remediation required us to add additional resources within our billing, cash application and collection departments. | |
| During 2005, we remediated the material weakness associated with our income tax accounting in accordance with SFAS No. 109. This remediation included hiring competent resources to staff a tax department (including an experienced tax director), developing a complete and accurate tax balance sheet and performing periodic income tax provision, deferred tax and valuation allowance estimates and supporting calculations. Additionally, our tax and accounting departments periodically review and evaluate our estimated effective income tax rate, realizability of deferred tax assets, valuation allowance requirements and the tax implications of significant and non-recurring transactions to ensure complete and accurate reporting and disclosures under SFAS No. 109. | |
| During 2005, we remediated the material weakness associated with the financial consolidation of our Tulsa, Oklahoma facility. This remediation included expanding the capabilities of Tulsa finance resources by training existing Tulsa staff and hiring additional finance resources, developing and implementing corporate oversight and monitoring procedures, performing detailed account reconciliation and developing reporting templates to ensure a complete and accurate consolidation of the financial statements of the Tulsa facility into our consolidated financial statements. |
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(1) fails to deliver products as required by the Supply Agreement; | |
(2) fails to provide certain assurances of performance required by the Supply Agreement; | |
(3) breaches the provisions of the Supply Agreement relating to intellectual property and proprietary information; | |
(4) participates in the sale, purchase or manufacture of airplane parts without the required approval of the FAA or appropriate foreign regulatory agency; | |
(5) defaults under certain requirements to maintain a system of quality assurance; | |
(6) fails to comply with other obligations under the Supply Agreement (which breach continues for more than 10 days after notice is received from Boeing); | |
(7) is unable to pay its debts as they become due, dissolves or declares bankruptcy; or | |
(8) breaches the assignment provisions of the Supply Agreement (which breach continues for more than 10 days after notice is received from Boeing). |
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(1) fails to deliver products as required by the B787 Supply Agreement; | |
(2) breaches the provisions of the B787 Supply Agreement relating to intellectual property and proprietary information; | |
(3) participates in the sale, purchase or manufacture of airplane parts without the required approval of the FAA or appropriate foreign regulatory agency; | |
(4) defaults under certain requirements to maintain a system of quality assurance; | |
(5) fails to comply with other obligations under the B787 Supply Agreement (which breach continues for more than 15 days after notice is received from Boeing); | |
(6) is unable to pay its debts as they become due, dissolves or declares bankruptcy; | |
(7) fails to comply with U.S. export control laws; or | |
(8) breaches the assignment provisions of the B787 Supply Agreement (which breach continues for more than 10 days after notice is received from Boeing). |
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Product | Description | Aircraft Platform | |||
Fuselage
|
|||||
Forward Fuselage
|
Forward section of fuselage which houses flight deck, passenger cabin and cargo area | B737, B747, B767, B777, B787 | |||
Other Fuselage Sections
|
Mid-section and other sections of the fuselage and certain other structural components, including floor beams |
B737, B747, B777,
Raytheon Hawker 800XP |
|||
Propulsion Systems
|
|||||
Nacelles (including Thrust Reversers)
|
Aerodynamic structure surrounding engine | B737, B747, B767, B777 | |||
Struts/Pylons
|
Structure that connects engine to the wing | B737, B747, B767, B777, B787 | |||
Wing Systems
|
|||||
Flight Control Surfaces
|
Flaps and slats | B737, B777, A320 family | |||
Empennages
|
Horizontal stabilizer and vertical fin spar assemblies | B737, Raytheon Hawker 800XP | |||
Wing Structures
|
Wing framework which consists mainly of spars, ribs, fixed leading edge, stringers, trailing edges and flap track beams | B737, B747, B777, B787, A320 family, A330, A340, A380 |
87
Product | Description | Military Platform | ||
Low Observables
|
Radar absorbent and translucent materials | UCAS, Various | ||
Other Military
|
Fabrication, bonding and assembly in support of various platforms | AWACS, AC-130U Gunship, V-22 and E-6 | ||
Other Military
|
Fabrication, testing, tooling, processing, engineering analysis, training | Various |
Product | Description | Aircraft Platform(1) | ||
Spares
|
Provides replacement parts and components support | B737, B747, B767, B777, A320 | ||
Maintenance, Repair and Overhaul
|
FAA certified repair station that provides complete on-site nacelle repair and overhaul; maintains global partnerships to support MRO services | B737, B777 |
(1) | The company also has the opportunity to produce spares for certain out-of -production aircraft and is under contract to provide spares for the B787 and A380. |
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| composites design and manufacturing processes; | |
| leading mechanized and automated assembly and fastening techniques; | |
| large scale skin fabrication using both metallic and composite materials; | |
| chemical etching and metal bonding expertise; | |
| monolithic structures technology; and | |
| precision metal forming producing complex contoured shapes in sheet metal and extruded aluminum. |
Engineering |
90
Research and Development |
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93
94
95
96
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Approximate
Location
Primary Use
Square Footage
Owned/Leased
Main Manufacturing Facility/Offices/Warehouse
10.4 million
Owned*/Leased*
Manufacturing Facility
1.6 million
Leased
Manufacturing Facility
135,000
Owned
Manufacturing Facility
1.1 million
Owned
Offices
15,919
Leased
*
A portion of the Wichita facility is owned and a portion is
leased through an IRB structure. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital
Resources Tax Incentive Bonds.
Table of Contents
United States
United Kingdom
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Name | Age | Position | ||||
Jeffrey L. Turner
|
55 | Director, President and Chief Executive Officer | ||||
Ulrich (Rick) Schmidt
|
56 | Executive Vice President, Chief Financial Officer and Treasurer | ||||
Ronald C. Brunton
|
58 | Executive Vice President and Chief Operating Officer | ||||
H. David Walker
|
55 | Senior Vice President Sales and Marketing | ||||
Gloria Farha Flentje
|
63 | Vice President, General Counsel and Secretary | ||||
Janet S. Nicolson
|
50 | Senior Vice President, Human Resources | ||||
John Lewelling
|
46 | Senior Vice President, Strategy and Information Technology | ||||
Richard Buchanan
|
56 | Vice President/General Manager of Fuselage Structures/Systems Business Unit | ||||
Michael G. King
|
50 | Vice President/General Manager of the Propulsion Structures and Systems Business Unit | ||||
Neil McManus
|
40 | Vice President and Managing Director, Spirit AeroSystems (Europe) Limited | ||||
Donald R. Carlisle
|
53 | Vice President/General Manager of Aerostructures Business Unit | ||||
Ivor (Ike) Evans
|
63 | Director | ||||
Paul Fulchino
|
59 | Director | ||||
Richard Gephardt
|
65 | Director | ||||
Robert Johnson
|
57 | Director | ||||
Ronald Kadish
|
58 | Director | ||||
Cornelius (Connie Mack) McGillicuddy, III
|
65 | Director | ||||
Seth Mersky
|
47 | Director | ||||
Francis Raborn
|
62 | Director | ||||
Nigel Wright
|
43 | Director |
Executive Officers |
98
99
Key Employees |
100
Directors |
101
102
103
104
105
106
107
108
109
110
111
Annual Compensation
Restricted
Other Annual
Stock
Name and Principal Position(1)
Year
Salary(2)
Bonus(3)
Compensation(4)
Awards(5)
2005
$
142,885
$
771,542
(6)
$
13,731
$
5,371,542
(7)
Chief Executive Officer
2005
$
133,077
(8)
$
276,210
(9)
$
4,228,630
(10)
$
4,226,210
(11)
Executive Vice President
and Chief Financial Officer
2005
$
94,443
$
388,887
(12)
$
$
1,388,887
(13)
Executive Vice President
and Chief Operating Officer
2005
$
80,502
$
346,602
(14)
$
$
796,602
(15)
Vice President/General
Manager of the
Aerostructures
Business Unit
2005
$
77,681
$
243,217
(16)
$
$
693,217
(17)
Vice President/General Manager of the Propulsion
Structures and Systems
Business Unit
(1)
Represents each persons principal position with Spirit in
fiscal 2005.
(2)
Represents base salary received from June 17, 2005 through
December 29, 2005.
(3)
Bonus information reflects amounts earned in the fiscal year
ended December 29, 2005, although such amounts may have
been paid in the first quarter of 2006.
(4)
In accordance with the rules of the SEC, other annual
compensation disclosed in this table does not include various
perquisites and other personal benefits received by a named
executive officer that does not exceed the lesser of $50,000 or
10% of such officers total annual salary and bonus
disclosed in this table.
(5)
Restricted stock awards granted in accordance with our Short
Term Incentive Plan, Long-Term Incentive Plan and Executive
Incentive Plan will be paid to plan participants only at the
time and to the extent they acquire an interest in such shares.
See Benefit Plans.
(6)
Represents a (a) $200,000 discretionary cash bonus and
(b) $571,542 cash payment under our Cash Incentive Plan.
(7)
Represents
(a) shares
of class B common stock with a value on the date of grant
of $571,542 that are scheduled to vest on February 17, 2007
in accordance with our Long-Term Incentive Plan and
(b) shares
of class B common stock with a value on the date of grant
of $4,800,000 that may vest upon the occurrence of certain
liquidity events in accordance with our Executive Incentive Plan.
(8)
Mr. Schmidt became an Executive Vice President and Chief
Financial Officer on September 12, 2005.
(9)
Represents a (a) $50,000 discretionary cash bonus and
(b) $226,210 cash payment under our Short Term Incentive
Plan.
(10)
Represents (a) a one-time cash payment to Mr. Schmidt
of which $1,717,365 was paid in September 2005 and
$2,382,635 was paid in January 2006 in lieu of foregone
executive compensation from The Goodrich Corporation, his former
employer and (b) costs associated with the executives
relocation to Wichita, Kansas.
Table of Contents
(11)
Represents
(a) shares
of class B common stock with a value on the date of grant
of $226,210 that are scheduled to vest on February 17, 2007
in accordance with our Short Term Incentive Plan and
(b) shares
of class B common stock with a value on the date of grant
of $4,000,000 that may vest upon the occurrence of certain
liquidity events in accordance with our Executive Incentive Plan.
(12)
Represents a (a) $200,000 discretionary cash bonus and
(b) $188,887 cash payment under our Short Term Incentive
Plan.
(13)
Represents
(a) shares
of class B common stock with a value on the date of grant
of $188,887 that are scheduled to vest on February 17, 2007
in accordance with our Short Term Incentive Plan and
(b) shares
of class B common stock with a value on the date of grant
of $1,200,000 that may vest upon the occurrence of certain
liquidity events in accordance with our Executive Incentive Plan.
(14)
Represents a (a) $250,000 discretionary cash bonus and
(b) $96,602 cash payment under our Short Term Incentive
Plan.
(15)
Represents
(a) shares
of class B common stock with a value on the date of grant
of $96,602 that are scheduled to vest on February 17, 2007
in accordance with our Short Term Incentive Plan and
(b) shares
of class B common stock with a value on the date of grant
of $700,000 that may vest upon the occurrence of certain
liquidity events in accordance with our Executive Incentive Plan.
(16)
Represents a (a) $150,000 discretionary cash bonus and
(b) $93,217 cash payment under our Short Term Incentive
Plan.
(17)
Represents
(a) shares
of class B common stock with a value on the date of grant
of $93,217 that are scheduled to vest on February 17, 2007
in accordance with our Short Term Incentive Plan and
(b) shares
of class B common stock with a value on the date of grant
of $600,000 that may vest upon the occurrence of certain
liquidity events in accordance with our Executive Incentive Plan.
Table of Contents
Table of Contents
Executive Incentive Plan
Table of Contents
Supplemental Executive Retirement Plan
Short Term Incentive Plan
Table of Contents
Long-Term Incentive Plan
Cash Incentive Plan
Director Stock Plan
Table of Contents
Table of Contents
Number and Type | Aggregate | ||||||||
Name | of Shares | Purchase Price | Date of Purchase | ||||||
5% Holders
|
|||||||||
Onex Corporation
|
shares of class B common stock | $ | 375,000,000 | June 16, 2005 | |||||
Onex Partners LP
|
shares of class B common stock | $ | 210,548,841 | June 16, 2005 | |||||
Onex American Holdings II LLC
|
shares of class B common stock | $ | 99,557,587 | June 16, 2005 | |||||
Wind Executive Investco LLC
|
shares of class B common stock | $ | 6,136,410 | June 16, 2005 | |||||
Onex U.S. Principals LP
|
shares of class B common stock | $ | 2,146,814 | June 16, 2005 | |||||
Onex Spirit Co-Invest LP
|
shares of class B common stock | $ | 56,610,348 | August 3, 2005 | |||||
Executive Officers
|
|||||||||
Jeffrey Turner
|
shares of class B | $ | 437,750 | June 16, 2005, | |||||
common stock | July 15, 2005, | ||||||||
August 1, 2005 |
112
Number and Type
Aggregate
Name
of Shares
Purchase Price
Date of Purchase
shares
of class B common stock
$
1,000,000
September 29, 2005
shares
of class B common stock
$
300,000
July 15, 2005
shares
of class B common stock
$
200,000
September 27, 2005
shares
of class B
$
109,780
July 15, 2005,
common stock
August 1, 2005
shares
of class B common stock
$
200,000
January 2, 2006
shares
of class B common stock
$
300,000
January 2, 2006
shares
of class B common stock
$
100,000
July 15, 2005
shares
of class B common stock
$
38,210
July 15, 2005
shares
of class B common stock
$
shares
of class B common stock
$
81,000
August 1, 2005
shares of class B
common stock
$
150,000
(1)
December 15, 2005
shares of class B
common stock
$
150,000
(1)
December 15, 2005
shares of class B
common stock
$
400,000
(2)
December 15, 2005
shares of class B
common stock
$
150,000
(1)
December 15, 2005
shares of class B
common stock
$
150,000
(1)
December 15, 2005
shares of class B
common stock
$
150,000
(1)
December 15, 2005
shares
of class B common stock
$
401,700
June 16, 2005,
August 3, 2005
shares of class B
common stock
$
150,000
(1)
December 15, 2005
shares
of class B common stock
$
773,886
June 16, 2005,
August 3, 2005
(1) | Value of shares granted pursuant to the Director Stock Plan. |
(2) | Value of 15,000 shares granted pursuant to the Director Stock Plan and 25,000 shares granted pursuant to the Director Stock Plan as partial compensation for consulting services provided to Spirit. |
113
Aggregate
Name
Number of Units
Conversion Price(1)
Date of Conversion
76,225
$
10.00
7/15/05
9,400
$
10.00
7/15/05
11,179
$
10.00
7/15/05
4,022
$
10.00
7/15/05
(1) | Value of accrued Boeing SERP benefit converted into phantom stock. |
114
115
| each person known by us to own beneficially 5% or more of our class A or class B common stock, | |
| each of our directors; | |
| each of our named executive officers; | |
| all of our directors and executive officers as a group; and | |
| each selling stockholder. |
Shares Beneficially Owned After Offering | ||||||||||||||||||||||||||||||||||||||||
Assuming the Underwriters Over- | Assuming the Underwriters Over- | |||||||||||||||||||||||||||||||||||||||
Before Offering | Allotment Option is Not Exercised | Allotment Option is Exercised in Full | ||||||||||||||||||||||||||||||||||||||
Number of | Percentage | Percentage | Percentage | |||||||||||||||||||||||||||||||||||||
Shares | of | Shares | of | of | ||||||||||||||||||||||||||||||||||||
Beneficially | Class/All | Percentage | Being | Class/All | Percentage | Class/All | Percentage | |||||||||||||||||||||||||||||||||
Owned(1) | Common | of Voting | Sold in | Common | of Voting | Common | of Voting | |||||||||||||||||||||||||||||||||
Name of Beneficial Owner | (2)(3) | Stock | Power | Offering | Number | Stock | Power | Number | Stock | Power | ||||||||||||||||||||||||||||||
Five Percent Stockholders
|
||||||||||||||||||||||||||||||||||||||||
Onex Corporation(4)
|
class B | |||||||||||||||||||||||||||||||||||||||
Onex Partners LP(5)
|
class B | |||||||||||||||||||||||||||||||||||||||
Onex American Holdings II LLC(6)
|
class B | |||||||||||||||||||||||||||||||||||||||
Wind Executive Investco LLC(7)
|
class B | |||||||||||||||||||||||||||||||||||||||
Onex U.S. Principals LP(8)
|
class B | |||||||||||||||||||||||||||||||||||||||
Onex Spirit Co-Invest LP(9)
|
class B | |||||||||||||||||||||||||||||||||||||||
Directors and Executive Officers
|
||||||||||||||||||||||||||||||||||||||||
Jeffrey Turner(10)
|
class B | |||||||||||||||||||||||||||||||||||||||
Ulrich Schmidt(10)
|
class B | |||||||||||||||||||||||||||||||||||||||
Ronald C. Brunton(10)
|
class B | |||||||||||||||||||||||||||||||||||||||
Donald R. Carlisle(10)
|
class B | |||||||||||||||||||||||||||||||||||||||
Michael G. King(10)
|
class B | |||||||||||||||||||||||||||||||||||||||
Ivor Evans(10)
|
class B | |||||||||||||||||||||||||||||||||||||||
Paul Fulchino(10)
|
class B | |||||||||||||||||||||||||||||||||||||||
Richard Gephardt(10)
|
class B | |||||||||||||||||||||||||||||||||||||||
Robert Johnson(10)
|
class B | |||||||||||||||||||||||||||||||||||||||
Ronald Kadish(10)
|
class B | |||||||||||||||||||||||||||||||||||||||
Connie Mack, III(10)
|
class B | |||||||||||||||||||||||||||||||||||||||
Seth Mersky(11)
|
class B | |||||||||||||||||||||||||||||||||||||||
Francis Raborn(10)
|
class B | |||||||||||||||||||||||||||||||||||||||
Nigel Wright(12)
|
class B | |||||||||||||||||||||||||||||||||||||||
All directors and executive officers as a group (20 persons)
|
class B |
* | Represents beneficial ownership of less than 1%. |
(1) | The amounts and percentages of our common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such |
116
security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed to be a beneficial owner of such securities as to which such person has an economic interest. | ||
(2) | On each matter submitted to the stockholders for their vote, our class A common stock is entitled to one vote per share and our class B common stock is entitled to ten votes per share, reducing to one vote per share under certain limited circumstances. Except as required by law, our class A and class B common stock vote together on all matters submitted to stockholders for their vote. | |
(3) | Each share of class B common stock may be converted at any time at the option of the holder into one share of class A common stock. Accordingly, each beneficial owner of shares of class B common stock is deemed the beneficial owner of the same number of shares of class A common stock. See Description of Capital Stock Common Stock Conversion Rights. | |
(4) | Includes the following: (i) shares of class B common stock held by Onex Partners LP; (ii) shares of class B common stock held by Onex American Holdings II LLC; (iii) shares of class B common stock held by Wind Executive Investco LLC; and (iv) shares of class B common stock held by Onex U.S. Principals LP. Onex Corporation may be deemed to own beneficially the shares of class B common stock held by (a) Onex Partners LP, through Onex ownership of all of the common stock of Onex Partners GP, Inc., the general partner of Onex Partners GP LP, the general partner of Onex Partners LP; (b) Onex American Holdings II LLC, through Onex ownership of all of the equity of Onex American Holdings II LLC; (c) Wind Executive Investco LLC, through Onex ownership of Onex American Holdings II LLC which owns % of the voting power of Wind Executive Investco LLC; (d) Onex U.S. Principals LP through Onex ownership of all of the equity of Onex American Holdings GP LLC, the general partner of Onex U.S. Principals LP and (e) Onex Spirit Co-Invest LP, through Onex ownership of all of the common stock of Onex Partners GP, Inc., the general partner of Onex Partners GP LP, the general partner of Onex Partners LP. |
Mr. Gerald W. Schwartz, the Chairman, President and Chief Executive Officer of Onex Corporation, owns shares representing a majority of the voting rights of the shares of Onex Corporation and as such may be deemed to own beneficially % of the shares of our class B common stock owned beneficially by Onex Corporation. Mr. Schwartz disclaims such beneficial ownership. The address for Onex Corporation is 161 Bay Street, Toronto, Ontario M5J 2S1, Canada. |
(5) | All of the shares of class B common stock owned by Onex Partners LP may be deemed owned beneficially by each of Onex Partners GP LP, Onex Partners GP, Inc. and Onex Corporation. The address for Onex Partners LP is c/o Onex Investment Corporation, 712 Fifth Avenue, New York, New York 10019. | |
(6) | All of the shares of class B common stock owned by Onex American Holdings II LLC may be deemed owned beneficially by Onex Corporation. The address for Onex American Holdings II LLC is 421 Leader Street, Marion, Ohio 43302. | |
(7) | All of the shares of class B common stock owned by Wind Executive Investco LLC may be deemed owned beneficially by each of Onex Partners GP LP, Onex Partners GP, Inc. and Onex Corporation. The address for Wind Executive Investco LLC is c/o Onex Investment Corporation, 712 Fifth Avenue, New York, New York 10019. | |
(8) | All of the shares of class B common stock owned by Onex U.S. Principals LP may be deemed owned beneficially by each of Onex Partners GP LP, Onex Partners GP, Inc. and Onex Corporation. The address for Onex U.S. Principals LP is c/o Onex Investment Corporation, 712 Fifth Avenue, New York, New York 10019. | |
(9) | All of the shares of class B common stock owned by Onex Spirit Co-Invest LP may be deemed owned beneficially by each of Onex Partners GP LP, Onex Partners GP, Inc. and Onex Corporation. The address for Onex Spirit Co-Invest LP is c/o Onex Investment Corporation, 712 Fifth Avenue, New York, New York 10019. |
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(10) | The address of these stockholders is c/o Spirit AeroSystems Holdings, Inc., 3801 South Oliver, Wichita, Kansas 67210. |
(11) | Includes (i) shares of class B common stock owned by Onex Partners LP which may be deemed beneficially owned by Mr. Mersky by reason of his pecuniary interest in Onex Partners LP and (ii) shares of class B common stock owned by Onex Spirit Co-Invest LP which may be deemed beneficially owned by Mr. Mersky by reason of his pecuniary interest in Onex Spirit Co-Invest LP. Mr. Mersky disclaims beneficial ownership of the shares of class B common stock owned by Onex Partners LP and Onex Spirit Co-Invest LP. Mr. Merskys address is c/o Onex Corporation, 161 Bay Street, Toronto, Ontario, M5J 2S1, Canada. |
(12) | Includes (i) shares of class B common stock owned by Onex Partners LP which may be deemed beneficially owned by Mr. Wright by reason of his pecuniary interest in Onex Partners LP and (ii) shares of class B common stock owned by Onex Spirit Co-Invest LP which may be deemed beneficially owned by Mr. Wright by reason of his pecuniary interest in Onex Spirit Co-Invest LP. Mr. Wright disclaims beneficial ownership of the shares of class B common stock owned by Onex Partners LP and Onex Spirit Co-Invest LP. Mr. Wrights address is c/o Onex Corporation, 161 Bay Street, Toronto, Ontario, M5J 2S1, Canada. |
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| shares of class A common stock, par value $0.01 per share, | |
| shares of class B common stock, par value $0.01 per share, and | |
| 10,000,000 shares of preferred stock, par value $0.01 per share. |
119
120
Class B Common Stock |
Undesignated Preferred Stock |
Advance Notice Requirements for Stockholder Proposals and Directors Nominations |
121
Call of Special Meetings |
Filling of Board Vacancies; Removal |
Stockholder Action by Written Consent |
Delaware Business Combination Statute |
Amendments to our Certificate of Incorporation and By-laws |
122
| any breach of the directors duty of loyalty to us or our stockholders, | |
| acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, | |
| the payment of unlawful dividends and unlawful repurchase or redemption of our capital stock prohibited by the DGCL, and | |
| any transaction from which the director derived any improper personal benefits. |
123
124
| a U.S. citizen or individual resident in the United States; | |
| a corporation, or other entity treated as a corporation created or organized under the laws of the United States or any political subdivision thereof; | |
| an estate the income of which is subject to U.S. federal income taxation regardless of its source; or | |
| a trust (i) if a U.S. court can exercise primary supervision over the administration of such trust and one or more U.S. fiduciaries have the authority to control all of the substantial interests of such trust or (ii) that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person. |
125
126
| the gain is U.S. trade or business income, in which case such gain generally will be taxed in the same manner as gains of U.S. persons, and such gains may also be subject to the branch profits tax in the case of a corporate Non-U.S. Holder; | |
| the Non-U.S. Holder is an individual who is present in the United States for more than 182 days in the taxable year of the disposition and who meets certain other requirements, in which case such holder generally will be subject to U.S. federal income tax at a rate of 30% (or a reduced rate under an applicable treaty) on the amount by which capital gains allocable to U.S. sources (including gains from the sale, exchange, retirement or other disposition of the common stock) exceed capital losses allocable to U.S. sources; or | |
| we are or have been a U.S. real property holding corporation for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the Non-U.S. Holder held our common stock (the applicable period). |
127
128
| shares issuable upon conversion of our currently outstanding class B common stock will be eligible for sale beginning 180 days after the date of this prospectus subject to an extension in certain circumstances as set forth in the section entitled Underwriting, | |
| shares will be eligible for sale beginning , and | |
| shares held by our executive officers and directors and shares held by trusts for the benefit of certain of our union-represented employees will be eligible for sale under Rule 144 commencing one-year from the date of this offering, or, if earlier, after the shares are registered under the Securities Act. |
129
| 1% of the number of shares of our class A common stock then outstanding, which will equal approximately shares immediately after this offering (approximately shares if the underwriters over-allotment option is exercised in full), and | |
| the average weekly trading volume of our class A common stock during the four calendar weeks preceding the filing of the Form 144 with respect to such sale. |
130
Underwriter | Number of Shares | ||||
Credit Suisse Securities (USA) LLC
|
|||||
Goldman, Sachs & Co.
|
|||||
Morgan Stanley & Co. Incorporated
|
|||||
Total
|
|||||
Per Share | Total | |||||||||||||||
Without | With | Without | With | |||||||||||||
Over-allotment | Over-allotment | Over-allotment | Over-allotment | |||||||||||||
Underwriting Discounts and Commissions paid by us
|
$ | $ | $ | $ | ||||||||||||
Expenses payable by us
|
$ | $ | $ | $ | ||||||||||||
Underwriting Discounts and Commissions paid by selling
stockholders
|
$ | $ | $ | $ | ||||||||||||
Expenses payable by the selling stockholders
|
$ | $ | $ | $ |
131
| Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. | |
| Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing shares in the open market. | |
| Syndicate covering transactions involve purchases of the class A common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more |
132
shares than could be covered by the over-allotment option, resulting in a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. | ||
| Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the class A common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. | |
| In passive market making, market makers in the class A common stock who are underwriters or prospective underwriters may, subject to limitations, make bids for or purchases of our class A common stock until the time, if any, at which a stabilizing bid is made. |
| to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; | |
| to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than 43,000,000 and (3) an annual net turnover of more than 50,000,000, as shown in its last annual or consolidated accounts; |
133
| to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the manager for any such offer; or | |
| in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive. |
it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) to persons who have professional experience in matters relating to investments falling with Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21 of FSMA does not apply to the company; and | |
it has complied with, and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the class A common stock in, from or otherwise involving the United Kingdom. |
134
| the purchaser is entitled under applicable provincial securities laws to purchase shares of class A common stock without the benefit of a prospectus qualified under those securities laws; | |
| where required by law, that the purchaser is purchasing as principal and not as agent; | |
| the purchaser has reviewed the text above under Resale Restrictions; and | |
| the purchaser acknowledges and consents to the provision of specified information concerning its purchase of shares of class A common stock to the regulatory authority that by law is entitled to collect the information. |
135
136
137
Page | ||||
Consolidated Financial Statements of Spirit AeroSystems
Holdings, Inc. for the periods ended March 30, 2006
(unaudited) and from February 7, 2005 (date of inception)
through December 29, 2005
|
||||
Report of Independent Registered Public Accounting Firm
|
F-2 | |||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 - F-36 | ||||
Financial Statements of Wichita Division (a business unit of
The Boeing Company) as of June 16, 2005 and December 31, 2004,
and for the period from January 1, 2005 through June 16, 2005,
and for the years ended December 31, 2004 and 2003
|
||||
F-37 | ||||
F-38 | ||||
F-39 | ||||
F-40 - F-51 | ||||
Unaudited Financial Statements of Wichita Division (a
business unit of The Boeing
Company) for the three months ended March 31, 2005 |
||||
F-52 | ||||
F-53 | ||||
F-54 - F-61 |
F-1
F-2
Period from | ||||||||||
Three months | February 7, 2005 | |||||||||
ended | (date of inception) | |||||||||
March 30, | through | |||||||||
2006 | December 29, 2005 | |||||||||
(Unaudited) | ||||||||||
($ in millions, except | ||||||||||
per share data) | ||||||||||
Net revenues
|
$ | 670.8 | $ | 1,208.4 | ||||||
Operating costs and expenses
|
||||||||||
Cost of sales
|
533.0 | 1,056.8 | ||||||||
Selling, general and administrative
|
35.3 | 110.2 | ||||||||
Research and development
|
42.4 | 78.3 | ||||||||
610.7 | 1,245.3 | |||||||||
Operating income (loss)
|
60.1 | (36.9 | ) | |||||||
Interest expense and financing fee amortization
|
(11.2 | ) | (25.1 | ) | ||||||
Interest income
|
7.1 | 15.4 | ||||||||
Other income, net
|
1.4 | 1.3 | ||||||||
Income (loss) from continuing operations before income taxes
|
57.4 | (45.3 | ) | |||||||
Income tax provision
|
(25.4 | ) | (13.9 | ) | ||||||
Net income (loss)
|
$ | 32.0 | $ | (59.2 | ) | |||||
Earnings (loss) per share
|
||||||||||
Basic
|
$ | 0.83 | $ | (1.55 | ) | |||||
Diluted
|
$ | 0.69 | $ | (1.55 | ) |
F-3
March 30, | December 29, | ||||||||
2006 | 2005 | ||||||||
(Unaudited) | |||||||||
($ in millions) | |||||||||
Current assets
|
|||||||||
Cash and cash equivalents
|
$ | 236.2 | $ | 241.3 | |||||
Accounts receivable net
|
175.0 | 99.6 | |||||||
Inventories net
|
537.2 | 505.7 | |||||||
Prepaid expenses
|
6.8 | 10.6 | |||||||
Deferred tax assets current
|
3.2 | 2.3 | |||||||
Total current assets
|
958.4 | 859.5 | |||||||
Property, plant and equipment, net
|
595.9 | 518.8 | |||||||
Long-term receivable
|
217.5 | 212.5 | |||||||
Other assets
|
76.1 | 63.5 | |||||||
Total assets
|
$ | 1,847.9 | $ | 1,654.3 | |||||
Current liabilities
|
|||||||||
Accounts payable
|
$ | 233.2 | $ | 168.7 | |||||
Accrued expenses
|
88.0 | 126.3 | |||||||
Current portion of long-term debt
|
13.1 | 11.6 | |||||||
Income taxes
|
19.7 | 0.8 | |||||||
Total current liabilities
|
354.0 | 307.4 | |||||||
Long-term debt
|
706.7 | 710.0 | |||||||
Other liabilities
|
410.3 | 308.2 | |||||||
Deferred tax liability non-current
|
3.2 | 2.3 | |||||||
Commitments and contingent liabilities (see Note 15)
|
|||||||||
Shareholders Equity
|
|||||||||
Preferred stock, par value $0.01, 10,000,000 shares
authorized, no shares issued and outstanding
|
| | |||||||
Common stock, Class A par value $0.01,
50,000,000 shares authorized, no shares issued and
outstanding
|
| | |||||||
Common stock, Class B par value $0.01;
50,000,000 shares authorized, 41,140,112
(unaudited) and 40,890,112 shares issued and
outstanding, respectively
|
0.4 | 0.4 | |||||||
Additional paid-in capital
|
385.5 | 381.0 | |||||||
Accumulated other comprehensive income
|
15.0 | 4.2 | |||||||
Accumulated deficit
|
(27.2 | ) | (59.2 | ) | |||||
Total shareholders equity
|
373.7 | 326.4 | |||||||
Total liabilities and shareholders equity
|
$ | 1,847.9 | $ | 1,654.3 | |||||
F-4
Class B | Accumulated | |||||||||||||||||||||||
Common Stock | Other | |||||||||||||||||||||||
Additional | Comprehensive | Accumulated | Comprehensive | |||||||||||||||||||||
Shares | Amount | Paid-in Capital | Income | Deficit | Loss | |||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||
Initial capitalization February 7, 2005
|
100 | (1) | | | ||||||||||||||||||||
Cancellation of shares(1)
|
(100 | ) | | | ||||||||||||||||||||
Equity issuance to investors
|
37,500,000 | 0.4 | 369.6 | |||||||||||||||||||||
Net loss
|
$ | (59.2 | ) | $ | (59.2 | ) | ||||||||||||||||||
Unrealized gain on cash flow hedges
|
$ | 4.2 | 4.2 | |||||||||||||||||||||
Employee equity awards
|
2,825,488 | | 3.7 | |||||||||||||||||||||
Non-employee equity awards
|
145,000 | | 0.5 | |||||||||||||||||||||
Equity issuances to management
|
419,624 | | 4.3 | |||||||||||||||||||||
Supplemental executive retirement plan conversion
|
| 2.9 | ||||||||||||||||||||||
Balance December 29, 2005
|
40,890,112 | 0.4 | 381.0 | 4.2 | (59.2 | ) | $ | (55.0 | ) | |||||||||||||||
Net income (unaudited)
|
32.0 | $ | 32.0 | |||||||||||||||||||||
Unrealized gain on cash flow hedges (unaudited)
|
10.8 | 10.8 | ||||||||||||||||||||||
Employee equity awards (unaudited)
|
354,984 | | 2.7 | |||||||||||||||||||||
Non-employee equity awards (unaudited)
|
| | 0.6 | | | | ||||||||||||||||||
Equity issuances to management (unaudited)
|
50,000 | | 1.2 | | | | ||||||||||||||||||
Balance March 30, 2006 (unaudited)
|
41,295,096 | $ | 0.4 | $ | 385.5 | $ | 15.0 | $ | (27.2 | ) | $ | (12.2 | ) | |||||||||||
(1) | Issued as common stock without designation as to class. Shares were cancelled as of June 16, 2005. |
F-5
Period from | ||||||||||
Three Months | February 7, 2005 | |||||||||
Ended | (Date of Inception) | |||||||||
March 30, | through | |||||||||
2006 | December 29, 2005 | |||||||||
(Unaudited) | ||||||||||
($ in millions) | ||||||||||
Operating activities
|
||||||||||
Net income (loss)
|
$ | 32.0 | $ | (59.2 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided
by operating activities
|
||||||||||
Depreciation expense
|
16.7 | 28.6 | ||||||||
Amortization expense
|
1.1 | 3.0 | ||||||||
Accretion of long-term receivable
|
(5.0 | ) | (9.7 | ) | ||||||
Employee stock compensation
|
3.9 | 4.2 | ||||||||
Changes in assets and liabilities, net of acquisition
|
||||||||||
Accounts receivable
|
(75.4 | ) | (89.2 | ) | ||||||
Inventories
|
(31.5 | ) | (26.4 | ) | ||||||
Other current assets
|
3.9 | (0.3 | ) | |||||||
Accounts payable and accrued liabilities
|
31.0 | 159.3 | ||||||||
Customer advance from Boeing
|
100.0 | 200.0 | ||||||||
Other
|
13.3 | 13.5 | ||||||||
Net cash provided by operating activities
|
90.0 | 223.8 | ||||||||
Investing Activities
|
||||||||||
Purchase of property, plant and equipment
|
(93.8 | ) | (144.6 | ) | ||||||
Acquisition of business, net of cash acquired
|
| (885.7 | ) | |||||||
Net cash used in investing activities
|
(93.8 | ) | (1,030.3 | ) | ||||||
Financing Activities
|
||||||||||
Proceeds from issuance of debt
|
| 700.0 | ||||||||
Debt issuance costs
|
| (21.4 | ) | |||||||
Payments on debt
|
(1.8 | ) | (5.0 | ) | ||||||
Equity contributions from shareholders
|
| 370.0 | ||||||||
Executive stock investments
|
0.5 | 4.2 | ||||||||
Net cash (used in) provided by financing activities
|
(1.3 | ) | 1,047.8 | |||||||
Net (decrease) increase in cash and cash equivalents for the
period
|
(5.1 | ) | 241.3 | |||||||
Cash and cash equivalents, beginning of period
|
241.3 | | ||||||||
Cash and cash equivalents, end of period
|
$ | 236.2 | $ | 241.3 | ||||||
Supplemental Information
|
||||||||||
Interest paid
|
$ | 1.6 | $ | 28.1 | ||||||
Income taxes paid
|
2.2 | 8.5 | ||||||||
Appreciation of financial instruments
|
10.8 | 4.2 | ||||||||
Property acquired through capital leases
|
| 26.7 |
F-6
1. | Nature of Business |
2. | Summary of Significant Accounting Policies |
Unaudited Interim Results |
Basis of Presentation |
Acquisition of Spirit |
F-7
Cash payment to Boeing
|
$ | 904 | ||||
Direct costs of the acquisition
|
21 | |||||
Less:
|
||||||
Consideration to be returned from Boeing for sale of capital
assets
|
(203 | ) | ||||
Consideration to be returned from Boeing for transition costs
|
(30 | ) | ||||
Working capital settlement
|
(19 | ) | ||||
Total consideration
|
$ | 673 | ||||
F-8
Pro-rata | |||||||||||||
Fair | Allocation of | Book | |||||||||||
Value, | Excess of | Value, | |||||||||||
June 16, | Fair Value | June 16, | |||||||||||
2005 | Over Cost | 2005 | |||||||||||
Cash
|
$ | 1.3 | $ | 1.3 | |||||||||
Accounts receivable
|
0.4 | 0.4 | |||||||||||
Inventories
|
479.2 | 479.2 | |||||||||||
Other current assets
|
0.3 | 0.3 | |||||||||||
Property, plant and equipment
|
902.3 | $ | (526.2 | ) | 376.1 | ||||||||
Intangible assets
|
85.2 | (54.5 | ) | 30.7 | |||||||||
Other assets
|
6.8 | 6.8 | |||||||||||
Accounts payable and accrued liabilities
|
(128.8 | ) | (128.8 | ) | |||||||||
Pension and post-retirement liabilities
|
(93.5 | ) | (93.5 | ) | |||||||||
Net assets acquired
|
$ | 1,253.2 | $ | (580.7 | ) | $ | 672.5 | ||||||
F-9
2006
|
$ | 24.0 | ||
2007
|
24.0 | |||
2008
|
24.0 | |||
2009
|
15.3 | |||
2010
|
|
F-10
Estimated Useful life | ||||
Land improvements
|
20 years | |||
Buildings
|
40 years | |||
Machinery and equipment
|
3-11 years | |||
Tooling Airplane program B787
|
5-20 years | |||
Tooling Airplane program all others
|
2-10 years |
F-11
F-12
F-13
3. | Inventories |
March 30, | December 29, | ||||||||
2006 | 2005 | ||||||||
(Unaudited) | |||||||||
Raw materials
|
$ | 120.0 | $ | 119.1 | |||||
Work-in-progress
|
417.2 | 386.6 | |||||||
Total inventories
|
$ | 537.2 | $ | 505.7 | |||||
Company | ||||
Inventory | ||||
B737
|
$ | 241.4 | ||
B747
|
60.3 | |||
B767
|
16.0 | |||
B777
|
125.3 | |||
Other in-process inventory related to long-term contracts and
other programs(1)
|
62.7 | |||
Balance December 29, 2005
|
$ | 505.7 | ||
(1) | Contracted non-recurring services for certain derivative aircraft programs to be paid by OEM, plus miscellaneous other work-in -progress. |
F-14
4.
Property, Plant and Equipment
March 30,
December 29,
2006
2005
(Unaudited)
$
18.8
$
18.8
116.3
116.0
126.1
121.8
128.9
121.6
251.3
169.2
641.4
547.4
(45.5
)
(28.6
)
$
595.9
$
518.8
5. | Long-Term Receivable |
2007
|
$ | 45.5 | |||
2008
|
116.1 | ||||
2009
|
115.4 | ||||
Total
|
$ | 277.0 | |||
6. | Other Assets |
March 30, | December 29, | ||||||||
2006 | 2005 | ||||||||
(Unaudited) | |||||||||
Intangible assets
|
|||||||||
Patents
|
$ | 3.5 | $ | 3.5 | |||||
Favorable leasehold interests
|
27.3 | 27.3 | |||||||
Total intangible assets
|
30.8 | 30.8 | |||||||
Less: accumulated amortization
|
(1.7 | ) | (1.4 | ) | |||||
Intangible assets, net
|
29.1 | 29.4 | |||||||
Deferred financing costs, net
|
21.7 | 22.8 | |||||||
Fair value of derivative instruments
|
17.5 | 6.9 | |||||||
Other
|
7.8 | 4.4 | |||||||
Total
|
$ | 76.1 | $ | 63.5 | |||||
F-15
2006
|
$ | 1.9 | ||
2007
|
1.9 | |||
2008
|
1.9 | |||
2009
|
1.9 | |||
2010
|
1.9 |
7. | Financial Instruments |
Effective | Fair Value, | |||||||||||||||
Principal | Variable | Fixed | Fixed | December 29, | ||||||||||||
Amount | Expires | Rate | Rate | Rate | 2005 | |||||||||||
$100
|
July 2008 | LIBOR | 4.24 | % | 6.59 | % | $ | 1.2 | ||||||||
$300
|
July 2009 | LIBOR | 4.30 | % | 6.65 | % | 4.2 | |||||||||
$100
|
July 2010 | LIBOR | 4.37 | % | 6.72 | % | 1.5 |
F-16
8. | Debt |
Credit Agreement |
F-17
Boeing Delayed Draw Term Loan Facility |
F-18
Principal Repayments |
2006
|
$ | 10.1 | ||||||
2007
|
7.0 | |||||||
2008
|
7.0 | |||||||
2009
|
7.0 | |||||||
2010
|
7.0 | |||||||
Thereafter
|
663.2 |
9. | Pension and Other Post-Retirement Benefits |
Multi-Employer Pension Plan |
Defined Contribution Plans |
F-19
Defined Benefit Pension Plans |
Other Post-Retirement Benefit Plans |
Obligations and Funded Status |
Other | |||||||||
Defined Benefit | Post-Retirement | ||||||||
Pension Plans | Benefit Plans | ||||||||
Change in benefit obligation
|
|||||||||
Benefit obligation, beginning of period
|
$ | | $ | | |||||
Acquisitions
|
583.8 | 31.8 | |||||||
Service cost
|
| 1.0 | |||||||
Interest cost
|
17.4 | 0.9 | |||||||
Amendments
|
| | |||||||
Actuarial losses
|
(58.1 | ) | (2.5 | ) | |||||
Benefit obligation, end of period
|
$ | 543.1 | $ | 31.2 | |||||
Change in plan assets
|
|||||||||
Fair value of plan assets, beginning of period
|
$ | | $ | | |||||
Acquisitions
|
525.0 | | |||||||
Actual return on plan assets
|
24.4 | | |||||||
Fair value of plan assets, end of period
|
$ | 549.4 | $ | | |||||
F-20
Other
Defined Benefit
Post-Retirement
Pension Plans
Benefit Plans
$
6.3
$
(31.2
)
(59.0
)
(2.4
)
$
(52.7
)
$
(33.6
)
$
$
(52.7
)
(33.6
)
$
(52.7
)
$
(33.6
)
Other | ||||||||
Defined Benefit | Post-Retirement | |||||||
Pension Plans | Benefit Plans | |||||||
Assumptions used to determine benefit obligation
for the period ended December 29, 2005 |
||||||||
Discount rate
|
6 percent | 5.75 percent | ||||||
Expected return
|
8.25 percent | N/A | ||||||
Salary increases
|
N/A | N/A | ||||||
Medical assumptions
|
||||||||
Trend assumed for next year
|
10 percent | |||||||
Ultimate trend rate
|
5 percent | |||||||
Year that ultimate trend rate is reached
|
2011 | |||||||
Components of benefit (income) expense | ||||||||
Service cost
|
$ | | $ | 1.0 | ||||
Interest cost
|
17.4 | 0.9 | ||||||
Expected return on plan assets
|
(23.5 | ) | | |||||
Net benefit (income) expense
|
$ | (6.1 | ) | $ | 1.9 | |||
F-21
Other
Defined Benefit
Post-Retirement
Pension Plans
Benefit Plans
Assumptions used to determine benefit expense
for the period ended December 29, 2005
5.5 percent
5.25 percent
8.25 percent
N/A
N/A
N/A
11.0 percent
5.0 percent
2011
Asset Category
|
|||||
Equity securities U.S.
|
55% | ||||
Equity securities International
|
7% | ||||
Debt securities
|
37% | ||||
Other
|
1% | ||||
Total
|
100% | ||||
F-22
Other Post-
Retirement
Pension Plans
Benefit Plans
$
1.4
$
2.7
4.4
0.1
6.6
0.2
9.2
0.2
101.7
13.8
10. | Capital Stock |
11. | Stock Compensation |
F-23
Executive Incentive Plan |
F-24
Shares
Value
(Thousands)
(Millions)
$
2,825
16.1
2,825
$
16.1
200
2.7
3,025
$
18.8
Board of Directors Stock Awards |
F-25
Shares
Value
(Thousands)
(Millions)
$
105
2.4
105
$
2.4
105
$
2.4
Short Term Incentive Plan |
Shares | Value | |||||||
(Thousands) | (Millions) | |||||||
Short Term Incentive Plan
|
||||||||
Nonvested at December 29, 2005
|
| | ||||||
Granted during period (unaudited)
|
155 | $ | 3.6 | |||||
Vested during period (unaudited)
|
| | ||||||
Exercised during period (unaudited)
|
| | ||||||
Forfeited during period (unaudited)
|
| | ||||||
Nonvested at March 30, 2006 (unaudited)
|
155 | $ | 3.6 | |||||
F-26
Union Equity Participation Program |
SARs | Value | |||||||
(Thousands) | (Millions) | |||||||
Union Equity Participation Plan
|
||||||||
Nonvested at February 7, 2005 (date of inception)
|
| | ||||||
Granted during period
|
4,900 | | ||||||
Vested during period
|
| | ||||||
Exercised during period
|
| | ||||||
Forfeited during period
|
| | ||||||
Nonvested at December 29, 2005
|
4,900 | | ||||||
Granted during period (unaudited)
|
| | ||||||
Vested during period (unaudited)
|
| | ||||||
Exercised during period (unaudited)
|
| | ||||||
Forfeited during period (unaudited)
|
| | ||||||
Nonvested at March 30, 2006 (unaudited)
|
4,900 | | ||||||
F-27
12.
Income Taxes
2005
$
9.3
9.3
7.2
7.2
(2.3
)
(0.3
)
(2.6
)
$
13.9
2005 | |||||
Tax benefit at U.S. federal statutory income tax rate
|
$ | (15.8 | ) | ||
State and local tax benefit
|
(3.4 | ) | |||
Change in valuation allowance
|
33.6 | ||||
Qualified Production Activity Deduction (IRC 199)
|
(0.5 | ) | |||
Total income tax
|
$ | 13.9 | |||
F-28
2005
$
28.2
12.8
20.2
8.0
(28.5
)
(1.5
)
39.2
(39.2
)
$
2005 | |||||
Current deferred tax assets
|
$ | 4.2 | |||
Current deferred tax liabilities
|
(1.9 | ) | |||
Net current deferred tax asset
|
2.3 | ||||
Non-current deferred tax assets
|
28.8 | ||||
Non-current deferred tax liabilities
|
(31.1 | ) | |||
Net non-current deferred tax liability
|
$ | (2.3 | ) | ||
F-29
13. | Earnings (Loss) per Share Calculation |
Three Month | ||||
Period Ended | ||||
March 30, 2006 | ||||
(Unaudited) | ||||
(In millions, except | ||||
per share data) | ||||
Basic Earnings per Share Calculation
|
||||
Net income
|
$ | 32.0 | ||
Weighted average shares outstanding
|
38.4 | |||
Basic earnings per share
|
$ | .83 | ||
Diluted Earnings per Share Calculation
|
||||
Net income
|
32.0 | |||
Weighted average shares outstanding
|
38.4 | |||
Effect of dilutive non-vested grants outstanding
|
8.0 | |||
Total weighted average shares outstanding
|
46.4 | |||
Diluted earnings per share
|
$ | .69 | ||
14. | Related Party Transactions |
F-30
15. | Commitments, Contingencies and Guarantees |
Litigation |
Age Discrimination Litigation |
Commitments |
Capital | ||||||||||||||||
Present | ||||||||||||||||
Operating | Value | Interest | Total | |||||||||||||
2006
|
$ | 4.7 | $ | 6.3 | $ | 1.3 | $ | 7.6 | ||||||||
2007
|
5.3 | 6.4 | 0.6 | 7.0 | ||||||||||||
2008
|
6.5 | 6.9 | 1.1 | 8.0 | ||||||||||||
2009
|
6.8 | 5.5 | 0.2 | 5.7 | ||||||||||||
2010
|
5.2 | | | | ||||||||||||
2011 and thereafter
|
11.1 | | | |
F-31
Service and Product Warranties |
Guarantees |
Indemnification |
Environmental |
F-32
Bonds |
F-33
16. | Significant Concentrations of Risk |
Economic Dependence |
Labor Force |
17. | Supplemental Balance Sheet Information |
March 30, | December 29, | ||||||||
2006 | 2005 | ||||||||
(Unaudited) | |||||||||
Accrued expenses
|
|||||||||
Accrued wages and bonuses
|
$ | 19.2 | $ | 19.2 | |||||
Accrued fringe benefits
|
41.9 | 68.5 | |||||||
Accrued interest
|
9.2 | 9.2 | |||||||
Other
|
17.7 | 29.4 | |||||||
Total
|
$ | 88.0 | $ | 126.3 | |||||
Other liabilities
|
|||||||||
Customer advance
|
$ | 300.0 | $ | 200.0 | |||||
Pension obligation
|
49.5 | 52.7 | |||||||
Post-employment benefit obligation
|
48.7 | 47.8 | |||||||
Other
|
12.1 | 7.7 | |||||||
Total
|
$ | 410.3 | $ | 308.2 | |||||
18. | Segment Information |
F-34
F-35
Three
Period from
Months
February 7, 2005
Ended
(Date of
March 30,
Inception) through
2006
December 29, 2005
(Unaudited)
$
353.7
$
637.8
216.5
372.3
92.0
170.6
8.6
27.7
$
670.8
$
1,208.4
$
60.1
$
43.6
29.8
24.5
5.5
5.6
0.5
(1.2
)
95.9
72.5
(33.9
)
(108.4
)
(1.9
)
(1.0
)
$
60.1
$
(36.9
)
19. | Subsequent Events (Unaudited) |
F-36
F-37
December 31,
June 16,
2004
2005
(Amounts in millions)
$
3.0
$
0.8
2.0
0.4
524.6
487.6
3.0
3.2
511.0
528.4
1,043.6
1,020.4
45.7
57.4
6.1
2.0
47.5
40.3
8.4
7.9
0.5
0.5
108.2
108.1
$
935.4
$
912.3
F-38
Period From | ||||||||||||||
Year Ended | Year Ended | January 1, 2005 | ||||||||||||
December 31, | December 31, | Through | ||||||||||||
2003 | 2004 | June 16, 2005 | ||||||||||||
(Amounts in millions) | ||||||||||||||
COST OF PRODUCTS TRANSFERRED:
|
||||||||||||||
Labor
|
$ | 733.9 | $ | 688.8 | $ | 326.6 | ||||||||
Material
|
821.6 | 885.1 | 503.0 | |||||||||||
Overhead and nonlabor
|
508.4 | 500.4 | 334.3 | |||||||||||
Total cost of products transferred
|
2,063.9 | 2,074.3 | 1,163.9 | |||||||||||
PROVISION OF ENERGY SERVICES Net
|
| | (0.2 | ) | ||||||||||
PERIOD EXPENSES:
|
||||||||||||||
General and administrative
|
116.7 | 155.1 | 79.7 | |||||||||||
Internal application development
|
17.3 | 18.1 | 11.0 | |||||||||||
757 production phase out
|
10.3 | | | |||||||||||
Total period expenses
|
144.3 | 173.2 | 90.7 | |||||||||||
TOTAL INCURRED AND ALLOCATED COSTS OF THE WICHITA DIVISION
|
$ | 2,208.2 | $ | 2,247.5 | $ | 1,254.4 | ||||||||
F-39
1. | BASIS OF PRESENTATION |
The Wichita Division (Division), which is not a separate legal entity, is operated as a cost center within the Boeing Commercial Airplanes Group (BCA) of The Boeing Company (Boeing). The Division includes the manufacturing operations of BCA located in Wichita, Kansas; Tulsa, Oklahoma, and McAlester, Oklahoma, along with certain assets and operations of the Shared Services Group (SSG) of Boeing. The Division has historically been an internal supplier of parts and assemblies to the 737, 747, 757, 767, and 777 Airplane Programs of BCA, with very few sales to third-party customers. The Division has also been selected as a supplier to the 787 Airplane Program currently under development by Boeing. These financial statements, hereafter referred to as the Financial Statements, reflect the standalone financial statements of the Division. Certain amounts in these financial statements have been allocated from Boeings financial statements. Allocations are generally based on the specific identification of costs, assets and liabilities, as well as on headcount and direct labor dollars where specific attribution is not practical. The General and Administrative (G&A) expense included in these statements is an allocation of Boeing Corporate (Corporate), SSG and BCA G&A expense (collectively Boeing G&A). | |
Management believes these allocations are reasonable, but may not be indicative of costs that would have been incurred had the Division been operated as a standalone business. | |
Most support function costs represent allocations to the Division. However, there is a portion of these support functions that occur at the Division, for example, general management, human resources, and finance that provide support directly to product-related organizations. | |
Boeing entered into an Asset Purchase Agreement (APA) dated February 22, 2005, as revised June 15, 2005, to sell the Division to Mid-Western Aircraft Systems, Inc. (Mid-Western), an indirect majority-owned subsidiary of Onex Partners L.P. The accompanying financial statements have been prepared with reference to this agreement and present assets and liabilities as well as a statement of cost center activities. The accompanying financial statements may not be indicative of the conditions that would have existed or the results of operations if the Division had been operated as a standalone company during the periods presented. | |
On June 16, 2005, Boeing completed the sale of substantially all of the assets at BCAs facilities in Wichita, Kansas and Tulsa and McAlester, Oklahoma under the APA to Mid-Western, which was subsequently named Spirit Aerosystems, Inc. (Spirit). Transaction consideration given to Boeing included cash of approximately $900, together with the transfer of certain liabilities and the establishment of long-term supply agreements. All assets and liabilities presented in these financial statements were included in the sale. | |
Statements of cash flows have not been presented as the Division participated in Boeings centralized cash management systems and all its cash management activities were funded by Boeing. Other than cash on hand to meet immediate cash requirements the Divisions cash flow information is estimated in Note 9 using a change in net working capital. | |
Transactions with Boeing Transactions with Boeing were conducted on a noncash basis, and generally involved performance under intracompany arrangements between the Division and Boeing. | |
Certain costs were incurred by Boeing on the Divisions behalf. To the extent practical, these costs are discretely transferred to the Division, but in some cases an allocation methodology is used to transfer |
F-40
the costs to the Division. These costs fall into three major categories and all such costs have been included in these financial statements. | |
The first category represents costs directly related to the activities of the Division, which were incurred by Boeing and transferred to the Division for administrative purposes including payroll, accounts payable, travel and employee benefits such as pension costs, and medical coverage. These costs are primarily included in Cost of Products Transferred and the balance included in Period Expenses. | |
A second category of costs incurred by Boeing on the Divisions behalf represented the purchase of parts from Boeing that are incorporated into the products of the Division. The cost of these parts is treated the same as the cost of parts acquired from third parties and is included in Cost of Products Transferred. | |
The third category of costs incurred by Boeing on the Divisions behalf are either general and administrative or relate to support services provided by Boeing for the benefit of the Division. These costs, except for those identified as G&A, are included in Cost of Products Transferred. These allocated costs are described in detail below. The following table reconciles total G&A and Internal Application Development (IAD) reported on the Statement of Cost Center Activity to the detailed cost tables that follow. IAD costs are certain costs incurred at the Division to improve processes or internal applications rather than product. |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Year Ended | Year Ended | Through | ||||||||||
Incurring Org and Description | 2003 | 2004 | 6/16/2005 | |||||||||
Allocated WHQ G&A
|
$ | 31.7 | $ | 31.2 | $ | 15.9 | ||||||
Allocated WHQ Share-Based Plans
|
8.9 | 19.4 | 20.1 | |||||||||
Allocated WHQ Share-Value Trust
|
4.0 | 3.9 | 2.0 | |||||||||
Allocated BCA G&A
|
46.9 | 53.2 | 26.7 | |||||||||
SSG G&A included in SSG Support Allocations (below)
|
30.0 | 29.6 | 5.5 | |||||||||
Division Incurred G&A
|
(4.8 | ) | 17.8 | 9.5 | ||||||||
Total Division G&A Expense
|
$ | 116.7 | $ | 155.1 | $ | 79.7 | ||||||
Period | ||||||||||||
1/1/2005 | ||||||||||||
Year Ended | Year Ended | Through | ||||||||||
Incurring Org and Description | 2003 | 2004 | 6/16/2005 | |||||||||
Division Incurred IAD (A period expense on the
Statement of Cost Center Activity)
|
$ | 17.3 | $ | 18.1 | $ | 11.0 | ||||||
F-41
Support Allocations
Boeing provides
certain services to the Division and pays for certain
expenditures on its behalf. The following table summarizes and
describes the approximate amounts billed to the Division.
Period
1/1/2005
Year Ended
Year Ended
Through
Incurring Org and Description
2003
2004
6/16/2005
$
2.1
$
4.3
$
4.9
212.9
233.4
114.6
54.3
46.3
25.1
42.8
41.9
21.2
312.1
325.9
165.8
30.0
29.6
5.5
$
282.1
$
296.3
$
160.3
BCA Computer Aided Design (CAD), BCA Computer Aided Manufacturing (CAM), and other cost allocated include calibration and certification costs and computer-aided design costs. | |
SSG costs (including an element of SSG-incurred G&A) were allocated to the Division based on SSGs cost collection and cost allocation processes which are primarily based on pooling of common costs and allocating pooled costs based on a measure of usage. SSG Workplace Services includes the cost of providing facilities, food, mail and in-plant transportation services, security and fire protection, technical services and safety, health, and environmental affairs. SSG Information Technology Services includes business systems and computing and network operations. SSG Administrative Services includes external transportation services, enterprise human resource management, payroll services and learning, training, and development. An estimate of the SSG G&A included in the above support allocations were recorded by the Division as period expense in accordance with established Boeing-wide practice. The remaining SSG-related amounts as well as the BCA CAD/CAM allocations were included in the Overhead and nonlabor portion of Cost of Products Transferred. | |
In 2005, SSG revised its methodology for allocating G&A costs. As a result of the revision, the January 1 through June 16, 2005 SSG G&A Allocations amount recorded was $5.5 rather than $14.8. | |
Period Expenses Incurred at the Division These costs are not inventoriable costs and therefore are not included in Costs of Products Transferred. |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Year Ended | Year Ended | Through | ||||||||||
Incurring Org and Description | 2003 | 2004 | 6/16/2005 | |||||||||
Division Incurred G&A (Included in Table (1))
|
$ | (4.8 | ) | $ | 17.8 | $ | 9.5 | |||||
Division Incurred IAD (Included in Table (2))
|
17.3 | 18.1 | 11.0 | |||||||||
Total
|
$ | 12.5 | $ | 35.9 | $ | 20.5 | ||||||
F-42
Division G&A costs are incurred at the Division and include salaries and costs associated with G&A-type functions such as site financial accounting. IAD costs are costs incurred at the Division to improve processes or internal applications rather than products. | |
Period Expense Incurred by Boeing not Billed or Incurred at the Division For purposes of these statements, certain costs have been allocated to the Division. These costs have not been billed to or incurred by, nor is the Division obligated to pay for these costs in the past or in the future. These allocations are conducted on a noncash basis and generally involve the performance of corporate-wide functions that have no direct relationship to the Divisions cost center activities. These costs are included in the total Division G&A expense (see Table 1). |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Year Ended | Year Ended | Through | ||||||||||
Incurring Org and Description | 2003 | 2004 | 6/16/2005 | |||||||||
Corporate G&A
|
$ | 31.7 | $ | 31.2 | $ | 15.9 | ||||||
Corporate Share-Based Plans
|
8.9 | 19.4 | 20.1 | |||||||||
Corporate Share-Value Trust
|
4.0 | 3.9 | 2.0 | |||||||||
BCA G&A
|
46.9 | 53.2 | 26.7 | |||||||||
Total Period Expense incurred by Boeing not billed or incurred
|
$ | 91.5 | $ | 107.7 | $ | 64.7 | ||||||
Corporate costs allocated include centralized services such as government affairs, legal, tax, office of internal governance, international relations, communications and advertising, CEO and staff, investor relations, and miscellaneous liability, property, and foreign insurances. Corporate Share-Based plans and Share-Value Trust are described in Note 8 below. | |
BCA G&A costs allocated include business operations, sales and marketing, contracts, finance, communications, and BCA office of the president. |
2. | Significant Accounting Policies |
Principles of Consolidation The consolidated financial statements of the Division include the accounts of the majority-owned interest in Kansas Industrial Energy Supply Company (KIESC). The KIESC (formerly known as Wichita Gas Utility) arrangement has been in place since 1980. It was formed to purchase gas directly from the gas suppliers rather than through the city of Wichita. The current arrangement gives participants in KIESC more control over their cost. The agreement between the participating companies is titled Tenants-in -Common Management Agreement. It designates the arrangement as a tenancy in common and stipulates that nothing in the agreement should be construed as creating a joint venture, association, or partnership. All assets are owned in common. Nothing can be severed in a way that hurts the other tenants. Each tenant is prohibited from selling or assigning their interest to another party without the approval of the other tenants. The Division owned 79% of all outstanding interests and considered that a controlling share. 100% of KIESCs results have been consolidated in these financial statements. Accordingly, the Divisions intercompany profits, transactions, and balances have been eliminated with the consolidation of KIESC. The result of KIESC income and expense is shown as Provision of Energy Services, Net. 77.77% of KIESC was sold on June 16, 2005 in connection with the transaction, with the remainder |
F-43
retained by Boeing to support Boeings remaining operations in Wichita, Kansas. KIESCs net assets are shown below: |
Period | ||||||||
1/1/2005 | ||||||||
Through | ||||||||
Incurring Org and Description | 12/31/04 | 6/16/2005 | ||||||
KIESC Total Net Assets
|
$ | 2.2 | $ | 2.7 | ||||
Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that directly affect the amounts reported in the financial statements. Actual results could differ from those estimates. | |
Cost of Products Transferred As a cost center to the BCA Airplane Programs, the Division does not have sales to parties other than Boeing. For purposes of these financial statements, the Division recognizes cost of products transferred in an amount equal to the cost assigned. Through May 31, 2005, the Wichita Site Cost of Products Transferred was recognized when completed parts and assemblies were received or the scheduled receipt date occurred at BCA Airplane Programs Final Assembly Areas. On June 1, 2005 this treatment changed to reflect the provisions of the supply agreement that was to be implemented post-divestiture. From June 1, 2005 to June 16, 2005, the Wichita Site Cost of Products Transferred was recognized when completed parts and assemblies were shipped from the Wichita plant. The Tulsa and McAlester Sites Cost of Products Transferred is recognized when completed parts and assemblies are shipped from the site. Costs of Products Transferred also includes costs assigned to programs as incurred, for support of non-recurring activities performed on behalf of the programs. Non-recurring support refers to activities like design or design and build of tooling. 787 design activities included in Division Cost of Products Transferred totals $65.6 for the period from January 1, 2005 through June 16, 2005. | |
Cost of Products Transferred consists of material, labor, nonlabor, and site overhead, which includes fringe benefits, production-related indirect and plant management salaries, and plant services. Labor cost includes direct and indirect labor, related fringe costs, and labor bonuses. Fringe benefit allocations are based on a rate applied to labor dollars. The rate includes elements such as vacation, holiday, sick leave, medical, pension, and postretirement medical. | |
Nonlabor costs included in overhead include cost of shop supplies, travel, software licensing, equipment depreciation, perishable tools, and cost allocations (see Transactions with Boeing above). | |
Cash Cash primarily consists of balances maintained by the Divisions consolidated interest in KIESC. The Division participates in Boeings centralized cash management systems. Accordingly, the financial statements exclude cash, debt, interest income, and interest expense maintained in the centralized cash management systems. | |
Accounts Receivable Accounts receivable consist of amounts on KIESC books due from third parties and are stated at the amount billed to customers, plus any accrued and unpaid interest. An allowance is provided for based upon a review of outstanding receivables, historical collection information, and existing economic conditions. | |
Inventories Inventories consist of raw materials and work in process (WIP). Finished goods are shipped immediately upon completion. Costs of raw materials and component parts that are identified |
F-44
as obsolete or surplus, including a provision for anticipated amounts, are included as a cost of products transferred. | |
The Divisions Wichita site in-process inventories are stated at the cost of products based on the stage of completion within production. The individual elements of inventory (e.g., raw material, WIP, and production stores) are valued using a standard cost methodology with any resulting variances to the standard allocated monthly to cost of products transferred. | |
The Divisions Tulsa/McAlester sites in-process inventories are stated at the cost of products based on the stage of completion within production. Raw materials are valued based on an average cost method. Commercial Airplane Programs WIP inventory is valued based on total actual incurred costs for a block of aircraft, less the billed amount. The billed amount is calculated based on the average unit cost of an end-item (e.g., 737 Slats/ Flaps) for a block of aircraft based on the Estimate at Completion. | |
Long-Term Assets Long-term assets consists of amounts on the KIESC books for investments in marketable securities. KIESC has the positive intent and ability to hold these until maturity. They are valued at historical cost, adjusted for amortization of premiums and accretion of discounts computed by the level-yield method. | |
Property, Plant, and Equipment Property, plant, and equipment are recorded at cost, including applicable construction-period interest, less accumulated depreciation, and are depreciated principally over the following estimated useful lives: new buildings and land improvements, from 10 to 40 years; and new machinery and equipment, from 3 to 20 years. The principal methods of depreciation are as follows: buildings and land improvements, 150% declining balance; and machinery and equipment, sum-of -the-years digits. The Division periodically evaluates the appropriateness of remaining depreciable lives assigned to long-lived assets subject to a management plan for disposition. | |
The Division reviews long-lived assets, which includes property, plant, and equipment, for impairments in accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets . Long-lived assets held for sale are stated at the lower of cost or fair value, less cost to sell. Long-lived assets held for use are subject to an impairment assessment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, the amount of the impairment is the difference between the carrying amount and the fair value of the asset. | |
757 Production Phase Out On October 16, 2003, Boeing announced that production of the 757 would end with the final aircraft to be produced in late 2004. This resulted in a Division charge to Period Expenses incurred for the year ended December 31, 2003, of $10.3, $3.5 related to vendor penalties and $6.8 related to obsolete and excess inventory. The vendor penalties are expected to be settled in cash by the end of 2006. The related liabilities are excluded from the Statement of Assets and Liabilities as they were not assumed in the acquisition. | |
Income Taxes Boeing does not allocate income tax expense and related assets and liabilities to the Division. In accordance with the APA, the Statement of Net Assets and Liabilities does not include assets and liabilities related to income tax. Accordingly, the Statement of Cost Center Activity does not reflect the effect of income taxes. | |
Leases The Division has entered into contracts, having noncancelable lease terms in excess of one year, for operating leases requiring future rental payments. |
F-45
Pension and Postretirement Benefits Plan The Division participates in various pension plans sponsored by Boeing which cover substantially all employees. Discrete, detailed information concerning costs of these plans is not available for the Division but is part of the Overhead and nonlabor costs allocated by Boeing and included in the Cost of Products Transferred. The assets and obligations under these plans are not separately identifiable for the Division. | |
Boeing also provides certain other postretirement benefit plans other than pensions which consist principally of health care coverage for eligible retirees. Discrete, detailed information concerning costs of these plans is not available for the Division but is part of the Overhead and nonlabor costs allocated by Boeing and included in the Cost of Products Transferred. The assets and obligations under these plans are not separately identifiable for the Division. | |
Share-Based Plans Division employees participate in certain of Boeings share-based compensation plans. In these financial statements, the share-based plan expenses are accounted for under SFAS 123R, Share-Based Payment (SFAS 123R) as of January 1, 2005, and under SFAS No. 123, Accounting for Stock-Based Compensation , for periods prior to January 1, 2005. |
In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 151, Inventory Costs an amendment of ARB No. 43 . This Standard requires abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) to be recognized as current period charges. Additionally, it requires that fixed production overhead costs be allocated to inventory based on the normal capacity of the production facility. The provisions of this Standard apply prospectively and are effective for inventory costs incurred after January 1, 2006. While the Division believes this Standard will not have a material effect on its financial statements, the impact of adopting these new rules is dependent on events that could occur in future periods, and as such, an estimate of the impact cannot be determined until the event occurs in future periods. |
4. | INVENTORIES |
Inventories are summarized as follows for the periods ending: |
Period | ||||||||
1/1/2005 | ||||||||
Through | ||||||||
12/31/2004 | 6/16/2005 | |||||||
Raw materials
|
$ | 209.1 | $ | 213.5 | ||||
Work in process
|
315.5 | 274.1 | ||||||
Inventories
|
$ | 524.6 | $ | 487.6 | ||||
F-46
5.
PROPERTY, PLANT, AND EQUIPMENT
Period
1/1/2005
Through
12/31/2004
6/16/2005
$
7.4
$
5.0
718.2
709.5
1,371.8
1,331.7
15.1
63.5
(1,601.5
)
(1,581.3
)
$
511.0
$
528.4
Depreciation expense, which is included in Cost of Products Transferred, is as follows for the periods ending: |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Year Ended | Year Ended | Through | ||||||||||
2003 | 2004 | 6/16/2005 | ||||||||||
Depreciation expense
|
$ | 97.4 | $ | 90.7 | $ | 40.3 | ||||||
Interest capitalized as construction-period property, plant, and equipment costs is as follows for the periods ending: |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Year Ended | Year Ended | Through | ||||||||||
2003 | 2004 | 6/16/2005 | ||||||||||
Interest capitalized
|
$ | 3.2 | $ | 4.9 | $ | 2.1 | ||||||
6. | COMMITMENTS |
Lease Minimum future rental commitments under operating leases having noncancelable lease terms in excess of one year aggregated approximately $18.7 at June 16, 2005 and are payable as follows: |
Future Minimum Payments | ||||
6/17/05-12/31/05
|
$ | 3.0 | ||
2006
|
4.3 | |||
2007
|
2.4 | |||
2008
|
2.2 | |||
2009
|
1.4 | |||
2010
|
0.6 | |||
Thereafter
|
4.8 |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Year Ended | Year Ended | Through | ||||||||||
2003 | 2004 | 6/16/2005 | ||||||||||
Total rent expense
|
$ | 9.8 | $ | 9.7 | $ | 4.3 | ||||||
F-47
7. | PENSION AND POSTRETIREMENT BENEFITS |
The Division participates in various pension and postretirement plans sponsored by Boeing which cover substantially all employees. Discrete, detailed information concerning costs of these plans is not available for the Division but is part of the Overhead and nonlabor costs allocated by Boeing and included in the Cost of Products Transferred. The assets and obligations under these plans are not separately identifiable for the Division. | |
The amounts below represent total Boeing balances. Note that Boeing uses a September 30 measurement date for its pension plans. |
Year Ended | Year Ended | |||||||
9/30/04 | 9/30/05 | |||||||
Pension plan assets
|
$ | 38,977 | $ | 43,484 | ||||
Pension plan benefit obligation
|
42,781 | 45,183 |
Boeing also provides certain other postretirement benefits other than pensions which consist principally of health care coverage for eligible retirees. Discrete, detailed information concerning costs of these plans is not available for the Division but is part of the Overhead and nonlabor costs allocated by Boeing and included in the Cost of Products Transferred. The assets and obligations under these plans are not separately identifiable for the Division. | |
The amounts below represent total Boeing balances. Note that Boeing uses a September 30 measurement date for its postretirement plans. |
Year Ended | Year Ended | |||||||
9/30/04 | 9/30/05 | |||||||
Postretirement benefits plan assets
|
$ | 72 | $ | 82 | ||||
Postretirement benefit obligation
|
8,135 | 8,057 |
8. | SHARE-BASED PLANS |
Share-Based Plans The following is a discussion of share-based compensation plans. Qualifying Division employees may retain eligibility under provisions of these plans going forward. Under the provisions of the APA, Boeing will retain these obligations. Division employees participate in certain of Boeings share-based compensation plans. In these financial statements, the share-based plan expenses are accounted for under SFAS 123R, as of January 1, 2005, using the modified prospective method, and under SFAS No. 123 for periods prior to January 1, 2005. The share-based plans are described below. Share-based plan expense allocated to the Division is included in the Statement of Cost Center Activity as a Period Expense classified as G&A. | |
Performance Shares Performance Shares are stock units that are convertible to Boeing common stock contingent upon Boeings stock price performance. If, at any time up to five years after award, Boeings stock price reaches and maintains a price equal to 161.0% of the Boeings stock issue price at the date of the award (representing a growth rate of 10% compounded annually for five years), 25% of the Performance Shares awarded are convertible to Boeing common stock. Likewise, at stock prices equal to 168.5%, 176.2%, 184.2%, 192.5%, and 201.1% of the Boeing stock price at the date of award, the cumulative portions of awarded Performance Shares convertible to Boeing common stock are 40%, 55%, 75%, 100%, and 125%, respectively. Performance Shares awards not converted to Boeing common stock expire five years after the date of the award; however, the Compensation Committee of the Boeing Board of Directors may, at its discretion, allow vesting of up to 100% of the target Performance Shares if Boeings total shareholder return (stock price appreciation plus dividends) during the five-year performance period exceeds the average total shareholder return of the S&P 500 over the same period. |
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Beginning with the 2003 grants, all new Performance Shares awarded are subject to different terms and conditions from those issued prior to 2003. If at any time up to five years after award Boeings stock price reaches and maintains for 20 consecutive days a price equal to a cumulative growth rate of 40% above the grant price, 15% of the Performance Shares awarded are convertible to common stock. Likewise, at cumulative growth rates above the grant price equal to 50%, 60%, 70%, 80%, 90%, 100%, 110%, 120%, and 125%, the cumulative portion of awarded shares convertible to Boeing common stock are 30%, 45%, 60%, 75%, 90%, 100%, 110%, 120%, and 125%, respectively. Performance Share awards not converted to Boeing common stock expire five years after the date of the award. In the event all stock price hurdles have not been met at the end of the performance period, unvested shares may vest based on Boeings Total Shareholder Return (TSR) performance relative to the S&P 500. If less than 125% of the grant has vested at the end of the five-year performance period, an award formula will be applied to the initial grant based on the percentile rank of Boeings TSR relative to the S&P 500. This can result in a vesting of the Performance Shares award up to a total of 125% and only applies if (1) Boeings total shareholder return during the five-year performance period meets or exceeds the median total shareholder return of the S&P 500 over the same period and (2) total shareholder return is in excess of the five-year Treasury Bill rate at the start of the five-year period. The Division was allocated share-based expense amounts calculated based on SFAS No. 123 for Performance Share awards granted to employees of the Division. The allocated share-based plans expense, which is included in Period Expense as G&A in the Statement of Cost Center Activity, was approximately as follows: |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Year Ended | Year Ended | Through | ||||||||||
2003 | 2004 | 6/16/2005 | ||||||||||
Performance shares
|
$ | 8.3 | $ | 18.5 | $ | 17.1 | ||||||
ShareValue Trust The ShareValue Trust, established effective July 1, 1996, is a 14-year irrevocable trust that holds Boeing common stock, receives dividends, and distributes to employees appreciation in value above a 3% per annum threshold rate of return. As of December 31, 2004, the Trust held 38,982,205 shares of Boeing common stock, split between two funds, fund 1 and fund 2. | |
The Division was allocated ShareValue Trust expense based upon headcount at the Division. The allocated ShareValue Trust expense, which is included in Period Expenses as G&A in the Statement of Cost Center Activity, was approximately as follows: |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Year Ended | Year Ended | Through | ||||||||||
2003 | 2004 | 6/16/2005 | ||||||||||
Share-value trust
|
$ | 4.0 | $ | 3.9 | $ | 2.0 | ||||||
Other Share-Based Compensation Boeing offers employees stock awards, at no cost to the employee, under its Career Shares, Learning Together, and Engineering Technical Fellows stock programs. Additionally, Boeing common stock is issued or interest is accrued to certain Boeing employees electing deferrals under certain share-based compensation or salary deferral plans. The Division was allocated Other Share-Based Compensation expense based upon headcount at the |
F-49
Division. The allocated Other Share-Based Compensation expense,
which is included in Period Expenses as G&A in the Statement
of Cost Center Activity, was approximately as follows:
Period
1/1/2005
Year Ended
Year Ended
Through
2003
2004
6/16/2005
$
0.6
$
0.9
$
3.0
9. | CASH FLOW INFORMATION |
As a cost center, the Divisions cash funding activities were managed and funded by Corporate. The Divisions cash impacts are estimated below using a change in net working capital approach: |
Period | |||||||||||||||
1/1/2005 | |||||||||||||||
Year Ended | Year Ended | Through | |||||||||||||
2003 | 2004 | 6/16/2005 | |||||||||||||
Cash flow from operating activities:
|
|||||||||||||||
Intercompany cost of products transferred
|
$ | (2,063.9 | ) | $ | (2,074.3 | ) | $ | (1,163.9 | ) | ||||||
Period expenses
|
(144.3 | ) | (173.2 | ) | (90.7 | ) | |||||||||
Net energy services
|
0.0 | 0.0 | 0.2 | ||||||||||||
Depreciation
|
97.4 | 90.7 | 40.3 | ||||||||||||
Changes in working capital:
|
|||||||||||||||
Cash (KIESC)
|
2.3 | (0.6 | ) | (2.2 | ) | ||||||||||
Accounts receivable
|
(0.4 | ) | 0.0 | 1.6 | |||||||||||
Inventories
|
5.7 | 4.8 | 37.0 | ||||||||||||
Prepaid expenses
|
(0.2 | ) | 0.3 | 0.0 | |||||||||||
Accounts payable
|
14.6 | (11.5 | ) | 11.7 | |||||||||||
Accrued expenses
|
3.5 | (1.9 | ) | (4.1 | ) | ||||||||||
Employee vacation
|
0.4 | 0.8 | (7.2 | ) | |||||||||||
Accrued employee related expenses
|
3.1 | | (0.5 | ) | |||||||||||
Net cash used by operating activities
|
(2,081.8 | ) | (2,164.9 | ) | (1,177.8 | ) | |||||||||
Investing activities:
|
|||||||||||||||
Capital expenditures
|
(43.3 | ) | (54.4 | ) | (48.2 | ) | |||||||||
Net cash impact
|
$ | (2,125.1 | ) | $ | (2,219.3 | ) | $ | (1,226.0 | ) | ||||||
10. | SIGNIFICANT CONCENTRATIONS OF RISK |
For all of the periods covered by these financial statements, all of the Divisions product transfers were to Boeing Programs. The Division is subject to both operational and external business environment risks. Operational risks that can disrupt the ability to make timely delivery of commercial jet aircraft components and assemblies and meet contractual commitments include execution of internal performance plans, product performance risks associated with regulatory certifications by the U.S. government, other regulatory uncertainties, collective bargaining disputes, performance issues with key suppliers and subcontractors, and the cost and availability of energy resources, such as electrical power. Aircraft programs, particularly new aircraft models, face the additional risk of pricing pressures and cost management issues inherent in the design and production of complex products. |
F-50
External business environment risks include adverse governmental import and export policies, factors that result in significant and prolonged disruption to air travel worldwide, and other factors that affect the economic viability of the commercial airline industry. Examples of factors relating to external business environment risks include the volatility of aircraft fuel prices, global trade policies, worldwide political stability and economic growth, acts of aggression that impact the perceived safety of commercial flight, escalation trends inherent in pricing, and a competitive industry structure which results in market pressure to reduce product prices. As of June 16, 2005, the principal collective bargaining agreements were with the International Association of Machinists and Aerospace Workers (IAM) representing 51% of the Division employees; the Society of Professional Engineering Employees (SPEEA) representing 34% of the Division employees; The United Automobile, Aerospace, and Agricultural Implement Workers of America representing 9% of the Division employees. At the end of June 16, 2005, all Division employees left the Boeing payroll as a result of the sale of the Division to Mid-Western and are no longer working under the terms and conditions of the Boeing labor agreements. Employees who transferred to Mid-Western were covered by their labor agreements or employment practices, if no labor agreement was in place. |
11. | CONTINGENCIES |
The Division is subject to federal and state requirements for protection of the environment, including those for discharge of hazardous materials and remediation of contaminated sites. The costs incurred and expected to be incurred have not had, and are not expected to have, a material adverse impact. | |
The provisions of the APA specifically exclude the assumption of environmental liabilities relating to conditions existing on or prior to June 16, 2005 and also exclude liabilities arising from any environmental proceedings pending as of June 16, 2005, as well as any proceeding commenced after June 16, 2005 to the extent arising out of or relating to any act or omission occurring on or prior to the closing date. | |
Also, the provisions of the APA specifically exclude liabilities arising out of any proceedings pending as of June 16, 2005 or that arise after June 16, 2005 to the extent the matter relates to an act or omission that occurred prior to June 16, 2005. |
F-51
F-52
F-53
1. | BASIS OF PRESENTATION |
The condensed consolidated interim financial statements included in this report have been prepared by management of The Boeing Company (Boeing). In the opinion of management, all adjustments necessary for a fair presentation of the Wichita Division (accruals and standalone presentation) are reflected. The results as shown as of March 31 on the statement of cost center activity are not necessarily indicative of the results of the Wichita Division for the full year. | |
The interim financial statements should be read in conjunction with the audited financial statements, including the notes for December 31, 2004 and 2003. | |
The Wichita Division (Division), which is not a separate legal entity, is operated as a cost center within the Boeing Commercial Airplanes Group (BCA) of Boeing. The Division includes the manufacturing operations of BCA located in Wichita, Kansas; Tulsa, Oklahoma, and McAlester, Oklahoma, along with certain assets and operations of the Shared Services Group (SSG) of Boeing. The Division has historically been an internal supplier of parts and assemblies to the 737, 747, 757, 767, and 777 Airplane Programs of BCA, with very few sales to third-party customers. The Division has also been selected as a supplier to the 787 Airplane Program currently under development by Boeing. These financial statements, hereafter referred to as the Financial Statements, reflect the standalone financial statements of the Division. Certain amounts in these financial statements have been allocated from Boeings financial statements. Allocations are generally based on the specific identification of costs, assets and liabilities, as well as on headcount and direct labor dollars where specific attribution is not practical. The General and Administrative (G&A) expense included in these statements is an allocation of Boeing Corporate (Corporate), SSG and BCA G&A expense (collectively Boeing G&A). | |
Management believes these allocations are reasonable, but may not be indicative of costs that would have been incurred had the Division been operated as a standalone business. | |
Most support function costs represent allocations to the Division. However, there is a portion of these support functions that occur at the Division, for example, general management, human resources, and finance that provide support directly to product-related organizations. | |
Boeing entered into an Asset Purchase Agreement (APA) dated February 22, 2005, as revised June 15, 2005, to sell the Division to Mid-Western Aircraft Systems, Inc (Mid-Western), an indirect majority-owned subsidiary of Onex Partners L.P. The accompanying financial statements have been prepared with reference to this agreement and present net assets and liabilities as well as a statement of cost center activities. The accompanying financial statements may not be indicative of the conditions that would have existed or the results of operations if the Division had been operated as a standalone company during the period presented. | |
On June 16, 2005, Boeing completed the sale of substantially all of the assets at BCAs facilities in Wichita, Kansas and Tulsa and McAlester, Oklahoma under the APA to Mid-Western, which was subsequently named Spirit AeroSystems, Inc. (Spirit). Transaction consideration given to Boeing included cash of approximately $900, together with the transfer of certain liabilities and the establishment of long-term supply agreements. All assets and liabilities presented in these financial statements were included in the sale. | |
Statements of cash flows have not been presented as the Division participated in Boeings centralized cash management systems and all its cash management activities were funded by Boeing. Other than |
F-54
cash on hand to meet immediate cash requirements The Divisions cash flow information is estimated in Note 4 using a change in net working capital. | |
Transactions with Boeing Transactions with Boeing were conducted on a noncash basis, and generally involved performance under intracompany contractual arrangements between the Division and Boeing. | |
Certain costs were incurred by Boeing on the Divisions behalf. To the extent practical, these costs are discretely transferred to the Division, but in some cases an allocation methodology is used to transfer the costs to the Division. These costs fall into three major categories and all such costs have been included in these financial statements. | |
The first category represents costs directly related to the activities of the Division, which were incurred by Boeing and transferred to the Division for administrative purposes including payroll, accounts payable, travel and employee benefits such as pension costs, and medical coverage. These costs are primarily included in Cost of Products Transferred and the balance included in Period Expenses. | |
A second category of costs incurred by Boeing on the Divisions behalf represented the purchase of parts from Boeing that are incorporated into the products of the Division. The cost of these parts is treated the same as the cost of parts acquired from unrelated parties and included in Cost of Products Transferred. | |
The third category of costs incurred by Boeing on the Divisions behalf are either general and administrative or relate to support services provided by Boeing for the benefit of the Division. These costs, except for those identified as G&A, are included in Cost of Products Transferred. These allocated costs are described in detail below. The following table reconciles total G&A and Internal Application Development (IAD) reported on the Statement of Cost Center Activity to the detail cost tables that follow. IAD costs are certain costs incurred at the Division to improve processes or internal applications rather than product. |
Three Months | ||||
Ended | ||||
Incurring Org and Description | 3/31/2005 | |||
(Unaudited) | ||||
Allocated Corporate G&A
|
$ | 7.3 | ||
Allocated Corporate Share-Based Plans
|
1.9 | |||
Allocated Corporate Share-Value Trust
|
1.1 | |||
Allocated BCA G&A
|
13.6 | |||
SSG G&A included in SSG Support Allocations (below)
|
3.2 | |||
Division Incurred G&A
|
4.1 | |||
Total Division G&A Expense
|
$ | 31.2 | ||
F-55
Three Months
Ended
Incurring Org and Description
3/31/2005
(Unaudited)
$
5.7
Support Allocations Boeing provides certain services to the Division and pays for certain expenditures on its behalf. The following table summarizes and describes the approximate amounts billed to the Division during: |
Three Months | ||||
Ended | ||||
Incurring Org and Description | 3/31/2005 | |||
(Unaudited) | ||||
BCA CAD/ CAM and Other
|
$ | 1.9 | ||
SSG Workplace Services
|
59.2 | |||
SSG Information Technology Services
|
13.0 | |||
SSG Administrative Services
|
10.6 | |||
Total Support Allocations (including SSG G&A)
|
84.7 | |||
Less SSG G&A Allocations included in Cost Allocation
Table(1) above
|
3.2 | |||
Total SSG Costs and BCA CAD/ CAM and Other included in Division
Cost of Products Transferred
|
$ | 81.5 | ||
BCA Computer Aided Design (CAD), BCA Computer Aided Manufacturing (CAM), and other cost allocated include calibration and certification costs and computer-aided design costs. | |
SSG costs (including an element of SSG-incurred G&A) were allocated to the Division based on SSGs cost collection and cost allocation processes which are primarily based on pooling of common costs and allocating pooled costs based on a measure of usage. SSG Workplace Services includes the cost of providing facilities, food, mail and in-plant transportation services, security and fire protection, technical services and safety, health, and environmental affairs. SSG Information Technology Services includes business systems and computing and network operations. SSG Administrative Services includes external transportation services, enterprise human resource management, payroll services and learning, training, and development. An estimate of the SSG G&A included in the above support allocations were recorded by the Division as period expense in accordance with established Boeing-wide practice. The remaining SSG-related amounts as well as the BCA CAD/ CAM allocations were included in the Overhead and nonlabor portion of Cost of Products Transferred. | |
In 2005, SSG revised its methodology for allocating G&A costs. As a result of the revision, the January 1 through March 31, 2005 SSG G&A Allocations amount recorded was $3.2 rather than $8.3. | |
Period Expenses Incurred at the Division These costs are not inventoriable costs and therefore are not included in Costs of Products Transferred. |
F-56
Three Months
Ended
Incurring Org and Description
3/31/2005
(Unaudited)
$
4.1
5.7
$
9.8
Division G&A costs are incurred at the Division and include salaries and costs associated with G&A-type functions such as site financial accounting. IAD costs are cost incurred at the Division to improve processes or internal applications rather than products. | |
Period Expense Incurred by Boeing not Billed or Incurred at the Division For purposes of these statements, certain costs have been allocated to the Division. These costs have not been billed to or incurred by, nor is the Division obligated to pay for these costs in the past or in the future. These allocations are conducted on a noncash basis and generally involve the performance of corporate-wide functions that have no direct relationship to the Divisions cost center activities. These costs are included in the total Division G&A expense (see Table 1). |
Three Months | ||||
Ended | ||||
Incurring Org and Description | 3/31/2005 | |||
(Unaudited) | ||||
Corporate G&A
|
$ | 7.3 | ||
Corporate Share-Based Plans
|
1.9 | |||
Corporate Share-Value Trust
|
1.1 | |||
BCA G&A
|
13.6 | |||
Total Period Expense incurred by Boeing not billed or incurred
|
$ | 23.9 | ||
Corporate costs allocated include centralized services such as government affairs, legal, tax, office of internal governance, international relations, communications and advertising, CEO and staff, investor relations, and miscellaneous liability, property, and foreign insurances. | |
BCA G&A costs allocated include business operations, sales and marketing, contracts, finance, communications, and BCA office of the president. |
2. | SIGNIFICANT ACCOUNTING POLICIES |
Principles of Consolidation The consolidated financial statements of the Division include the accounts of the majority-owned interest in Kansas Industrial Energy Supply Company (KIESC). The KIESC (formerly known as Wichita Gas Utility) arrangement has been in place since 1980. It was formed to purchase gas directly from the gas suppliers rather than through the city of Wichita. The current arrangement gives participants in KIESC more control over their cost. The agreement between the participating companies is titled Tenants-in -Common Management Agreement. It designates the arrangement as a tenancy in common and stipulates that nothing in the agreement should be construed as creating a joint venture, association, or partnership. All assets are owned in common. Nothing can be severed in a way that hurts the other tenants. Each tenant is prohibited |
F-57
from selling or assigning their interest to another party without the approval of the other tenants. The Division currently owns 79% of all outstanding interests. 100% of KIESCs results have been consolidated in these financial statements. Accordingly, the Divisions intercompany profits, transactions, and balances have been eliminated with the consolidation of KIESC. 77.77% of KIESC was sold on June 16, 2005 in connection with the transaction, with the remainder retained by Boeing to support Boeings remaining operations in Wichita, Kansas. KIESCs net assets are shown below: |
Three Months | ||||
Ended | ||||
Incurring Org and Description | 3/31/2005 | |||
(Unaudited) | ||||
KIESC Total Net Assets
|
$ | 2.2 | ||
Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that directly affect the amounts reported in the financial statements. Actual results could differ from those estimates. | |
Cost of Products Transferred As a cost center to the BCA Airplane Programs, the Division does not have sales to parties other than Boeing. For purposes of these financial statements, the Division recognizes cost of products transferred in an amount equal to the cost assigned. The Wichita Site Cost of Products Transferred was recognized when completed parts and assemblies were received or the scheduled receipt date occurred at BCA Airplane Programs Final Assembly Areas. The Tulsa and McAlester Sites Cost of Products Transferred was recognized when completed parts and assemblies were shipped from the site. Cost of Products Transferred also includes costs assigned to programs as incurred, for support of non-recurring activities performed on behalf of the programs. Non-recurring support refers to activities like design and build of tooling. 787 design activities included in Division cost of Products Transferred totals $37.4 for the period from January 1, 2005 through March 31, 2005. | |
Cost of Products Transferred consists of material, labor, nonlabor, and site overhead, which includes fringe benefits, production-related indirect and plant management salaries, and plant services. Labor cost includes direct and indirect labor, related fringe costs, and labor bonuses. Fringe benefit allocations are based on a rate applied to labor dollars. The rate includes elements such as vacation, holiday, sick leave, medical, pension, and postretirement medical. | |
Nonlabor costs included in overhead include cost of shop supplies, travel, software licensing, equipment depreciation, perishable tools, and cost allocations (see Transactions with Boeing above). | |
Cash Cash primarily consists of balances maintained by the Divisions consolidated interest in KIESC. The Division participates in Boeings centralized cash management systems. Accordingly, the financial statements exclude cash, debt, interest income, and interest expense maintained in the centralized cash management systems. | |
Accounts Receivable Accounts receivable consist of amounts on KIESC books due from third parties and are stated at the amount billed to customers, plus any accrued and unpaid interest. An allowance is provided for based upon a review of outstanding receivables, historical collection information, and existing economic conditions. | |
Inventories Inventories consist of raw materials and work in process (WIP). Finished goods are shipped immediately upon completion. Costs of raw materials and component parts that are identified |
F-58
as obsolete or surplus, including a provision for anticipated amounts, are included as a cost of products transferred. | |
The Divisions Wichita site in-process inventories are stated at the cost of products based on the stage of completion within production. The individual elements of inventory (e.g., raw material, WIP, and production stores) are valued using a standard cost methodology with any resulting variances to the standard allocated monthly to cost of products transferred. | |
The Divisions Tulsa/ McAlester sites in-process inventories are stated at the cost of products based on the stage of completion within production. Raw materials are valued based on an average cost method. Commercial Airplane Programs WIP inventory is valued based on total actual incurred costs for a block of aircraft, less the billed amount. The billed amount is calculated based on the average unit cost of an end-item (e.g., 737 Slats/ Flaps) for a block of aircraft based on the Estimate at Completion. | |
Long-Term Assets Long-term assets consist of amounts on the KIESC books for investments in marketable securities. KIESC has the positive intent and ability to hold these until maturity. They are valued at historical cost, adjusted for amortization of premiums and accretion of discounts computed by the level-yield method. | |
Property, Plant, and Equipment Property, plant, and equipment are recorded at cost, including applicable construction-period interest, less accumulated depreciation, and are depreciated principally over the following estimated useful lives: new buildings and land improvements, from 10 to 40 years; and new machinery and equipment, from 3 to 20 years. The principal methods of depreciation are as follows: buildings and land improvements, 150% declining balance; and machinery and equipment, sum-of -the-years digits. The Division periodically evaluates the appropriateness of remaining depreciable lives assigned to long-lived assets subject to a management plan for disposition. | |
The Division reviews long-lived assets, which includes property, plant, and equipment, for impairments in accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long Lived Assets. Long-lived assets held for sale are stated at the lower of cost or fair value, less cost to sell. Long-lived assets held for use are subject to an impairment assessment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, the amount of the impairment is the difference between the carrying amount and the fair value of the asset. |
3. | INVENTORIES |
Inventories are summarized as follows: |
Three Months | ||||
Ended | ||||
3/31/2005 | ||||
(Unaudited) | ||||
Raw materials
|
$ | 199.9 | ||
Work in process
|
307.0 | |||
Inventories
|
$ | 506.9 | ||
F-59
4.
CASH FLOW INFORMATION
As a cost center, the Divisions, cash funding activities
were managed and funded by WHQ. The Divisions cash impacts are
estimated below using a change in net working capital approach:
Three Months
Ended
3/31/2005
(Unaudited)
$
(602.4
)
(36.9
)
0.0
17.9
(2.7
)
(0.9
)
17.7
(0.1
)
14.5
(2.9
)
2.3
(0.2
)
(593.7
)
(21.5
)
$
(615.2
)
5. | SIGNIFICANT CONCENTRATIONS OF RISK |
For all of the periods covered by these financial statements, all of the Divisions product transfers were to Boeing Programs. The Division is subject to both operational and external business environment risks. Operational risks that can disrupt the ability to make timely delivery of commercial jet aircraft components and assemblies and meet contractual commitments include execution of internal performance plans, product performance risks associated with regulatory certifications by the U.S. government, other regulatory uncertainties, collective bargaining disputes, performance issues with key suppliers and subcontractors, and the cost and availability of energy resources, such as electrical power. Aircraft programs, particularly new aircraft models, face the additional risk of pricing pressures and cost management issues inherent in the design and production of complex products. External business environment risks include adverse governmental import and export policies, factors that result in significant and prolonged disruption to air travel worldwide, and other factors that affect the economic viability of the commercial airline industry. Examples of factors relating to external business environment risks include the volatility of aircraft fuel prices, global trade policies, worldwide political stability and economic growth, acts of aggression that impact the perceived safety of commercial flight, escalation trends inherent in pricing, and a competitive industry structure which results in market pressure to reduce product prices. As of March 31, 2005, the principal collective bargaining agreements were with the International Association of Machinists and Aerospace Workers |
F-60
(IAM) representing 51% of the Division employees; the Society of Professional Engineering Employees (SPEEA) representing 34% of the Division employees; The United Automobile, Aerospace, and Agricultural Implement Workers of America representing 9% of the Division employees. At the end of June 16, 2005 all Division employees left the Boeing payroll as a result of the sale of the Division to Mid-Western and are no longer working under the terms and conditions of the Boeing labor agreements. Employees who transferred to Mid-western were covered by their labor agreements or employment practices, if no labor agreement was in place. |
6. | CONTINGENCIES |
The Division is subject to federal and state requirements for protection of the environment, including those for discharge of hazardous materials and remediation of contaminated sites. The costs incurred and expected to be incurred have not had, and are not expected to have, a material adverse impact. | |
The provisions of the APA specifically exclude the assumption of environmental liabilities relating to conditions existing on or prior to June 16, 2005 and also exclude liabilities arising from any environmental proceedings pending as of June 16, 2005, as well as any proceeding commenced after June 16, 2005 to the extent arising out of or relating to any act or omission occurring on or prior to June 16, 2005. | |
Also, the provisions of the APA specifically exclude liabilities arising out of any proceedings pending as of June 16, 2005 or that arise after June 16, 2005 to the extent the matter relates to an act or omission that occurred prior to June 16, 2005. |
F-61
II-1
II-2
II-3
II-4
II-5
Item 13.
Other Expenses of Issuance and Distribution
$
53,500
50,500
*
*
*
*
*
*
$
*
*
To be provided by amendment
Item 14.
Indemnification of Directors and Officers
Table of Contents
Item 15.
Recent Sales of Unregistered Securities
Table of Contents
Item 16.
Exhibits and Financial Data Schedules
(a)
Exhibits
Table of Contents
10.15
Intercompany Agreement, dated June 30, 2005, by and among
Onex Partners Manager L.P. and Spirit AeroSystems, Inc.
10.16
Consulting Agreement, dated as of February 25, 2005,
between Gephardt and Associates LLC and Spirit AeroSystems, Inc.
(f/k/a Mid-Western Aircraft Systems, Inc.).
10.17
Amended and Restated Credit Agreement, dated as of July 20,
2005, among Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft
Systems, Inc.), Spirit AeroSystems Holdings, Inc. (f/k/a
Mid-Western Aircraft Systems Holdings, Inc.), Onex Wind Finance
LP, the guarantors party thereto, Citicorp North America, Inc.
and the other lenders party thereto.
10.18
Amendment No. 1 to the Amended and Restated Credit
Agreement, dated as of December 11, 2005, among Spirit
AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.),
Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft
Systems Holdings, Inc.), Onex Wind Finance LP, the guarantors
party thereto, Citicorp North America, Inc. and the other
lenders party thereto.
10.19
Amendment No. 2 to the Amended and Restated Credit
Agreement, dated as of March 31, 2006, among Spirit
AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.),
Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft
Systems Holdings, Inc.), Onex Wind Finance LP, the guarantors
party thereto, Citicorp North America, Inc. and the other
lenders party thereto.
10.20
Security Agreement, dated as of June 16, 2005, made by
Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems,
Inc.), Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western
Aircraft Systems Holdings, Inc.), Onex Wind Finance LP, 3101447
Nova Scotia Company, Onex Wind Finance LLC and Citicorp North
America, Inc., as collateral agent.
10.21
Credit Agreement, dated as of June 16, 2005, among Spirit
AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.),
Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft
Systems Holdings, Inc.), Onex Wind Finance LP, 3101447 Nova
Scotia Company, the other guarantor party thereto, and The
Boeing Company.
10.22
Security Agreement, dated as of June 16, 2005, made by
Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems,
Inc.), Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western
Aircraft Systems Holdings, Inc.), Spirit AeroSystems Finance,
Inc. (f/k/a Mid-Western Aircraft Finance, Inc.), Onex Wind
Finance LP, 3101447 Nova Scotia Company, Onex Wind Finance LLC
and The Boeing Company, as agent.
10.23
Special Business Provisions (Sustaining), dated as of
June 16, 2005, between The Boeing Company and Spirit
AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems,
Inc.).
10.24
General Terms Agreement (Sustaining and others), dated as of
June 16, 2005, between The Boeing Company and Spirit
AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems,
Inc.).
10.25
Hardware Material Services General Terms Agreement, dated as of
June 16, 2005, between The Boeing Company and Spirit
AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems,
Inc.).
10.26
Ancillary Know-How Supplemental License Agreement between The
Boeing Company and Spirit AeroSystems, Inc. (f/k/a Mid-Western
Aircraft Systems, Inc.), entered into as of June 16,
2005.
10.27
Sublease Agreement, dated as of June 16, 2005, among The
Boeing Company, Boeing IRB Asset Trust and Spirit AeroSystems,
Inc. (f/k/a Mid-Western Aircraft Systems, Inc).
11.1
Statement regarding computation of earnings per share*
21.1
Subsidiaries of Spirit AeroSystems Holdings, Inc.
23.1
Consent of PricewaterhouseCoopers LLP
23.2
Consent of Deloitte & Touche LLP
23.3
Consent of Kaye Scholer LLP (included in Exhibit 5.1)*
24.1
Powers of Attorney of the directors of Spirit AeroSystems
Holdings, Inc. (included in the signature page to the
registration statement)
*
To be filed by amendment
Confidential treatment requested. Confidential portions of this
document have been redacted and filed separately with the
Securities and Exchange Commission.
Table of Contents
Item 17.
Undertakings
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Table of Contents
II-6
SPIRIT AEROSYSTEMS HOLDINGS, INC.
By:
/s/ Ulrich Schmidt
Ulrich Schmidt
Chief Financial Officer
Signature
Title
Date
/s/ Jeffrey L. Turner
President and Chief Executive Officer
(Principal Executive Officer)
June 29, 2006
/s/ Ulrich Schmidt
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
June 29, 2006
/s/ D. Randolph Davis
Corporate Controller (Principal Accounting Officer)
June 29, 2006
/s/ Seth Mersky
Director
June 29, 2006
/s/ Nigel Wright
Director
June 29, 2006
Exhibit 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
THE BOEING COMPANY
AND
MID-WESTERN AIRCRAFT SYSTEMS, INC.
Dated as of February 22, 2005
TABLE OF CONTENTS
Page ---- 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 |
Page ---- 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 |
Page ---- 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 |
Page ---- 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 |
LIST OF SCHEDULES AND EXHIBITS
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 |
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 |
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)
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
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
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
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
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);
(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;
(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;
(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
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
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
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
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
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
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:
((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.
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:
(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]
(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]
(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
(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;
(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;
(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;
(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;
(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.
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
(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
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);
(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;
(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
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
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.
(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.
(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;
(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
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.
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
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
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
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
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:
(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
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.
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.
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
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
(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
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
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;
(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
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
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.
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
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
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
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
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
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
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
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
(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.
(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.
(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.
(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.
(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
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
(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.
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
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.
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
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.
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
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.
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
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
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
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
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
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,
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).
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.
(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.
(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.
(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
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-
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
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
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
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
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.
(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
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
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.
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,
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
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.
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).
"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
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.
"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).
"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
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.
"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.
"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).
"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).
"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,
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.
"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
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.
"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).
"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.
"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.
"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.
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: --------------------------------- |
Exhibit 2.2
FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT ("Amendment"), is entered into and effective as of June 15, 2005, by and between The Boeing Company, a Delaware corporation ("Seller"), and Mid-Western Aircraft Systems, Inc., a Delaware corporation ("Buyer"), with respect to the following facts:
WITNESSETH
A. Seller and Buyer are parties to that certain Asset Purchase Agreement dated as of February 22, 2005 (the "Asset Purchase Agreement"). All capitalized terms used herein shall have the meanings ascribed to such terms in the Asset Purchase Agreement, unless otherwise defined herein.
B. Section 11.8 of the Asset Purchase Agreement provides that the Asset Purchase Agreement may be amended only by a written instrument signed by each of the parties thereto.
C. Pursuant to the terms of Section 11.8 of the Asset Purchase Agreement, Seller and Buyer now desire to amend the Asset Purchase Agreement on the terms and 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:
1. List of Schedules and Exhibits. The list of Schedules and Exhibit is hereby amended by deleting the reference to Schedule 1.1(a)(xvi) - Included Spares Inventory.
2. Section 1.1(a)(ii). Section 1.1(a)(ii) is hereby deleted in its entirety and is replaced with the following:
"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 and excluding Spares Inventory (the "Inventory");"
3. Section 1.1(a)(xvi). Section 1.1(a)(xvi) is hereby deleted in its entirety.
4. Section 1.1(b)(xix). The parenthetical in Section 1.1(b)(xix) is hereby deleted.
5. New Section 1.1(b)(xxix). A new Section 1.1(b)(xxix) of the Asset Purchase Agreement will be added to read as follows:
"1.1(b)(xxix) The Spares Inventory."
6. Amendment to Section 1.3(c). The second sentence of Section 1.3(c) is hereby deleted in its entirety to delete the reference to Spares Inventory and is replaced with the following:
"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) plus (y) One Hundred Ninety-Two Million Four Hundred Thousand ($192,400,000), as adjusted as follows:"
7. Amendment to Section 3.3(a). The first sentence of Section 3.3(a) of the Asset Purchase Agreement is hereby amended and restated in its entirety as follows:
"(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, 2003 and 2004, 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")."
8. Amendment to Section 3.24. The second sentence of Section 3.24 is hereby deleted in its entirety to delete the reference to Spares Inventory and is replaced with the following:
"All Inventory is in the possession or control of Seller at the locations listed under paragraph (a) of Schedule 3.24 except for items that are in the possession or control of suppliers set forth on Schedule 3.23(c)."
9. Section 5.11. The third and fourth sentences of Section 5.11 are hereby deleted in their entirety.
10. Amendment to Section 6.2 (f). The first two paragraphs of Section 6.2(f) of the Asset Purchase Agreement are hereby amended and restated in their entirety as follows:
"(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) (other than those employees represented by the International Association of Machinists and Aerospace Workers) 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 plan ("Buyer's Union Pension Plan II") for the benefit of Hired Employees who are represented by the International Association of Machinists and Aerospace Workers and who participate in Seller's Union Pension Plan I ("Buyer's Hired Union Employees II"), (iii) a defined benefit pension plan ("Buyer's Union Pension Plan III") 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 III" and together with Buyer's Hired Union Employees I and Buyer's Hired Union Employees II, "Hired Union Employees"), and (iv) 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, Buyer's Union Pension Plan III 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), provided that Seller's Union Pension Plan I shall simultaneously make such a transfer to Buyer's Union Pension Plan I with respect to Buyer's Hired Union Employees I and to Buyer's Union Pension Plan II with respect to Buyer's Hired Union Employees II. All transfers shall be in accordance with the requirements of Section 414(1) of the Code."
11. Section 6.17. Section 6.17 is hereby deleted in its entirety to delete the reference to Spares Inventory and is replaced with the following:
"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."
12. New Section 6.22. A new Section 6.22 of the Asset Purchase Agreement will be added to read as follows:
"6.22 Seller Policies and Procedures. Seller grants Buyer access
to and the use of certain of Seller's policies and procedures set
forth on Schedule 6.22 ("Seller Policies and Procedures"). Buyer shall
have the right to utilize the Seller Policies and Procedures for six
(6) months after the Closing Date with respect to its operation of the
Business, provided that Buyer and its employees, agents,
representatives or Affiliates will not disclose its use of such Seller
Policies and Procedures to any third party. As a result of Buyer's use
of the Seller Policies and Procedures for its operation for the
Business after the Closing, regardless of whether the Seller Policies
and Procedures are in compliance with Law or are invalid in any
manner, Buyer hereby agrees to indemnify, defend and hold harmless
Seller for Buyer's use thereof, pursuant to Section 9.2(a)(iv) of the
Asset Purchase Agreement."
13. Section 12.1. The second sentence of the defined term "Net Working Capital" in Section 12.1 is hereby deleted in its entirety.
14. Section 12.1. The definition of the defined term "Target Net Working Capital" in Section 12.1 is hereby deleted in its entirety to delete the reference to Spares Inventory and is replaced with the following:
"Target Net Working Capital Amount" means the Net Working Capital of the Business as set forth in the Audited Interim Financial Statements."
15. Exhibit N. Exhibit N to the Asset Purchase Agreement hereby deleted and replaced with Exhibit N attached hereto.
16. Amendments to Schedules.
(a) Schedule 1.1(a)(xvi) to the Asset Purchase Agreement is hereby deleted in its entirety.
(b) Schedules 1.6(b), 3.3(a) and 3.8 to the Asset Purchase Agreement are hereby deleted in their entirety and replaced by Schedules 1.6(b), 3.3(a) and 3.8, hereto, respectively.
(c) Paragraph (b) of Schedule 3.24 is hereby deleted in its entirety.
(d) Section 2 of Schedule 6.2(f) to the Asset Purchase Agreement is amended by the addition of a new sentence immediately prior to paragraph (a), to read as follows:
"It is expressly understood that Seller's Union Pension Plan I shall simultaneously transfer assets and liabilities to Buyer's Union Pension Plan I with respect to Buyer's Hired Union Employees I and to Buyer's Union Pension Plan II with respect to Buyer's Hired Union Employees II."
17. Miscellaneous. This Amendment (i) may not be amended or modified except in writing and (ii) may be executed in separate counterparts and by facsimile, each of which shall be deemed an original but all such counterparts shall together constitute one and the same instrument. Other than provided herein, the provisions of the Asset Purchase Agreement shall remain in full force and effect; provided that, in the event of any conflict between the Asset Purchase Agreement or any Seller Transaction Agreements and this Amendment, the provisions of this Amendment shall govern. In particular, Buyer and Seller hereby agree that Seller shall be entitled to sell or utilize the Spares Inventory in any manner it deems appropriate and that any provision of the Asset Purchase Agreement or the Seller Transaction Agreements that conflicts in any manner with the foregoing shall no longer be applicable.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to 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: VP, Secretary & Treasurer |
Exhibit 4.3
INVESTOR STOCKHOLDERS AGREEMENT
This Investor Stockholders Agreement is made as of June 16, 2005 among Mid-Western Aircraft Systems Holdings, Inc., a Delaware corporation (the "COMPANY"), Onex Partners LP, a Delaware limited partnership ("ONEX PARTNERS"), the Stockholders listed on the signature pages of this Agreement and such other Stockholders of the Company as may, from time to time, become parties to this Agreement in accordance with the provisions hereof.
Upon consummation of the transactions contemplated by the Asset Purchase Agreement, dated as of February 22, 2005, between the Company and The Boeing Company, a Delaware corporation, with respect to the acquisition of the assets comprising the Business (as defined therein) and of certain related transactions to be consummated concurrently therewith (the "CLOSING"), Onex Partners and certain other Stockholders will own or may hereafter acquire certain Shares. The Company, the Onex Investors and certain other Stockholders are parties to a Registration Agreement (the "REGISTRATION AGREEMENT"), also dated as of the date hereof.
All of the Stockholders desire to enter into this Agreement for the purpose of regulating certain aspects of the Stockholders' relationships with one another and with the Company and in order to provide for the stability of the Company.
The parties, intending to be legally bound hereby, agree as follows:
ARTICLE 1
Certain Definitions
1.1 Certain Definitions. When used in this Agreement the following terms shall have the respective meanings shown:
"AFFILIATE" means, with respect to any Person, (a) any director or executive officer of such Person, (b) any spouse, parent, sibling, descendant or trust for the exclusive benefit of such Person or his or her spouse, parent, sibling or descendant (or the spouse, parent, sibling or descendant of any director or executive officer of such Person), and (c) any other Person that, directly or indirectly, controls or is controlled by or is under common control with such Person. For the purpose of this definition, (i) "control" (including with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, status as a general partner, or by contract or otherwise and (ii) Onex Corporation shall be deemed to control any Person controlled by Gerald W. Schwartz so long as Mr. Schwartz controls Onex Corporation.
"APPROVED SALE" has the meaning set forth in Section 5.2(a).
"BOARD" means the board of directors of the Company.
"BUSINESS DAY" means any day which is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in New York City.
"CALL EVENT" has the meaning set forth in Section 5.3(a).
"CALL NOTICE" has the meaning set forth in Section 5.3(a).
"CALL PRICE" means the most recent value per Share as determined by the Board prior to the date of the applicable Call Event for purposes of the Company's short-term incentive plan; provided that, if the Company has not adopted a short-term incentive plan, the "Call Price" shall be the fair market value per Share as determined by the Board in good faith without regard to minority discounts.
"CREDIT AGREEMENT" has the meaning set forth in Section 5.3(c).
"EXEMPT TRANSFER" means (i) any Transfer to or among the Onex Investors and (ii) any Transfer by an Onex Investor within 180 days following the date hereof to one or more institutional co-investors, provided in each case that each such transferee (if not already a party to this Agreement) shall have agreed in writing to become a party to this Agreement.
"FORMER MANAGEMENT HOLDER" has the meaning set forth in Section 5.3(a).
"INITIAL CALL PERIOD" has the meaning set forth in Section 5.3(a).
"MAJORITY ONEX INVESTORS" means Onex Investors holding, in the aggregate, a majority of the Shares held by all Onex Investors.
"MANAGEMENT INVESTOR" means Jeffrey L. Turner and any other individual employed by the Company or any subsidiary of the Company at the time he or she becomes a party to this Agreement, in each case for so long as such individual is employed by the Company or any subsidiary of the Company.
"ONEX CORPORATION" means Onex Corporation, an Ontario corporation.
"ONEX INVESTOR" means Onex Partners, Onex Corporation or any Affiliate of Onex Partners or Onex Corporation that is a holder of Shares or other equity interests of the Company, including, for purposes of this Agreement, (a) any Person which has granted to Onex Partners, Onex Corporation or any of their respective Affiliates the right to vote or dispose of such Person's Shares, other than pursuant to this Agreement, and (b) any employee, officer or director of Onex Corporation.
"OTHER INVESTOR" means any holder of Shares that is or becomes a party to this Agreement other than (a) the Onex Investors and (b) the transferees of the Onex Investors that acquire all of the Shares held by the Onex Investors as of the date hereof.
"PERSON" means an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization or a government or any department or agency thereof.
"PUBLIC OFFERING" means a public offering and sale of capital stock of the Company pursuant to an effective registration statement under the Securities Act.
"PUBLIC SALE" means any sale of Shares pursuant to a Public Offering or to the public through a broker or dealer or to a market maker pursuant to the provisions of Rule 144 (or any similar provision then in force) adopted under the Securities Act.
"QUALIFIED PUBLIC OFFERING" means the sale in one or more underwritten Public Offerings of at least 20% of the equity interests in the Company outstanding immediately after giving effect to the most recent such offering.
"SALE OF THE COMPANY" means any transaction pursuant to which Person(s) other than the Company's existing Stockholders as of the date hereof and their respective Affiliates acquire (a) capital stock of the Company possessing the voting power under normal circumstances to elect a majority of the Board (whether by merger, consolidation, recapitalization, reorganization or sale or transfer of the Company's equity interests or otherwise) or (b) all or substantially all of the Company's assets (determined on a consolidated basis).
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to time.
"SHARES" means (a) the shares of the Company's Class A Common Stock, par value $0.01 per share, Class B Common Stock, par value $0.01 per share, and any other capital stock of the Company purchased, issued to or otherwise acquired by any Stockholder, including Shares acquired upon the exercise of any warrant, option or other convertible security, and (b) any equity securities issued or issuable, directly or indirectly, with respect to the securities referred to in clause (a) by way of dividend or unit split, exchange or conversion, or in connection with a combination of Shares, recapitalization, merger, consolidation or other reorganization. As to any particular equity interests constituting Shares, such Shares will continue to be Shares subject to this Agreement in the hands of any holder of such Shares (other than purchasers pursuant to a Public Sale).
"STOCKHOLDER" means any holder of Shares that is or becomes a party to this Agreement.
"STOCKHOLDER REPRESENTATIVE" has the meaning set forth in Section 4.3(a).
"SUBORDINATE OBLIGATION" has the meaning set forth in Section 5.3(c)
"SUBSEQUENT CALL PERIOD" has the meaning set forth in Section 5.3(b).
ARTICLE 2
Board of Directors of the Company
2.1 Board of Directors.
(a) Each of the Stockholders will vote all of its Shares, and the Company will take all necessary or desirable action within its control, in order to cause the election to the Board of such individuals as may be designated from time to time by the Majority Onex Investors.
(b) The provisions of this Article 2 will terminate automatically upon the earlier to occur of (i) a Sale of the Company or (ii) a Qualified Public Offering.
ARTICLE 3
Covenants of the Company and Other Matters
3.1 Financial Information. So long as a Stockholder owns any Shares, the Company shall furnish or otherwise make available to such Stockholder the following:
(a) as promptly as practicable, and in any event within 90 days after the end of each fiscal year of the Company, copies of the audited annual consolidated financial statements of the Company and its subsidiaries, including a consolidated balance sheet of the Company and its subsidiaries as at the end of such fiscal year, consolidated statements of income and of cash flow of the Company and its subsidiaries for such fiscal year and the related notes thereto, and stating in comparative form the figures as of the end of and for the previous fiscal year, accompanied by an audit report thereon by a firm of independent certified public accountants of national recognition; and
(b) as promptly as practicable, and in any event within 45 days after the end of each fiscal quarter of the Company, copies of the unaudited quarterly consolidated financial statements of the Company, including a consolidated balance sheet of the Company and its subsidiaries as at the end of such fiscal quarter, and consolidated statements of income and of cash flow of the Company and its subsidiaries for such fiscal quarter and year to date period, and stating in comparative form the figures as of the end of and for the corresponding fiscal quarter and year to date period in the previous fiscal year; provided, that such statements need not cover periods prior to the date hereof.
The Board may require that Other Investors execute a confidentiality agreement acceptable to the Board as a condition to the receipt of the financial information set forth in this Sections 3.1, but such confidentiality agreement shall not apply to any financial information made publicly available by the Company in connection with or following a Public Offering.
(c) The provisions of this Section 3.1 will terminate automatically
(i) with respect to all Stockholders upon the earlier to occur of (1) a Sale of
the Company or (2) a Qualified Public Offering and (ii) with respect to any
Stockholder who is or was at any time during the term of this Agreement a
Management Investor, at such time when such Stockholder ceases to be deemed a
Management Investor hereunder.
ARTICLE 4
Restrictions on Transfer of Shares
4.1 Transfer of Stockholder Shares. Without the written consent of the Company and Onex Partners, no Other Investor shall sell, transfer, assign, pledge, exchange or otherwise dispose of (a "TRANSFER") any interest in Shares held by an Other Investor except pursuant to the provisions of this Article 4, Article 5 or pursuant to a Public Sale.
4.2 Permitted Transfers.
(a) The restrictions contained in this Article 4 shall not apply with respect to (i) any Transfer of Shares by any Stockholder to or among its Affiliates, or (ii) any Transfer of Shares by any Stockholder to any other Stockholder; provided, that the restrictions contained in this Article 4 shall continue to be applicable to the Shares after any such Transfer and provided further that each transferee of such Shares shall have agreed in writing to become a party to this Agreement. Any Management Investor transferring Shares pursuant to this Section 4.2(a)(i) shall remain the "STOCKHOLDER REPRESENTATIVE" with respect to all such transferred Shares and shall be responsible for the giving and receipt of all consents, notices and other communication between the Company and the other Stockholders, on the one hand, and the transferee(s) of such Shares, on the other hand.
(b) The provisions of this Article 4 shall terminate automatically upon the earlier to occur of (i) a Sale of the Company and (ii) a Qualified Public Offering.
(c) In the case of any Transfer pursuant to Section 4.2(a)(i), a transferee may at any time, and shall forthwith in the event that such transferee ceases to be an Affiliate of the transferor, transfer back to such transferor all of the Shares held by it.
ARTICLE 5
Tag-Along, Drag-Along and Put/Call Rights
5.1 Tag-Along Right.
(a) At least 20 days prior to any Transfer (other than an Exempt Transfer) by any Onex Investor of 10% or more of the aggregate number of Shares owned by the Onex Investor as of the date of this Agreement in a single transaction or series of related transactions (the "INITIATING STOCKHOLDER"), such Initiating Stockholder shall deliver a written notice (the "SALE NOTICE") to each Other Investor, specifying the identity of the prospective purchaser(s), the number of Shares to be transferred, the price per Share to be paid for such Shares, and, in reasonable detail, the other terms and conditions of the Transfer. Each of such Other Investor may elect to participate in the contemplated Transfer at the same price per share and on the same terms by delivering written notice to the Initiating Stockholder within ten days after delivery of the Sale Notice (each such electing Other Investor is a "PARTICIPATING STOCKHOLDER"). Each Participating Stockholder will be entitled and obligated to sell in the contemplated Transfer, at the price per Share and on the same terms and conditions, a number of Shares equal to such Participating Stockholder's Tag-Along Percentage (as defined below) of the number of Shares
proposed to be transferred by the Initiating Stockholder and the number of Shares to be transferred by the Initiating Stockholder in such contemplated Transfer shall be reduced by the number of Shares to be transferred by the Participating Stockholders (unless the Initiating Stockholder purchases such Shares directly from the Participating Stockholders pursuant to Section 5.1(b)), simultaneously with and conditioned upon the closing of the sale by the Initiating Stockholder. However, the contemplated Transfer may provide for payment in securities, or a combination of cash and securities, to all Stockholders that are accredited investors within the meaning of Regulation D under the Securities Act and in cash to Stockholders that are not accredited investors or may provide Stockholders that are accredited investors with the option to receive Securities, or a combination of cash and securities, or cash while Stockholders that are not accredited investors receive cash. The Initiating Stockholder may abandon the contemplated Transfer at any time prior to its closing without any liability or obligation under this Section 5.1. A Participating Stockholder's "TAG-ALONG PERCENTAGE" is the quotient obtained by dividing (i) the number of Shares owned by such Participating Stockholder at the time of such Transfer, by (ii) the sum of the aggregate number of Shares owned by the Stockholders at the time of such Transfer (including the Initiating Stockholder) and, without duplication, all other holders having co-sale rights with respect to such Transfer.
(b) The Initiating Stockholder shall effect the participation of the
Participating Stockholders in the contemplated Transfer by either (i) obtaining
the agreement of the prospective purchaser(s) to purchase from the Participating
Stockholders the Shares which the Participating Stockholders are entitled to
sell to such prospective purchaser(s) pursuant to Section 5.1(a) or (ii)
purchasing the number of Shares from the Participating Stockholders which the
Participating Stockholders would have been entitled to sell to the prospective
purchaser(s) pursuant to Section 5.1(a) at the same price per Share and on the
same terms and conditions at which such Participating Stockholders are entitled
otherwise to sell such Shares to the prospective purchaser(s) pursuant to
Section 5.1(a), in either case simultaneously with and conditioned upon the
closing of the proposed Transfer.
(c) The Participating Stockholders will use their best efforts to cooperate in the proposed Transfer and will take all necessary and desirable actions in connection with the consummation of the proposed Transfer as are reasonably requested by the Initiating Stockholder, including, but not limited to, entry into agreements and provision of representations, warranties and indemnification; provided, that no Participating Stockholder shall be required to enter into substantively different agreements or provide substantively different representations and warranties or indemnification than the Initiating Stockholder and each Participating Stockholder's obligations thereunder shall be several and, other than with respect to the Participating Stockholder's representations, warranties and indemnification relating to title to his/her/its Shares, encumbrances on such Shares and his/her/its status and authority to consummate the contemplated Transfer, limited to the proceeds received by such Stockholder in connection with such proposed Transfer.
(d) Prior to transferring its Shares pursuant to this Section 5.1, the Initiating Stockholder shall cause the prospective purchaser(s) to agree in writing to become a party to this Agreement.
(e) The provisions of this Section 5.1 shall not apply to any Public Sale, to any Transfer in connection with a Sale of the Company or to any Exempt Transfer.
5.2 Drag-Along Right.
(a) Subject to Section 5.2(b), if the Majority Onex Investors approve a sale (other than an Exempt Transfer) of: (i) 20% or more of the outstanding Shares or (ii) all or substantially all of the assets of the Company (each an "APPROVED SALE"), whether by way of merger, consolidation, sale of stock or assets, or otherwise, all Stockholders shall consent to and raise no objections against the Approved Sale, and if the Approved Sale is structured as (A) a merger or consolidation of the Company or a subsidiary, or a sale of all or substantially all of the assets of the Company or a subsidiary, each Stockholder shall waive any dissenters rights, appraisal rights or similar rights in connection with such merger, consolidation or asset sale, or (B) a sale of 20% or more of the outstanding Shares, each Stockholder shall agree to sell his/her/its respective Drag-Along Percentage (as defined below) of the Shares which are the subject of the Approved Sale, on the same terms and conditions as applicable to the Shares being sold by the Onex Investor in such Approved Sale. The Stockholders will use their best efforts to cooperate in the Approved Sale and will take all necessary and desirable actions in connection with the consummation of the Approved Sale as are reasonably requested by the Majority Onex Investors, including, but not limited to, entry into agreements and provision of representations, warranties and indemnification, provided, that no Stockholder shall be required to enter into substantively different agreements or provide substantively different representations and warranties or indemnification than any other Stockholder and each Stockholder's obligations thereunder shall be several and limited to the proceeds received by such Stockholder in connection with such Approved Sale. A Stockholder's "DRAG-ALONG PERCENTAGE" is the product obtained by multiplying (i) the total number of Shares owned by such Stockholder at the time of the Approved Sale by (ii) the quotient obtained by dividing (x) the total number of Shares being Transferred in the Approved Sale by the Onex Investors by (y) the total number of Shares owned by the Onex Investors at the time of the Approved Sale.
(b) The obligations of the Stockholders with respect to the Approved Sale are subject to the satisfaction of the following conditions: (i) upon the consummation of the Approved Sale, all of the Stockholders will receive the same form and per Share amount of consideration for their Shares as all other Stockholders, or if any Stockholders are given an option as to the form and amount of consideration to be received, all Stockholders must be given the same option (except that the Approved Sale may provide for payment in securities, or a combination of cash and securities, to all Stockholders that are accredited investors within the meaning of Regulation D under the Securities Act and in cash to Stockholders that are not accredited investors or may provide Stockholders that are accredited investors with the option to receive securities, or a combination of cash and securities, or cash while Stockholders that are not accredited investors receive cash); and (ii) if the Approved Sale includes a sale to a Person that is an Onex Investor or an Affiliate of an Onex Investor, the holders of a majority of the Shares held by the Other Investors may request that an appraisal of the fair market value of the securities to be sold and/or received (based on the fair market value of all of the Company's outstanding capital stock, without regard to any control premium or liquidity or minority discount) by the Other Investors in connection with such Approved Sale be made by an investment banking firm of national recognition mutually agreeable to such parties, and it shall
be a condition to the consummation of such Approved Sale to an Onex Investor or an Affiliate of an Onex Investor that such Person pay as consideration to the Other Investors the fair market value as determined pursuant to such appraisal (if such appraisal results in a valuation greater than the valuation of the consideration proposed to be delivered in connection with such Approved Sale, the Company shall pay the costs of such appraisal, otherwise the requesting Stockholders shall pay such costs).
(c) If the proposed Approved Sale involves the receipt by Stockholders of securities for which Section 4(2) of the Securities Act of 1933 or Rule 506 (or any similar rule then in effect) promulgated by the Securities and Exchange Commission may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), the Stockholders will, at the request of the Majority Onex Investors, and to the extent required to comply with Regulation D, appoint a purchaser representative (as such term is defined in Rule 501) reasonably acceptable to the Majority Onex Investor. If any Stockholder appoints the purchaser representative designated by the Majority Onex Investors, the Company will pay the fees of such purchaser representative, but if any Stockholder declines to appoint the purchaser representative designated by the Majority Onex Investors, such holder will appoint another purchaser representative (reasonably acceptable to the Majority Onex Investors), and such holder will be responsible for the fees of the purchaser representative so appointed.
5.3 Call Rights on Former Management Holders' Shares.
(a) If the employment of any Management Investor (a "FORMER MANAGEMENT HOLDER") with the Company or any subsidiary of the Company shall terminate for any reason, (the "CALL EVENT"), then the Company shall have the right to require such Former Management Investor (or, in the case of death or permanent disability, such Former Management Investor's executor, personal representative or legal representative) to sell, by delivery of a written notice (the "CALL NOTICE") to such Former Management Investor (or, in the case of death or permanent disability, such Former Management Investor's executor, personal representative or legal representative) within 180 days after the date of the Call Event (the "INITIAL CALL PERIOD"), and such Former Management Investor (or, in the case of death or permanent disability, such Former Management Investor's executor, personal representative or legal representative) shall be required to sell, all of the Shares then held by such Former Management Holder (including any Shares then held by an Affiliate of such Former Management Holder pursuant to a Transfer under Section 4.2(a)(i)) at a price per Share equal to the Call Price.
(b) If at any time, a Former Management Holder acquires an interest in additional Shares (whether through his/her participation any of the Company's equity incentive plans or otherwise) after the expiration of the Initial Call Period, then the Company shall have the right to require such Former Management Investor (or, in the case of death or permanent disability, such Former Management Investor's executor, personal representative or legal representative) to sell, by delivery of Call Notice to such Former Management Investor (or, in the case of death or permanent disability, such Former Management Investor's executor, personal representative or legal representative) within 90 days after the date of such acquisition (a "SUBSEQUENT CALL PERIOD"), and such Former Management Investor (or, in the case of death or permanent disability, such Former Management Investor's executor, personal representative or legal representative) shall be required to sell, all of the Shares then held by such Former
Management Holder (including any Shares then held by an Affiliate of such Former Management Holder pursuant to a Transfer under Section 4.2(a)(i)) at a price per Share equal to the Call Price.
(c) The closing of any purchase of Shares by the Company pursuant to this Section 5.3 shall take place at the principal office of the Company within 15 days after the expiration of the Call Period or Subsequent Call Period, as applicable, as the Company shall specify to such Former Management Investor (or, in the case of death or permanent disability, such Former Management Investor's executor, personal representative or legal representative) in writing. At such closing, such Former Management Investor (or, in the case of death or permanent disability, such Former Management Investor's executor, personal representative or legal representative) shall deliver to the Company certificates and/or other instruments representing, together with stock or other appropriate powers duly endorsed with respect to, the Shares, free and clear of all liens, encumbrances or other restrictions (other than pursuant to securities laws or this Agreement), against payment by the Company of the purchase price for the Shares in cash (by delivery of a certified check payable to such Former Management Investor (or, in the case of death, such Former Management Investor's estate)). Notwithstanding the foregoing, if the payment of all or any portion of the purchase price is not permitted to be made at the closing by the terms any credit agreement(s) relating to the Company's senior debt (collectively, the "CREDIT AGREEMENT"), or the payment would cause a Default or an Event of Default (as such terms are defined in any Credit Agreement), then that portion of the purchase price shall instead become a subordinated obligation of the Company (a "SUBORDINATE OBLIGATION"); the Subordinate Obligation shall not be payable during the continuance of a Default or an Event of Default (as defined in any Credit Agreement) or if such payment would not otherwise be permitted by any Credit Agreement or would result in a Default or an Event of Default (as defined under any Credit Agreement). The Subordinate Obligation shall be payable on the earlier to occur of (i) one day after the closing date of a complete refinancing of the Company's senior debt and (ii) receipt by the Company of the written approval of its senior lenders to pay the principal and interest on the obligation in full. The Subordinate Obligation shall accrue interest at the weighted average rate applicable from time to time on the Company's senior debt. The Company shall pre-pay the amount of any Subordinate Obligation, together with accrued and unpaid interest, as and when it is permitted to do so without Default (as defined) or creating an Event of Default (as defined) under any Credit Agreement, provided, that if there is more than one Subordinate Obligation outstanding, the Company shall make pre-payments on each Subordinate Obligation in the proportion that the outstanding amount thereof (including accrued and unpaid interest) bears to the aggregate outstanding Subordinate Obligations (including accrued and unpaid interest).
(d) If and to the extent the Company does not deliver a Call Notice within the Call Period or Subsequent Call Period, as applicable, or if the purchase of all Shares subject to the Call Notice does not occur at the scheduled closing date through the fault of the Company, then the Company's right to purchase such Shares pursuant to this Section 5.3 shall terminate.
ARTICLE 6
Preemptive Rights
6.1 Grant of Preemptive Right. Subject to Section 6.6, if the Company authorizes the issuance or sale of any Shares or securities convertible into or exercisable for Shares (together, the "PARTICIPATION SECURITIES") to any Onex Investor or Affiliate of Onex Investor (other than the Company or any subsidiary of the Company), the Company shall, on the terms and conditions of this Article 6, offer to each of the Other Investors the right to purchase or subscribe for up to an aggregate number of Participation Securities equal to the product obtained by multiplying (i) the total number of Participation Securities to be issued or sold by the Company, by (ii) a fraction, the numerator of which is the aggregate number of Shares held by such Other Investor, and the denominator of which is the aggregate number of Shares outstanding, in each case, determined as of the date of the Preemptive Notice. For the purpose of this Article 6, "STOCKHOLDER PARTICIPATION SECURITIES" means, with respect to any Other Investor in connection with any proposed issuance or sale of Participation Securities, that number of Participation Securities as to which such Other Investor is entitled to exercise preemptive rights hereunder, calculated under the immediately preceding sentence. However, the Company may elect not to extend preemptive rights to any Other Investor that is not an "accredited investor" within the meaning of Regulation D under the Securities Act or whose participation in the offering would, in the reasonable judgment of the Company, require registration or qualification under any federal, state or foreign securities law and if it does so the Persons so excluded shall not be an "Other Investor" for any purpose under this Article 6.
6.2 Delivery of Preemptive Notice. If the Company proposes to issue or sell any Participation Securities in a transaction giving rise to the preemptive rights provided for in this Article 6, subject to Section 6.4, the Company shall send a written notice (the "PREEMPTIVE NOTICE") to each Other Investor at least ten Business Days before the proposed date of such issuance or sale, setting forth (a) the type and, if not Shares, the terms and conditions of the Participation Securities, (b) the number of Participation Securities that the Company proposes to sell or issue, (c) the price (before any commission or discount) at which such Participation Securities are proposed to be issued or sold (or, in the case of an offering in which the price is not known at the time the Preemptive Notice is given, the method of determining such price and an estimate thereof), (d) the other material terms of the transaction, and (e) the aggregate number of Stockholder Participation Securities which may be purchased by such Other Investor (determined under Section 6.1).
6.3 Delivery of Exercise Notice; Waiver of Preemptive Right. At any time within the ten Business Days following the date the Company delivers the Preemptive Notice, an Other Investor may exercise the preemptive rights provided under this Article 6 by delivering notice to the Company (an "EXERCISE NOTICE") exercising such Other Investor's preemptive rights as to all, but not less than all, of its Stockholder Participation Securities. If any Other Investor does not deliver a timely Exercise Notice, such Other Investor shall be deemed to have irrevocably waived the preemptive rights provided by this Article 6 with respect to all such Stockholder Participation Securities that are the subject of the Preemptive Notice, and the Company shall be permitted to issue such Other Investor's Stockholder Participation Securities free from the preemptive rights provided under this Article 6.
6.4 Terms of Issuance of Sale of Participation Securities.
(a) Subject to Section 6.4(b), (c) and (d) below, the purchase of, or subscription for Participation Securities by the Other Investors who exercise preemptive rights under this Article 6, shall be at the same price and on the same terms and conditions, including the date of sale or issuance, as are applicable to the proposed issuance or sale by the Company of the Participation Securities to any Onex Investor or Affiliate of an Onex Investor.
(b) If the Company determines in good faith that the delay occasioned by complying with the procedures contemplated by this Article 6 would be prejudicial to the Company or its financial condition or business and operations, then the Company may before delivering the Preemptive Notice or after delivering the Preemptive Notice (but in such case before observing the time periods and other procedures set forth in this Article 6), (i) issue or sell all or any part of the Participation Securities to any Onex Investor or Affiliate of Onex Investor without issuing or selling all or any part of the Stockholder Participation Securities of some or all of the Other Investors to any such Other Investors or (ii) issue or sell all or any part of the Participation Securities to any Onex Investor or Affiliate of an Onex Investor and also issue to any Onex Investor or Affiliate of an Onex Investor all or any part of the Stockholder Participation Securities of some or all of the Other Investors.
If the Company elects to issue Participation Securities to any Onex Investor or Affiliate of an Onex Investor under this Section 6.4(b) before it delivers a Preemptive Notice, then the Company shall deliver the Preemptive Notice to each Other Investor no later than ten
Business Days after the date on which the Participation Securities are issued or sold to the Onex Investor or Affiliate of an Onex Investor. If at the time any Other Investor delivers a timely Exercise Notice in accordance with Section 6.3, the Company has not yet issued or sold the Stockholder Participation Securities that such Other Investor is entitled to purchase hereunder to an Onex Investor or Affiliate of an Onex Investor, then such unissued Stockholder Participation Securities shall be issued or sold by the Company to such Other Investor as promptly as practicable, but in no event later than five Business Days following the date of delivery of the Exercise Notice, at the same price, and on the same terms and conditions, as were applicable to the issuance or sale of Participation Securities to any Onex Investor or Affiliate of an Onex Investor.
(c) If, at the time an Other Investor delivers a timely Exercise Notice in accordance with Section 6.3, the Company has issued or sold some or all of the Stockholder Participation Securities that such Other Investor is entitled to purchase hereunder to any Onex Investor or Affiliate of an Onex Investor, then any such Stockholder Participation Securities shall be sold by an Onex Investor or Affiliate of an Onex Investor to such Other Investor as promptly as is practicable, but in no event later than five Business Days following the date of delivery of the Exercise Notice, at a price per Participation Security equal to the price paid by an Onex Investor or Affiliate of an Onex Investor therefor, plus interest on such amount from the date of purchase by an Onex Investor or Affiliate of an Onex Investor through the date of sale to the Other Investor, at a rate per annum equal to the then-effective prime rate, as announced by Citibank N.A. At the closing of any such sale by an Onex Investor or Affiliate of an Onex Investor, such Persons shall deliver to the Other Investor certificates representing the Stockholder Participation Securities to be conveyed, duly endorsed or accompanied by stock powers executed in blank, against payment of the purchase price therefor calculated hereunder.
(d) If Participation Securities issued or sold by the Company consist of multiple types or classes of securities, then the Other Investors who elect to exercise their preemptive right shall purchase such types or classes of securities in the same relative proportions as do Onex Investors or Affiliates of Onex Investors. Further, if any Participation Securities to be issued or sold by the Company are to be issued or sold by the Company as part of a unit that includes, or otherwise together with other securities (including debt securities) of the Company that are not Participation Securities ("OTHER SECURITIES"), then any Other Investor exercising preemptive rights provided under this Article 6 must in connection therewith also purchase such Other Securities of the Company that are part of such unit or otherwise being issued or sold by the Company together with the Participation Securities, and the definitions of "PARTICIPATION SECURITIES" and "STOCKHOLDER PARTICIPATION SECURITIES" shall for all purposes of this Article 6 be deemed to include any such Other Securities of the Company.
6.5 Sale by Company Absent Exercise of Preemptive Right. If, with respect to any issuance or sale of Participation Securities in connection with which the Company has delivered Preemptive Notices, no Other Investor has delivered a timely Exercise Notice covering some or all Stockholder Participation Securities that are the subject of such Preemptive Notices, the Company shall, unless the Company has already done so in reliance on Section 6.4(b), have 120 days following the expiration of the ten Business Day period following the date of delivery of the Preemptive Notice in which to sell all or any part of those Stockholder Participation
Securities which Stockholders have not so elected to purchase to any Person or entity, including, but not limited to, any Onex Investor.
6.6 Termination; Securities Excluded from Preemptive Right. The provisions of this Article 6 will terminate automatically upon the earlier to occur of (a) a Sale of the Company or (b) a Qualified Public Offering and shall not apply to such a Sale of the Company or Qualified Public Offering. The provisions of this Article 6 shall not apply to (i) Participation Securities issued in connection with a pro rata stock dividend, stock split or recapitalization or the like, (ii) Participation Securities issued upon exercise or conversion of any option, warrant or other securities convertible into or exercisable for Shares, (iii) Participation Securities issued in a Public Sale, whether or not any Onex Investor participates in such Public Sale, or (iv) Participation Securities issued in any transaction or series of related transactions in which less than 20% of the Participation Securities to be issued are purchased by Onex Investors.
ARTICLE 7
Transfers of Shares
7.1 Transfers in Accordance with this Agreement. The Company may refuse to register any Transfer of Shares on its transfer books if such Transfer is not in accordance with this Agreement and state and federal securities laws.
7.2 Legending of Shares Certificates. The Shares may be uncertificated. All certificates representing Shares held by any Person subject to this Agreement (and by any permitted or required transferees who are bound by or subject to this Agreement) shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD (WITHIN THE MEANING OF SUCH ACT) IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT OR AN EXEMPTION THEREFROM. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND CERTAIN RESTRICTIONS ON THE VOTING OF SUCH SECURITIES CONTAINED IN THE INVESTOR STOCKHOLDERS AGREEMENT, DATED AS OF JUNE 16, 2005, AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE COMPANY'S STOCKHOLDERS. A COPY OF SUCH INVESTOR STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
7.3 Default of Delivery.
(a) In the event that any Stockholder, the Company, or any Stockholder's transferees or assignees (each, a "REQUIRING PARTY") have the right to acquire Shares from any other Stockholder or the right to require any such other Stockholder to sell its Shares to any other Person, pursuant to the terms of this Agreement (such selling Stockholder hereinafter referred to as the "TRANSFEROR" and such Requiring Party or any other Person to whom the Transferor is required to transfer Shares, as applicable, hereinafter referred to as the "TRANSFEREE") and the Transferor is not present at the closing, or is present but for any reason fails to produce and deliver to the Transferee the certificates or other instruments representing any of the Shares being transferred, then the cash purchase price, as and when payable, may be deposited into a bank account in the name of the Company and any other consideration permitted or required to be delivered in satisfaction of the purchase price shall be deposited with the Company. Such deposits shall constitute valid and effective payment to the Transferor of the purchase price for the Shares being transferred notwithstanding the fact that the Transferor may have voluntarily attempted to encumber or dispose of any of the Shares contrary to the terms hereof, or that one or more certificates or other evidences of ownership of such Shares may have been delivered to any other Person. From and after the date of such deposits (even though the stock certificates in the name of the Transferor have not been delivered to the Transferee), the purchase by and transfer of the Shares to the Transferee shall be deemed to have been fully completed and all right, title, benefit and interest of the Transferor in and to all such Shares, both at law and in equity, shall be conclusively deemed to have been transferred and assigned to and become vested in the Transferee and the Transferee will have the right to request that the Company enter the transfer into the Unit register and the Company shall be entitled to so enter the transfer.
(b) Where the Transferee has made a deposit in accordance with
subsection (a), the Transferor shall be entitled to receive the cash purchase
price of the Shares so deposited with the Company's bankers, and to receive any
other consideration deposited with the Company. Upon delivery to the Company of
(i) the certificates or other instruments representing the Shares duly endorsed
for transfer and (ii) any other document required to be delivered by the
Transferor at closing, including, without limitation, the release or discharge
of any encumbrance relating to the Shares and stock transfer stamps, if
necessary.
ARTICLE 8
Miscellaneous
8.1 Voting Agreement and Appointment of Proxy.
(a) The Other Investors shall at all times vote their Shares (to the extent they are entitled to vote the same) as specifically provided herein or, if not so provided, in the same manner as the Shares held by the Majority Onex Investors are voted, on the election of directors and on all other matters which are submitted to a vote (or consent in lieu of voting) of the Company's Stockholders and on which such Shares are entitled to vote. To the extent permitted by law and for all purposes of this Agreement, each Other Investor, by its execution of this Agreement, hereby irrevocably constitutes and appoints Onex Partners and such other Persons as may from time to time be designated by the Majority Onex Investors, its proxy with full power
of substitution to vote all of its Shares at any meeting of Stockholders of the Company, or to give consent in lieu of voting on the election of directors and on any matter which is submitted for a vote or consent to the Stockholders and on which such Shares are entitled to vote, provided, that such Shares are voted or consent is given with respect to it as specifically provided herein, or if not so provided, in the same manner as the Shares held by the Majority Onex Investors. The proxies and powers granted by the Other Investors pursuant to this Section 8.1 are coupled with an interest.
(b) Each Stockholder represents that it has not granted and is not a party to any proxy, voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement, and no such holder of Shares shall grant any proxy or become party to any voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement.
(c) The voting agreement set forth in this Section 8.1 shall terminate automatically upon the earlier to occur of (i) a Sale of the Company or (ii) a Qualified Public Offering.
8.2 Stock Certificates. The Company shall be permitted to hold stock certificates representing Shares issued to Other Investors as custodian for such Other Investors, including, without limitation, for purposes of consummating transactions permitted or required by this Agreement.
8.3 Termination of Agreement. Unless otherwise provided herein, this Agreement shall terminate and be of no further force or effect upon the earliest to occur of (i) a Sale of the Company, (ii) the third anniversary of a Qualified Public Offering or (iii) the mutual written agreement to terminate this Agreement by the Majority Onex Investors, on the one hand, and the Holders (other than the Onex Investors) holding a majority of the then outstanding Shares, on the other hand.
8.4 Notices. All notices, consents and other communications required or permitted to be given under or by reason of this Agreement shall be in writing, shall be delivered personally or by e-mail or telecopy as described below or by reputable overnight courier, and shall be deemed given on the date on which such delivery is made, provided, that any such delivery made on a day that is not a Business Day, or that is made after 5:00 p.m. on a Business Day, shall be deemed to be given on the following Business Day. If delivered by e-mail or telecopy, such notices or communications shall be confirmed by a registered or certified letter (return receipt requested), postage prepaid. Any such delivery shall be addressed to the intended recipient at the following addresses (or at such other address for a party as shall be specified by such party by like notice to the other parties):
If to the Company or an Onex Investor: c/o Onex Investment Corp.
712 Fifth Avenue
New York, New York 10019
Attention: Seth Mersky and Nigel Wright
Fax: (212) 582-0909
E-mail: smersky@onex.com
nwright@onex.com with copies to: Onex American Holdings II LLC 21 Leader Street Marion, Ohio 43302 Attention: Donald F. West Fax: (740) 223-7762 E-Mail: dwest@onex.com and Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Attention: Joel I. Greenberg, Esq. Fax: (212) 836-8211 E-mail: jigreenberg@kayescholer.com |
If to any Other Investor at such Other Investor's address as set forth on such Other Investor's signature page hereto.
If to any other Person which becomes a party to this Agreement in accordance with the terms hereof, at the address for delivery of notices or communications given to all other parties by such party at such time.
8.5 Interpretation. In this Agreement, unless a contrary intention
appears, (a) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision, (b) the words "include," "includes" or
"including" shall be deemed to be followed by the words "without limitation,"
(c) reference to any Article or Section means such Article or Section hereof,
(d) words of any gender shall be deemed to include each other gender, and (e)
words using the singular or plural number shall also include the plural or
singular number, respectively. No provision of this Agreement shall be
interpreted or construed against any party hereto solely because such party or
its legal representative drafted such provision.
8.6 Captions. The captions in this Agreement are for convenience of reference only and shall not be given any effect in the interpretation of this Agreement.
8.7 Governing Law. This Agreement shall be construed in accordance with, and governed by, the laws of the State of Delaware without regard to conflicts of laws principles which would result in the application of the laws of another jurisdiction.
8.8 Time. Time shall be of the essence of this Agreement.
8.9 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
8.10 Jurisdiction. The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the courts of the State of Delaware and the United States District Court for the District of Delaware for any actions, suits or proceedings arising out of or relating to this agreement and the transactions contemplated hereby (and agree not to commence any action, suit or proceeding relating thereto except in such courts). The parties hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the courts of the State of Delaware and the United States District Court from the District of Delaware, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
8.11 Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
8.12 Assignment. This Agreement shall be binding upon the parties hereto, all Stockholders and, to the extent expressly provided elsewhere in this Agreement, their respective permitted transferees and assigns (other than purchasers of equity securities pursuant to a Public Sale), together with in each case all successors, heirs, executors and administrators thereof, and shall inure to the benefit of the parties hereto, all Stockholders and, to the extent expressly provided elsewhere in this Agreement, assigns of the Stockholders, together, in each case, with all successors, heirs, executors and administrators thereof. Except as otherwise provided herein, no party may assign any of its rights or delegate any of its duties under this Agreement.
8.13 Amendment and Waiver. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement will be effective unless such modification, amendment or waiver is approved in writing by the Company, the Majority Onex Investors and Other Investors holding a majority of the Shares held by all Other Investors, provided, that a modification, amendment or waiver of Section 4.2(b) as to any Other Investor may be authorized by such Other Investor and the Board. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. No purported waiver shall be effective unless in writing. The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent or other breach.
8.14 Remedies. The parties shall be entitled to enforce their rights under this Agreement specifically to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or temporary, preliminary or permanent injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement.
8.15 Counterparts; Joinder. This Agreement may be executed in counterparts, each of which shall be considered an original, but all of which together shall constitute one and the same instrument. Additional Persons may become parties to this Agreement in accordance with the provisions of this Agreement or with the consent of the Company and the Majority Onex Investors, in either case by executing and delivering to the Company a joinder agreement.
8.16 Complete Agreement. This Agreement, the documents expressly referred to herein (including the Registration Agreement) and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understanding, agreements or representations by or among the parties, written or oral, that may be related to the subject matter hereof in any way.
[Signature Pages Follows]
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
MID-WESTERN AIRCRAFT SYSTEMS
HOLDINGS, INC.
By: /s/ Nigel Wright ------------------------------------ Name: Nigel Wright ---------------------------------- Title: Vice President --------------------------------- |
ONEX PARTNERS LP
By: Onex Partners GP LP,
its General Partner
By: Onex Partners Manager LP, its Agent
By: Onex Partners Manager GP Inc.,
its General Partner
By: /s/ Seth Mersky ------------------------------------ Name: Seth Mersky ---------------------------------- Title: Managing Director --------------------------------- By: /s/ Donald F. West ------------------------------------ Name: Donald F. West ---------------------------------- Title: Vice President --------------------------------- |
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Kerry D. Crisp --------------------------- Name: Kerry D. Crisp Title: V.P. Human Resources |
Address for Notice:
7541 N/W 130th
Potwin, KS 67123
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Michael G. King --------------------------- Name: Michael G. King Title: VP GM PSS |
Address for Notice:
7807 Birdie Lane
Wichita, KS 67205
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ John A. Pilla --------------------------- Name: John A. Pilla Title: VP-GM 787 |
Address for Notice:
1817 West Evanston
Wichita, KS 67204
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ M.L. Williams --------------------------- Name: M.L. Williams Title: SR VP Finance & Controller |
Address for Notice:
14831 Summerfield
Wichita, KS 67230
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Donald R. Carlisle --------------------------- Name: Donald R. Carlisle Title: Vice President/General Mgr. |
Address for Notice:
6204 S. Cedar Ave
Broken Arrow, OK 74011
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Carolyn A. Harms --------------------------- Name: Carolyn A. Harms Title: VP/GM, Spares/MRO & Aftermarket Support Business Unit |
Address for Notice:
12 Madopalla Ct.
Derby, KS 67037
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Vernell Jackson --------------------------- Name: Vernell Jackson Title: V.P. H.R. & Admin. |
Address for Notice:
1848 Paddock Green Court
Wichita, KS 67206
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Ronald C. Brunton --------------------------- Name: Ronald C. Brunton Title: Ex. V.P./CHF. Optg. Officer |
Address for Notice:
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Ulrich Schmidt --------------------------- Name: Ulrich Schmidt Title: EVP & CFO |
Address for Notice:
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Jeffrey L. Turner --------------------------- Name: Title: President/CEO |
Address for Notice:
1320 N. Covington Cir.
Wichita, KS 67212
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Daniel H. Wheeler ----------------------------------- Name: Daniel H. Wheeler Title: Director, 787 Fuselage Manufacturing |
Address for Notice:
237 N. Crestway
Wichita, KS 67208
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Michael C. Germann --------------------------- Name: Michael C. Germann Title: VP, Communications & Public Affairs Mid-Western Aircraft Systems, Inc. |
Address for Notice:
618 N. 18th Fairway
Andover, KS 67002
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Dana A. Smith --------------------------- Name: Title: |
Address for Notice:
4986 SW Cliff Road
Towanda, KS 67144
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ James M. Urso --------------------------- Name: James M. Urso Title: VP Supply Chain Management |
Address for Notice:
1648 Tiara Pines Place
Derby, KS 67037
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Tod J. Wawzysko ----------------------------------- Name: Tod J. Wawzysko Title: VP - Quality and Process Improvement |
Address for Notice:
13502 SW 150th St.
Rose Hill, Kansas 67133
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Richard Buchanan --------------------------- Name: Richard Buchanan Title: VP/GM Fuselage Structures |
Address for Notice:
709 Erin Lane
Mulvane, KS 67110
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Sheri Boyer ------------------ Name: Sheri Boyer Title: Director of General Fabrication |
Address for Notice:
Sheri Boyer
PO Box 280
Kechi, KS 67067
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Gloria G. Farha Flentje ---------------------------- Name: Gloria G. Farha Flentje Title: VP General Counsel & Secretary |
Address for Notice:
155 N. Quenton
Wichita, KS 67208
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Peter H. Wu ------------------ Name: Peter Wu Title: V.P. / Chief Scientist |
Address for Notice:
1445 Cedar Park
Wichita, KS 67235
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Jerry D. Vaughan --------------------------- Name: Jerry D. Vaughan Title: Director, SCM |
Address for Notice:
14630 E. 44th St. S
Derby, KS 67037
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Michael E. Nelson --------------------------- Name: Michael E. Nelson Title: Director, Operations MWASI Aerostructures Business Unit |
Address for Notice:
8301 N. 160th E. Ct.
Owasso, OK 74055
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Rodney A. Webber ------------------------------------ Name: Rodney A. Webber Title: 737-800 MMA Program Director |
Address for Notice:
12335 Meribeau Ct.
Wichita, KS 67235
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ George H. Miller ------------------------------------ Name: George H. Miller Title: Chief Engr/Director |
Address for Notice:
123 North Emporia
Valley Center, KS 67147
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Frederick J. Dodds III ------------------------------------ Name: Frederick J. Dodds III Title: Deputy General Counsel |
Address for Notice:
7346 E. 24th Avn.
Wichita, KS 67226
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Forrest E. Urban ------------------------------------ Name: Forrest E. Urban Title: 787 Factory Director |
Address for Notice:
7209 Cedaridge Cir.
Wichita, KS 67226
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Ellston White ------------------------------------ Name: Ellston O. White Title: Chief Information Officer |
Address for Notice:
2807 Forest Park
Derby, KS 67037
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Anthony J. Veith ------------------------------------ Name: Anthony J. Veith Title: Director, Spares Inventory Mgmt |
Address for Notice:
409 Huntington Road
Andale, KS 67001
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Suzanne Scott ------------------------------------ Name: Suzanne Scott Title: Director Human Resources Support Services |
Address for Notice:
12205 W. Nantucket
Wichita, KS 67235
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ David E. Finneran ------------------------------------ Name: David E. Finneran Title: Director |
Address for Notice:
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Jeffrey D. Jabara ------------------------------------ Name: Jeffrey D. Jabara Title: |
Address for Notice:
1825 N. Frederic
Wichita, KS 67206
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Brian L. Skelton ------------------------------------ Name: Brian L. Skelton Title: Director, Quality & Tech Svcs. |
Address for Notice:
5022 E. Cedar Ridge Road
Claremore, OK 74019
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Allen R. Williams ------------------------------------ Name: Allen R. Williams Title: Director of Engineering |
Address for Notice:
7501 E. 64th Place
Tulsa, OK 74133
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Joseph W. Jarrett ------------------------------------ Name: Joseph W. Jarrett Title: Controller, MWASI Aerostructure Business Unit |
Address for Notice:
9405 S. 74th e. Ave.
Tulsa, Okla 74133
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Thomas A. Greenwood ------------------------------------ Name: Thomas A. Greenwood Title: Director of Global Technology Utilization |
Address for Notice:
1267 Countywalk
Wichita, KS 67206
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Timothy A. Cosgrove ------------------------------------ Name: Timothy A. Cosgrove Title: Director, H.R. |
Address for Notice:
21481 E. 105th St.
Broken Arrow, OK 74014
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Sherri A. Williams ------------------------------------ Name: Title: Director Compensation and Benefits |
Address for Notice:
1435 N. Glen Wood Ct.
Wichita, KS 67230
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Adam M. Pogue ------------------------------------ Name: Adam M. Pogue Title: Facilities Director |
Address for Notice:
Mid-Western Aircraft Systems, Inc.
PO Box 78008
Wichita, KS 67278-0008
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Steven Turkle ------------------------------------ Name: Thomas Steven Turkle Title: Director, Logistics |
Address for Notice:
1011 N. Golden Hills
Wichita, KS 67212
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Jeffrey V. Clark ------------------------------------ Name: Jeffrey V. Clark Title: Employment & Labor Relations Director |
Address for Notice:
9423 Shannon Way Ct.
Wichita, KS 67206
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Douglas Scott ------------------------------------ Name: Douglas Scott Title: Director |
Address for Notice:
12205 W. Nantucket
Wichita, Kansas 67235
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Susan Lyn Bacon ------------------------------------ Name: Susan Lyn Bacon Title: Director Manufacturing Engineering |
Address for Notice:
Susan Lyn Bacon
638 S. Erie
Wichita, KS 67211
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Radhe Bhagat ------------------------------------ Name: Radhe S. Bhagat Title: Director, Product Definition |
Address for Notice:
8514 E. MT. Vernon Ct.
Wichita, KS 67207
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Kenneth L. Wright ------------------------------------ Name: Kenneth L. Wright Title: Director Operations/New Programs |
Address for Notice:
2411 Spring Meadow
Wichita, Ks 67205
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Marci L. Johnson -------------------------------- Name: Marci L. Johnson Title: Business Operations and Development Director |
Address for Notice:
4110 Sweet Bay Circle
Wichita, KS 67226
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ V R McMullen -------------------------------- Name: Victor R. McMullen Jr. Title: 747/767/777 Operations Director |
Address for Notice:
802 Hawthorne
Derby, KS 67037
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ David P. Bartz -------------------------------- Name: David P. Bartz Title: 737 Operations Director |
Address for Notice:
2406 N. Ridgeside Circle
Wichita, KS 67205
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Mark E. Hoffman -------------------------------- Name: Mark E. Hoffman Title: Engr. Dir.- 787 Pylon |
Address for Notice:
1321 Buckboard CT
Derby, KS 67037
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Rodney C. Cheatham -------------------------------- Name: Rodney C. Cheatham Title: Director, Procurement |
Address for Notice:
706 Bramerton Court
Andover, KS 67002
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Robert M. Mayle -------------------------------- Name: Robert M. Mayle Title: Engineering Director |
Address for Notice:
14704 Timber Lake Rd
Wichita, KS 67230
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Don A. Blake -------------------------------- Name: Title: |
Address for Notice:
1324 Broad Moor
Derby, KS 67037
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ David E. Wiseman -------------------------------- Name: David E. Wiseman Title: Procurement Director |
Address for Notice:
1748 Oxford Cirle
Derby, Kansas
67037
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Kimberly E. Scanlan -------------------------------- Name: Kimberly E. Scanlan Title: Director, Human Resources |
Address for Notice:
7333 E. 22nd #10
Wichita, KS 67226
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Ricky L. Morriss -------------------------------- Name: Ricky L. Morriss Title: Tooling Director |
Address for Notice:
P.O. Box 216
Douglass KS 67039
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Douglas H. Reece -------------------------------- Name: Douglas H. Reece Title: Director, Quality/ Customer Relations |
Address for Notice:
1925 Saddle Creek Ct
Wichita, KS 67206
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Kip Schmidt -------------------------------- Name: Kip Schmidt Title: |
Address for Notice:
1509 N. Wheatridge
Wichita, KS 67235
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Lana K. McCutchen -------------------------------- Name: Lana K. McCutchen Title: Director, Finance 787/New Programs Controller |
Address for Notice:
1061 N. 199th W. Circle
Goddard, KS 67052
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Lois Ilene Covey -------------------------------- Name: Lois Ilene Covey Title: Director Supply Chain Management |
Address for Notice:
Lois Ilene Covey
15410 Hickory
Goddard KS 67052
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Richard L. Davis Jr. -------------------------------- Name: Richard L. Davis Jr. Title: Business Management Director |
Address for Notice:
15831 Limerick St.
Wichita, KS 67230
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Curtis Demuth -------------------------------- Name: Curtis W. Demuth Title: |
Address for Notice:
14905 Sharon Ln.
Wichita KS 67230
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
OTHER INVESTOR
By: /s/ Mary E. French -------------------------------- Name: Mary E. French Title: Director |
Address for Notice:
3769 Whispering Brook
Wichita, KS 67220
COUNTERPART SIGNATURE PAGE TO
INVESTOR STOCKHOLDERS AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS
STOCKHOLDERS DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of March 1, 2006.
/s/ Stephen F. Page --------------------------------------- [NAME] Stephen F. Page |
Address for Notice:
3200 Ocean Drive
Manhattan Beach
Calif. 90266
COUNTERPART SIGNATURE PAGE TO
INVESTOR STOCKHOLDERS AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS
STOCKHOLDERS DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of _______ __, 200__.
/s/ Robert Johnson --------------------------------------- Robert D. Johnson |
Address for Notice:
COUNTERPART SIGNATURE PAGE TO
INVESTOR STOCKHOLDERS AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS
STOCKHOLDERS DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of December 16, 2005.
/s/ Richard A. Gephardt --------------------------------------- Richard A. Gephardt |
Address for Notice:
822 Capital Sq. Pl. S.W.
Washington, DC 20024
COUNTERPART SIGNATURE PAGE TO
INVESTOR STOCKHOLDERS AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS
STOCKHOLDERS DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of December 20, 2005.
/s/ Paul Fulchino --------------------------------------- Paul Fulchino |
Address for Notice:
4212 St. Andrews Blvd
Irung, TX 75038
COUNTERPART SIGNATURE PAGE TO
INVESTOR STOCKHOLDERS AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS
STOCKHOLDERS DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of 12/17, 2005
/s/ Ivor Evans --------------------------------------- Ivor "Ike" Evans |
Address for Notice:
8 Catboat
Hilton Head
South Carolina 29928
COUNTERPART SIGNATURE PAGE TO
INVESTOR STOCKHOLDERS AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS
STOCKHOLDERS DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of December 21, 2005.
/s/ F. Raborn --------------------------------------- Francis "Buzz" Raborn |
Address for Notice:
9221 Black Riffres CT
Great Falls, VA 22066
COUNTERPART SIGNATURE PAGE TO
INVESTOR STOCKHOLDERS AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS
STOCKHOLDERS DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of December 19, 2005.
/s/ Ronald T. Kadish --------------------------------------- Ronald T. Kadish |
Address for Notice:
COUNTERPART SIGNATURE PAGE TO
INVESTOR STOCKHOLDERS AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS
STOCKHOLDERS DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of ________ __, 200__.
/s/ Connie Mack --------------------------------------- Connie Mack |
Address for Notice:
P.O. Box 3729
Placida, FL 33946
Exhibit 4.4
REGISTRATION AGREEMENT
This Registration Agreement is made as of June 16, 2005, among Mid-Western Aircraft Systems Holdings, Inc., a Delaware corporation (the "COMPANY"), and the Persons listed on Schedule A attached hereto and such other stockholders of the Company as may, from time to time, become parties to this Agreement in accordance with the provisions hereof (the "INVESTORS").
Certain of the Investors and the Company are parties to a subscription agreement pertaining to the Investors' investment and/or contribution to the Company. In order to induce those Investors which are parties to the subscription agreement to enter into such agreements, the Company has agreed to provide the registration rights set forth in this Agreement. Unless otherwise provided in this Agreement, capitalized terms used herein shall have the meanings set forth in Section 9.
The parties, intending to be legally bound hereby, agree as follows:
1. Demand Registrations.
(a) Requests for Registration. Subject to Sections 1(b) and 1(c), at any time, the Majority Onex Investors may request registration under the Securities Act of all or part of their Registrable Securities on Form S-1 or any similar long-form registration ("LONG-FORM REGISTRATIONS") or, if available, on Form S-2 or S-3 or any similar short-form registration ("SHORT-FORM REGISTRATIONS"). In addition, at any time after the consummation of a Public Offering, the holders of a majority of the Registrable Securities may request Long-Form Registrations or, if available, Short-Form Registrations of all or part of their Registrable Securities until such holders cease to hold at least 10% of the number of Registrable Securities held by such holders as of the date hereof. Each request for a registration under this Section 1(a) shall specify the approximate number of Registrable Securities requested to be registered and the proposed method of distribution. Within ten days after receipt of any such request, the Company will give written notice of such requested registration to all other holders of Registrable Securities and, subject to Section 1(d), will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company's notice. All registrations requested pursuant to this Section 1(a) are referred to herein as "DEMAND REGISTRATIONS."
(b) Long-Form Registrations. The holders of a majority of the Registrable Securities will be entitled to request three Long-Form Registrations in which the Company will pay all Registration Expenses and the Majority Onex Investors will be entitled to request an unlimited number of Long-Form Registrations in which the Company will pay all Registration Expenses ("COMPANY-PAID LONG-FORM REGISTRATIONS"). A registration will not count as one of the permitted Long-Form Registrations until it has become effective (unless such Long-Form Registration has not become effective due solely to the fault of the holders requesting such registration and such holders do
not agree to bear all Registration Expenses (as defined below) in connection therewith); provided that in any event (absent such an agreement by the holders requesting such registration) the Company will pay all Registration Expenses in connection with any registration initiated as a Company-Paid Long-Form Registration whether or not it has become effective. All Long-Form Registrations shall be underwritten registrations.
(c) Short-Form Registrations. In addition to the Company-Paid Long-Form Registrations provided pursuant to Section 1(b), the Majority Onex Investors and the holders a majority of the Registrable Securities will each be entitled to request an unlimited number of Short-Form Registrations in which the Company will pay all Registration Expenses. Demand Registrations will be Short-Form Registrations whenever the Company is permitted to use any applicable short form, but the Company shall include in the prospectus information of the type required in a Long-Form Registration to the extent reasonably requested by the managing underwriters. After the Company has become subject to the reporting requirements of the Securities Exchange Act, the Company will use its commercially reasonable efforts to be eligible to use Short-Form Registrations for the sale of Registrable Securities. The Majority Onex Investors may require that any Short-Form Registration provide, pursuant to Rule 415 under the Securities Act or any successor rule, for the continuous offering and rule of Registrable Securities through market transactions and such other methods of distribution as the Majority Onex Investors may reasonably request (a "SHELF REGISTRATION").
(d) Priority on Demand Registrations. The Company will not include in any Demand Registration any securities that are not Registrable Securities without the prior written consent of the holders of at least a majority of the Registrable Securities included in such registration. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities and, if permitted pursuant to the immediately preceding sentence, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without adversely affecting the marketability of the offering, the Company will include in such registration prior to the inclusion of any securities which are not Registrable Securities the number of Registrable Securities requested to be included (whether upon exercise of a demand registration right or upon exercise of the right to participate in such a demand registration) that in the opinion of such underwriters can be sold without adversely affecting the marketability of the offering, pro rata among the respective holders thereof on the basis of the number of Registrable Securities requested to be included by each such holder.
(e) Restrictions on Demand Registrations. The Company will not be obligated to effect any Demand Registration, other than a Shelf Registration, within six months after the effective date of a Demand Registration or a registration in which the holders of Registrable Securities were given piggyback rights pursuant to Section 2 and in which there was no reduction in the number of Registrable Securities requested to be included. The Company may postpone for up to six months the filing or the effectiveness of a registration statement for a Demand Registration if the Board of Directors of the Company determines that such Demand Registration would reasonably be expected to have an
adverse effect on (i) any proposal or plan by the Company or any of its subsidiaries to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer or similar transaction, or (ii) any material corporate development; provided that in such event, the holders of Registrable Securities initially requesting such Demand Registration will be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration will not count as a requested Demand Registrations hereunder and the Company will pay all Registration Expenses in connection with such registration.
(f) Selection of Underwriters. The holders of a majority of the Registrable Securities included in any Demand Registration will have the right to select the investment banker(s) and manager(s) to administer the offering, subject to the Company's approval which will not be unreasonably withheld.
(g) Other Registration Rights. Subject to the following provisos, the Company will not grant to any Persons the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable into or exercisable for such securities, without the prior written consent of the holders of at least a majority of the Registrable Securities; provided that the Company may grant such rights to request the Company to register any equity securities of the Company as are consistent with any union equity participation programs implemented by the Company, in its sole discretion, on or prior to June 16, 2006; provided further that the Company may grant rights to other Persons to participate in Piggyback Registrations or Demand Registrations so long as such rights are subordinate to the rights of the holders of Registrable Securities with respect to such Piggyback Registrations or Demand Registrations.
2. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register any of its securities under the Securities Act (including primary registrations on behalf of the Company and secondary registrations on behalf of the holders of its securities other than pursuant to a Demand Registration) and the registration form to be used may be used for the registration of Registrable Securities (a "PIGGYBACK REGISTRATION"), the Company will give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company's notice. However, the Company shall not include Registrable Securities in a primary registration on behalf of the Company if the Majority Onex Investors so determine.
(b) Piggyback Expenses. The Registration Expenses of the holders of Registrable Securities will be paid by the Company in all Piggyback Registrations.
(c) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company will include
in such registration (i) first, the securities the Company proposes to sell,
(ii) second, the Registrable Securities requested to be included in such
registration, pro rata among the holders of such Registrable Securities on the
basis of the number of shares requested to be included by each such holder, and
(iii) third, other securities requested to be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company will include
in such registration (i) first, pro rata among the securities requested to be
included therein by the holders requesting such registration and the other
Registrable Securities requested to be included in such registration, on the
basis of the number of shares requested to be included by each such holder, and
(ii) second, other securities requested to be included in such registration.
(e) Selection of Underwriters. If any Piggyback Registration is an underwritten offering, the Company's selection of investment banker(s) and manager(s) for the offering will be subject to approval by the holders of a majority of the Registrable Securities included in such Piggyback Registration. Such approval will not be unreasonably withheld.
(f) Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
Section 1 or pursuant to this Section 2, and if such previous registration has
not been withdrawn or abandoned, the Company will not, except as required by
Section 1, file or cause to be effected any other registration of any of its
equity securities or securities convertible or exchangeable into or exercisable
for its equity securities under the Securities Act (except on Form S-8 or any
successor form), whether on its own behalf or at the request of any holder or
holders of such securities, until a period of at least six months has elapsed
from the effective date of such previous registration.
3. Holdback Agreements.
(a) Each holder of Registrable Securities agrees not to effect any public sale or distribution (including sales pursuant to Rule 144 under the Securities Act) of Registrable Securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 90-day (180-day in the case of the initial Public Offering) period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration in which Registrable Securities are included or which is the initial Public Offering (except as part of such underwritten registration), unless the underwriters managing the registered public offering otherwise agree. In connection with any underwritten Demand Registration, each holder of Registrable Securities will, if so requested by the managing underwriter, enter into customary lock-up agreements for the periods specified in the preceding sentence (or such shorter periods to which the managing
underwriter may agree), subject to extension for up to 35 days on customary terms by reason of earnings releases or material news or events concerning the Company.
(b) The Company agrees (i) not to effect any public sale or distribution (including sales pursuant to Rule 144 under the Securities Act) of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and during the 90-day period (180-day in the case of the Initial Public Offering) beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration or pursuant to registrations on Form S-8 or any successor form), unless the underwriters managing the registered public offering otherwise agree, and (ii) to cause each holder of its common stock, or any securities convertible into or exchangeable or exercisable for common stock, purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144 under the Securities Act) of any Registrable Securities during such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree.
4. Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company will use commercially reasonable efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company will as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to the counsel selected by the holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents will be subject to the review of such counsel);
(b) prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the period required to accomplish the plan of distribution set forth therein (but not, except in the case of a Shelf Registration, more than six months) and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of distribution by the sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction, (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction, in each case where it would not otherwise be required to qualify, subject itself to taxation or consent to general service of process but for this subparagraph);
(e) notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, the Company will promptly prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be listed, if eligible for such listing, on one or more securities exchanges or the NASD automated quotation system (on the National Market System if the Company so qualifies);
(g) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the underwriters reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a stock split or a combination of shares);
(i) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning
with the first day of the Company's first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any common stock included in such registration statement for sale in any jurisdiction, the Company will use its reasonable best efforts promptly to obtain the withdrawal of such order;
(l) obtain comfort letters, dated (i) the effective date of such registration statement, ( ii) the date the Registrable Securities being sold are delivered to the underwriters, if any, for sale pursuant thereto and (iii) if required by the underwriters, if any, on or prior to the date of any preliminary prospectuses, from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters and if the Registrable Securities included in such registration statement constitute at least 10% of the securities covered by such registration statement, also covering such matters as the holders of a majority of the Registrable Securities being sold reasonably request;
(m) provide a legal opinion of the Company's outside counsel with respect to the registration statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature;
(n) if requested by the managing underwriter or underwriters or a holder of Registrable Securities being sold in connection with an underwritten offering (including an underwritten offering under a Shelf Registration), promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriters and the holders of a majority of the Registrable Securities being sold agree should be included therein relating to the plan of distribution with respect to such Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold to such underwriters, the purchase price being paid thereof by such underwriters and with respect to any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Securities to be sold in such offering; and make all required filings of such prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such prospectus supplement or post-effective amendment;
(o) cooperate with the selling holders of Registrable Securities and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two business days prior to any sale of Registrable Securities to the underwriters;
(p) cooperate with, and make members of management available to participate in, road shows and other marketing activities as reasonably requested by the managing underwriter or underwriters; and
(q) use its best efforts to cause the Registrable Securities covered by the applicable registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities.
5. Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses associated with filings required to be made with the NASD (including, if applicable, the fees and expenses of any "qualified independent underwriter"and its counsel as may be required by the rules and regulations of the NASD), fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company (all such expenses being herein called "REGISTRATION EXPENSES"), will be borne as provided in this Agreement, except that the Company will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on the NASD automated quotation system (on the National Market System if the Company so qualifies).
(b) In connection with each Demand Registration and each Piggyback Registration, the Company will reimburse the holders of Registrable Securities covered by such registration for, or pay directly, the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Registrable Securities initially requesting such registration (in the case of a Demand Registration) or the holders of a majority of the Registrable Securities included in such registration (in the case of a Piggyback Registration).
(c) To the extent Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder will pay those Registration Expenses allocable to the registration of such holder's securities so included, and any Registration Expenses not so allocable will be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered.
6. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by law, each holder of Registrable Securities, its officers and directors and each Person who controls such holder (within the meaning of the Securities Act or the Securities Exchange Act) against all losses, claims, damages, liabilities and expenses (including any amounts paid in any settlement effected with the Company's consent, which consent shall not be unreasonably withheld) caused by any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation by the Company of any federal, state or common law applicable to the Company and relating to action required of or inaction by the Company in connection with such registration, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder which specifically states that it is for use in the preparation of such registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or by such holder's failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same. In connection with an underwritten offering, the Company will indemnify the underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act or the Securities Exchange Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information relating to such holder and its Registrable Securities as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, will indemnify the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act or the Securities Exchange Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information so furnished in writing by such holder which specifically states that it is for use in the preparation of such registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto; provided that the obligation to indemnify will be individual to each holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (but any failure to so notify the indemnifying party shall not relieve it of any liability which it may otherwise have to any indemnified party unless such failure shall materially adversely affect the defense of such claim) and (ii) unless in such indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of, or knowledge of, the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of securities. The Company also agrees to make such provisions, as are reasonably requested by any indemnified party, for contribution to such party in such proportion as is appropriate to reflect the relative benefits received by, and the relative fault of, the Company and such indemnified party in the event the Company's indemnification is unavailable for any reason. The indemnification and contribution provided for in this Agreement shall be in addition to, and not in lieu of, the indemnification and contribution provisions in any underwriting or similar agreement.
7. Participation in Registrations.
(a) No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any overallotment or "green shoe" option requested by the managing underwriter(s)) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.
(b) Each Person that is participating in any registration hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(e), such Person will forthwith discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person's receipt of the copies of a supplemented or amended prospectus as contemplated by Section 4(e).
8. Current Public Information. At all times after the Company has effected a Public Offering, the Company will use commercially reasonable efforts to file all reports required to be filed by it under the Securities Act and the Securities Exchange Act and the rules and regulations adopted by the Securities and Exchange Commission thereunder, and will take such further action as any holder or holders of Registrable Securities may reasonably request, all to the extent required to enable such holders to sell Registrable Securities pursuant to Rule 144 adopted by the Securities and Exchange
commission under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the Securities and Exchange Commission.
9. Definitions.
(a) "COMMON STOCK" means the Company's common stock, par value $0.01 per share.
(b) "PERSON" means an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization or a government or any department or agency thereof.
(c) "PUBLIC OFFERING" means the sale in an underwritten public offering under the Securities Act of equity securities of the Company.
(d) "PUBLIC SALE" means any Public Offering or sale to the public pursuant to a registration statement or through a broker, dealer or to a market maker pursuant to the provisions of Rule 144 adopted under the Securities Act.
(e) "REGISTRABLE SECURITIES" means (i) any Common Stock issued and
outstanding, (ii) any of the Company's Common Stock issued or issuable with
respect to the securities referred to in clause (i) by way of a stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization, and (iii) any other shares of the
Company's Common Stock held by Persons holding securities described in clauses
(i) or (ii). As to any particular Registrable Securities, such securities will
cease to be Registrable Securities when they have been sold pursuant to a Public
Sale. For purposes of this Agreement, a Person will be deemed to be a holder of
Registrable Securities whenever such Person has the right to acquire directly or
indirectly such Registrable Securities (upon conversion, exchange or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected.
(f) "SECURITIES ACT" means the Securities Act of 1933, as amended, or any similar federal law then in force.
(g) "SECURITIES AND EXCHANGE COMMISSION" includes any governmental body or agency succeeding to the functions thereof.
(h) "SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or any similar federal law then in force.
(i) "STOCKHOLDERS AGREEMENT" means the Investor Stockholder Agreement, of even date herewith, entered into by and among the Company and the Investors.
Unless otherwise stated, other capitalized terms contained herein have the meanings set forth in the Stockholders Agreement.
10. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement.
(b) Remedies. The parties shall be entitled to enforce their rights under this Agreement specifically to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or temporary, preliminary or permanent injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement.
(c) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of the Company, the Majority Onex Investors and the holders of at least a majority of the Registrable Securities. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. No purported waiver shall be effective unless in writing. The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent or other breach.
(d) Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of purchasers or holders of Registrable Securities are also for the benefit of, and enforceable by, any subsequent holder of Registrable Securities.
(e) Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provisions of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
(f) Counterparts; Joinder. This Agreement may be executed in counterparts, each of which shall be considered an original, but all of which together shall constitute one and the same instrument. Additional Persons may become parties to this Agreement as "Investors" with the consent of the Company and the Majority Onex Investors, by executing and delivering to the Company a joinder agreement.
(g) Interpretation. In this Agreement, unless a contrary intention
appears, (i) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision, (ii) the words "include," "includes" or
"including" shall be deemed to be followed by the words "without limitation,"
(iii) reference to any Section means such Section hereof, (iv) words of any
gender shall be deemed to include each other gender, and (v) words using the
singular or plural number shall also include the plural or singular number,
respectively. No provision of this Agreement shall be interpreted or construed
against any party hereto solely because such party or its legal representative
drafted such provision.
(h) Captions. The captions in this Agreement are for convenience of reference only and shall not be given any effect in the interpretation of this Agreement.
(i) Governing Law. This Agreement shall be construed in accordance with, and governed by, the laws of the State of Delaware without regard to conflicts of laws principles which would result in the application of the laws of another jurisdiction.
(j) Jurisdiction. The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the courts of the State of Delaware and the United States District Court for the District of Delaware for any actions, suits or proceedings arising out of or relating to this agreement and the transactions contemplated hereby (and agree not to commence any action, suit or proceeding relating thereto except in such courts). The parties hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the courts of the State of Delaware and the United States District Court from the District of Delaware, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
(k) Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(l) Complete Agreement. This Agreement, the documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understanding, agreements or representations by or among the parties, written or oral, that may be related to the subject matter hereof in any way.
(m) Notices. All notices, consents and other communications required or permitted to be given under or by reason of this Agreement shall be in writing, shall be delivered personally or by e-mail or telecopy as described below or by reputable overnight courier, and shall be deemed given on the date on which such delivery is made. If delivered by e-mail or telecopy, such notices or communications shall be confirmed by a registered or certified letter (return receipt requested), postage
prepaid. Such notices, consents and other communications will be sent to the parties at the addresses specified for notices in the Stockholders Agreement or to such other address as the recipient has specified by prior notice to the other parties.
* * * * *
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first above written.
MID-WESTERN AIRCRAFT SYSTEMS
HOLDINGS, INC.
By: /s/ Nigel Wright ------------------------------------ Name: ---------------------------------- Title: --------------------------------- |
ONEX PARTNERS LP
By: Onex Partners GP LP,
its General Partner
By: Onex Partners Manager LP, its Agent
By: Onex Partners Manager GP Inc.,
its General Partner
By: /s/ Robert LeBlanc ------------------------------------ Name: ---------------------------------- Title: --------------------------------- By: /s/ Donald F. West ------------------------------------ Name: Donald F. West Title: Vice President |
ONEX AMERICAN HOLDINGS II LLC
By: /s/ Donald F. West ------------------------------------ Name: Donald F. West Title: Director |
WIND EXECUTIVE INVESTCO LLC
By: /s/ Donald F. West ------------------------------------ Name: Donald F. West Title: Director |
ONEX US PRINCIPALS LP
By: /s/ Donald F. West ------------------------------------ Name: Donald F. West Title: Representative |
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, all as of the date first written above.
INVESTOR
By: /s/ Jeffrey L. Turner ------------------------------------- Name: Jeffrey L. Turner Title: President/ Chief Executive Officer |
COUNTERPART SIGNATURE PAGE TO
REGISTRATION AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS STOCKHOLDERS
DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of _______ __, 200__.
/s/ Robert Johnson ------------------ Robert D. Johnson |
COUNTERPART SIGNATURE PAGE TO
REGISTRATION AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS STOCKHOLDERS
DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of December 16, 2005.
/s/ Richard A. Gephardt ----------------------- Richard A. Gephardt |
COUNTERPART SIGNATURE PAGE TO
REGISTRATION AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS STOCKHOLDERS
DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of December 21, 2005.
/s/ Paul Fulchino ----------------- Paul Fulchino |
COUNTERPART SIGNATURE PAGE TO
REGISTRATION AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS STOCKHOLDERS
DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of 12/17, 2005
/s/ Ivor Evans -------------- Ivor "Ike" Evans |
COUNTERPART SIGNATURE PAGE TO
REGISTRATION AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS STOCKHOLDERS
DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of December 21, 2005.
/s/ F. Raborn ------------- Francis "Buzz" Raborn |
COUNTERPART SIGNATURE PAGE TO
REGISTRATION AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS STOCKHOLDERS
DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of December 19, 2005.
/s/ Ronald T. Kadish -------------------- Ronald T. Kadish |
COUNTERPART SIGNATURE PAGE TO
REGISTRATION AGREEMENT
BY AND AMONG SPIRIT AEROSYSTEMS HOLDINGS, INC. AND CERTAIN OF ITS STOCKHOLDERS
DATED AS OF JUNE 16, 2005
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties listed below, all as of ________ __, 200__.
/s/ Connie Mack --------------- Connie Mack |
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of the Closing Date (as defined below), by and between Mid-Western Aircraft Systems, Inc. a Delaware corporation (the "Company"), and Jeffrey L. Turner ("Executive").
Recitals
WHEREAS, the Company and The Boeing Company have entered into an Asset Purchase Agreement, dated as of February 22, 2005 (the "Purchase Agreement"), pursuant to which the Company will purchase substantially all of The Boeing Company's commercial aircraft operations in Wichita, Kansas and Tulsa, Oklahoma;
WHEREAS, the Executive is currently serving as Vice President and General Manager of The Boeing Company's Wichita and Tulsa operations, and the Company desires to secure the continued employment of Executive in accordance herewith;
WHEREAS, Executive has agreed to become the Chief Executive Officer of the Company pursuant to the terms and conditions of this Agreement; and
WHEREAS, the parties desire to enter into this Agreement, as of the effective date of the consummation of the transactions contemplated by the Purchase Agreement (the "Closing Date"), setting forth the terms and conditions for the employment relationship of the Executive with the Company during the Employment Period (as hereinafter defined).
NOW THEREFORE, in consideration of the foregoing, and the representations, warranties, and covenants hereinafter, the parties hereto agree as follows:
1. Employment. Subject to the conditions contained in Section 2 herein, at all times during the Employment Period (as hereinafter defined), the Company shall employ Executive in the capacity of Chief Executive Officer of the Company. In such capacity, Executive shall devote his full time and professional efforts to such position, shall be assigned and undertake those duties and tasks as are appropriate for a person in such position, which shall include, serving as a member of the Board of Directors of the Company (the "Board") or as an executive officer or member of the board of directors of any other affiliated company at the Company's request, and shall exercise such authority as is customarily exercised by a Chief Executive Officer of the Company subject to the overall supervision of the Board, and shall comply with all Company policies.
2. Conditions of Employment. Notwithstanding anything contained herein, this Agreement is conditioned on and this Agreement shall be deemed canceled and of no force and effect if (a) the Purchase Agreement is terminated in accordance with its terms, or (b) Executive fails to invest at least $500,000.00 (either in personal cash holdings of Executive and/or pursuant to an election under the Company's Supplemental Executive Retirement Plan (as in effect from
time to time, the "SERP")) in exchange for the Common Stock and/or phantom stock of the Company's parent, which investment will be matched by the Company on a basis of up to 4 to 1, subject to and in accordance with the terms and conditions of the Company's Executive Investment Plan (as in effect from time to time, the "EIP").
3. Employment Period. The term of this Agreement shall commence as of the Closing Date and shall expire, subject to earlier termination of employment as hereinafter provided, on the third anniversary of the Closing Date ("Employment Period"); provided, however, that on the second anniversary of the Closing Date and each anniversary thereafter of such date, the Employment Period shall automatically be extended for an additional one (1) year period unless prior thereto: a) either party has given written notice to the other that such party does not wish to extend the term of this Agreement, or b) the parties have agreed to otherwise extend this Agreement.
4. Compensation. Except as otherwise provided for herein, throughout the Employment Period the Company shall pay or provide Executive with the following, and Executive shall accept the same, as compensation for the performance of his undertakings and the services to be rendered by him throughout the Employment Period under this Agreement, including, without limitation, any services as a member of the Board (it being understood and agreed that Executive will not receive any additional compensation for serving as a member of the Board or as an officer or member of the board of directors of any other affiliated company at the Company's request):
(a) Annual Compensation.
(i) Base Salary: Two hundred and Sixty-Three Thousand and Four Hundred Dollars ($263,400.00) per year, to be reviewed annually by the Board (or, at the Board's direction, a committee of the Board), but the Base Salary and incentive compensation potential in the aggregate may not be reduced by the Board to a rate that is less than the highest rate Executive has attained on an annualized basis unless such reduction is part of a general salary reduction applied to members of the Company's senior management as a group.
(ii) Annual Incentive Compensation: Executive shall be provided target incentive compensation (either in cash, phantom stock, or Common Stock of the Company's parent, as specified by the Board of Directors or administrative committee of the Company's Short-Term Incentive Plan (as in effect from time to time, the "STIP")) pursuant to the terms and conditions of the STIP. The first year incentives shall include 40% of Base Salary in cash and 40% of Base Salary in stock or phantom stock if threshold incentives are reached, 200% of Base Salary in cash and 200% of Base Salary in stock or phantom stock if target incentives are reached and awards will be doubled to 400% respectively upon achievement of outstanding goals.
(b) Benefit Plans. Executive shall also participate in the Company's other employee benefit plans, policies, practices, and arrangements in which all senior executives are typically eligible to participate, or plans and arrangements substituted therefor or in addition thereto, including without limitation any defined benefit retirement plan, excess or
supplementary plan, profit sharing plan, savings plan, health and dental plan, disability plan, survivor income and life insurance plan, executive financial planning program, other arrangement, or any successors thereto, the SERP, STIP, EIP, and such other benefit plans, any and all of which may be amended by the Company from time to time, (collectively hereinafter referred to as the "Benefit Plans"). The Executive's entitlement to any other compensation or benefits shall be determined in accordance with the terms and conditions of the Benefit Plans and other applicable programs, practices, and arrangements then in effect.
(c) Paid Time Off. Paid time off of no less than five (5) weeks per year, and all paid holidays given by the Company to its executive officers.
(d) Fringe Benefits. All fringe benefits and perquisites all in accordance with the Company's policies as the same may be amended from time to time.
(e) Withholding Taxes. The Company shall have the right to deduct from all payments made to Executive hereunder any federal, state, or local taxes required by law to be withheld with respect to such payments.
(f) Expenses. During the Employment Period, the Company shall promptly pay or reimburse Executive for all reasonable out-of-pocket expenses incurred by Executive in the performance of duties hereunder in accordance with the Company's policies and procedures then in effect.
5. Office. Throughout the Employment Period the Company shall provide an office to Executive, the location and furnishings of which shall be equivalent to or better than the offices provided to other senior executives of the Company at the primary location of Executive's employment, and the Company shall provide secretarial services and other administrative services to Executive that shall be equivalent to or better than the secretarial services and other administrative services provided to other senior executives of the Company.
6. Termination. In addition to the termination rights in Section 2 of this Agreement, this Agreement shall terminate upon the following circumstances:
(a) Without Cause. At any time at the election of either Executive or Company for any reason or no reason, without cause.
(b) Cause. At any time at the election of Company for Cause. "Cause"
for this purpose shall mean (i) Executive committing a material breach of this
Agreement or acts involving moral turpitude, including fraud, dishonesty,
disclosure of confidential information, or the commission of a felony, or direct
and deliberate acts constituting a material breach of his duty of loyalty to
Company; (ii) Executive willfully or continuously refusing to or willfully
failing to perform the material duties reasonably assigned to him by the Board
that are consistent with the provisions of this Agreement and not resulting from
a Disability; or (iii) the inability of Executive to obtain and maintain
appropriate United States security clearances. Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to Executive a copy of a resolution, duly adopted by the Board. With regard to
(iii), if Executive's failure to obtain and maintain appropriate United States
security clearances is
through no fault of his own, and such failure may be remedied without harm to
the Company, then Executive will be given a reasonable time, not to exceed sixty
(60) days, to cure the breach.
(c) Disability. Executive's death or his being unable to render the services required to be rendered by him during the Employment Period for a period of one hundred eighty (180) days during any twelve-month period ("Disability").
7. Effect of Termination.
(a) If Executive's employment is terminated by Executive, the Company shall pay Executive's Base Salary through point of termination and pay one half (1/2) a pro rated bonus for the time worked (in cash or stock in accordance with the STIP) at the time incentive compensation would otherwise be payable under the plan for the year of termination on the basis of the Company's performance relative to target achieved for that full year. With regard to the EIP, Executive shall be credited with years of service for vesting purposes for the time worked prior to termination, and, except as may otherwise be expressly provided in this Agreement or in any Benefit Plan, Company shall have no further obligation to Executive.
(b) If Executive's employment is terminated by Company for Cause, the Company shall pay Executive's Base Salary through point of termination. With regard to the EIP, Executive shall be credited with years of service for vesting purposes for the time worked prior to termination, and, except as may otherwise be expressly provided in this Agreement or in any Benefit Plan, Company shall have no further obligation to Executive.
(c) If Executive's employment is terminated because of the expiration
of the Employment Period without renewal, Company shall (i) continue to pay
Executive his Base Salary in effect immediately prior to the end of the
Employment Period for a period (the "Expiry Period") equal to the greater of:
(I) 12 months from the end of the Employment Period, and (II) the duration of
the Non-Competition Period (as defined below), , (ii) with regard to the STIP,
pay a bonus (in cash or stock in accordance with the STIP) at the time incentive
compensation would otherwise be payable under the plan for the year of
termination on the basis of the Company's performance relative to target
achieved for that full year, and in respect of the remainder of the Expiry
Period pay a bonus at the time incentive compensation would otherwise be payable
for the year or years (or part thereof) in the remaining portion of the Expiry
Period on the basis that the Company achieved target for such year or years, but
pro rated for the portion of each such year or years that fell within such
remaining portion of the Expiry Period, and (iii) continue to pay the Medical
Benefits of Executive after termination during the Expiry Period (Medical
Benefits means that portion of the coverage paid by the Company for other
executive officers at the level of coverage elected by Executive during his
employment) or until Executive commences full time employment in an executive
position with another employer, if earlier. Except as may otherwise be expressly
provided in this Agreement or in any Benefit Plan, Company shall have no further
obligation to Executive.
(d) If Executive's employment is terminated by Company prior to the expiration of the Employment Period for any reason other than Cause and for so long as Executive is not in breach of his continuing obligations under Sections 8 and 9, Company shall (i) continue to pay Executive his Base Salary in effect immediately prior to the end of the
Employment Period for a period (the "Termination Period") equal to the greater of: (I) 12 months from the date of termination, and (II) the duration of the Non-Competition Period (as defined below, (ii) with regard to the STIP, pay a bonus (in cash or in stock in accordance with the STIP) at the time incentive compensation would otherwise be payable under the plan for the year of termination on the basis of the Company's performance relative to target achieved for the full year, and in respect of the remainder of the Termination Period pay a bonus at the time incentive compensation would otherwise be payable for the year or years (or part thereof) in the remaining portion of the Termination Period on the basis that the Company achieved target for such year or years, but pro rated for the portion of each such year or years that fell within such remaining portion of the Termination Period, (iii) with regard to the EIP, Executive shall be credited with years of service for vesting purposes for the time that would have otherwise been remaining in the Employment Period, but for the early termination, (iv) with regard to the EIP, in the event of a liquidity event (as defined in the EIP), if the return on invested capital (as defined in the EIP) is not less than 0% then Executive shall be entitled to the greater of (a) or (b) where: (a) equals the interest in shares acquired by applying the provisions of the EIP taking into account provision 7(d)(iii) above and (b) equals the interest in the shares acquired by applying the provisions of the EIP where the applicable percentage under Section 5.02.A of the EIP is 25% and the applicable percentage under Section 5.02.C. is 100%., and, (v) continue to pay the Medical Benefits of Executive after termination for twenty-four months (Medical Benefits means that portion of the coverage paid by the Company for other executive officers at the level of coverage elected by Executive during his employment) or until Executive commences full time employment in an executive position with another employer, if earlier. Except as may otherwise be expressly provided in this Agreement or in any Benefit Plan, Company shall have no further obligation to Executive. The obligations of Sections 8 through 17 of this Agreement shall survive the expiration or termination of this Agreement.
(e) If this Agreement is terminated because of Executive's Disability, the Company shall continue to pay (in addition to disability payments) the following until Employee reaches the age of sixty-five (65) or until Executive commences full time employment in an executive position with another employer, if earlier: Base Salary; Medical Benefits; and Life Insurance benefits as provided to other Company executive officers.
(f) If Executive's employment is terminated because of Executive's Death, Company shall (i) continue to pay Executive's Base Salary that would have otherwise been remaining in the Employment Period, but for the early termination., (ii) with regard to the STIP, pay a bonus (in cash or in stock in accordance with the STIP) at the time incentive compensation would otherwise be payable under the plan for the year of termination on the basis of the Company's performance relative to target achieved for the full year, and one additional year at target, and, except as may otherwise be expressly provided in this Agreement or in any Benefit Plan, Company shall have no further obligation to Executive. For purposes of vesting under the ElP, Executive shall be credited with years of service for vesting purposes for the time that would have otherwise been remaining in the Employment Period, but for the early termination. Amounts payable shall be paid to Executive's designated beneficiary under this Agreement or, if Executive has not designated a beneficiary in writing to the Company, to the personal representative(s) of Executive's estate. For purposes of this Section, Executive may designate an inter vivos revocable living grantor trust as Executive's beneficiary.
8. Covenant Not to Compete. Without the consent of the Company, Executive
shall not directly or indirectly at any time during the Employment Period and
for a period of two (2) years thereafter unless a shorter period of time is
specified in writing by Company to Executive within 30 days following the
termination of employment for any reason(the "Non-Competition Period"): (a)
undertake employment as an owner, director, partner, officer, employee,
affiliate, or consultant with any business entity directly engaged in the
manufacture and/or sale of products competitive with any major product or major
product line of the Company ("major" meaning greater than 10% of most recent
annual sales by dollar volume), the Company's parent, or any subsidiary of the
Company or the Company's parent; provided, however, that Executive shall not be
deemed to have breached this undertaking if his sole relation with such entity
consists of his holding, directly or indirectly, of not greater than two percent
(2%) of the outstanding securities of a company listed on or through a national
securities exchange; (b) undertake the solicitation of any customer of the
Company, or the Company's parent, or any subsidiary of the Company or Company's
parent, except for the benefit of the Company; or (c) contact any employee of
the Company, the Company's parent, or any subsidiary of the Company or Company's
parent for the purpose of hiring, diverting, or otherwise soliciting employment.
Notwithstanding the above, Executive shall not be deemed in violation of this
Section 8 if Executive undertakes employment with a competitor of the Company
but does not participate in the activities of the competitor that compete with
the Company (e.g., working in a division of a competing company where that
division sells non-competitive products).
9. Confidential Information. Without the express written consent of the Company, Executive shall not at any time (either during or after the termination of this Agreement for any reason) use (other than for the benefit of the Company) or disclose to any other business entity proprietary or confidential information concerning the Company, the Company's parent, or any of their affiliates, or the Company's, the Company's parent, or any of their affiliates' trade secrets or inventions of which Executive has gained knowledge during his employment with the Company or The Boeing Company. This Section 9 shall not apply to any such information that: a) Executive is required to disclose by law; or b) has been otherwise disseminated, disclosed, or made available to the public.
10. Effect of Breach. Executive agrees that a breach of Sections 8 or 9 cannot adequately be compensated by money damages and, therefore, Company shall be entitled, in addition to any other right or remedy available to it (including, but not limited to, an action for damages), to an injunction restraining such breach or a threatened breach and to specific performance of either such provision, and Executive hereby consents to the issuance of such injunction and to the ordering of specific performance.
11. Alternative Dispute Resolution.
(a) Mediation. Executive and the Company agree to submit, prior to arbitration, all unsettled claims, disputes, controversies, and other matters in question between them arising out of or relating to this Agreement (including but not limited to any claim that the Agreement or any of its provisions is invalid, illegal, or otherwise voidable or void) or the dealings or relationship between Executive and the Company ("Disputes") to mediation in Chicago, Illinois and in accordance with the Commercial Mediation Rules of the American Arbitration Association currently in effect. The mediation shall be private, confidential,
voluntary, and nonbinding. Any party may withdraw from the mediation at any time before signing a settlement agreement upon written notice to each other party and to the mediator. The mediator shall be neutral and impartial. The mediator shall be disqualified as a witness, consultant, expert, or counsel for either party with respect to the matters in Dispute and any related matters. The Company and Executive shall pay their respective attorneys' fee and other costs associated with the mediation, and Company and Executive shall equally bear the costs and fees of the mediator. If a Dispute cannot be resolved through mediation within ninety (90) days of being submitted to mediation, the parties agree to submit the Dispute to arbitration.
(b) Arbitration. Subject to Section 11(a), all Disputes will be submitted for binding arbitration to the American Arbitration Association on demand of either party. Such arbitration proceeding will be conducted in Chicago, Illinois and, except as otherwise provided in this Agreement, will be heard by one (1) arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. All matters relating to arbitration will be governed by the federal Arbitration Act (9 U.S.C. Sections 1 et. seq.) and not by any state arbitration law. The arbitrator will have the right to award or include in his award any relief which he deems proper under the circumstances, including, without limitation, money damages (with interest on unpaid amounts from the date due), specific performance, injunctive relief, and of this Agreement, reasonable attorneys' fees and costs, provided that the arbitrator will not have the right to amend or modify the terms of this Agreement. The award and decision of the arbitrator will be conclusive and binding upon all parties hereto, and judgment upon the award may be entered in any court of competent jurisdiction. Except as specified above, the Company and Executive shall pay their respective attorneys' fee and other costs associated with the arbitration, and the Company and Executive shall equally bear the costs and fees of the arbitrator.
(c) Confidentiality. Executive and Company agree that they will not disclose, or permit those acting on their behalf to disclose, any aspect of the proceedings under Section 11(a) and Section 11(b), including but not limited to the resolution or the existence or amount of any award, to any person, firm, organization, or entity of any character or nature, unless divulged (i) to an agency of the federal or state government, (ii) pursuant to a court order, (iii) pursuant to a requirement of law, (iv) pursuant to prior written consent of the Company or Executive, or (v) pursuant to a legal proceeding to enforce a settlement agreement or arbitration award. This provision is not intended to prohibit nor does it prohibit Executive's or Company's disclosures of the terms of any settlement or arbitration award to their attorney(s), accountant(s), financial advisor(s), or family members, provided that they comply with the provisions of this paragraph.
(d) Injunctions. Notwithstanding anything to the contrary contained in this Section 11, the Company and Executive shall have the right in a proper case to obtain temporary restraining orders and temporary or preliminary injunctive relief from a court of competent jurisdiction; provided, however, that Company and Executive must contemporaneously submit the Disputes for non-binding mediation under Section 11(a) and then for arbitration under Section 11(b) on the merits as provided herein if such Disputes cannot be resolved through mediation.
(e) Reimbursement of Fees. Company shall reimburse Executive for seventy-five (75) percent of all attorneys' fees, mediator fees, and arbitrator fees incurred by Executive, regardless of the outcome of any such proceedings.
12. Notices. All notices required or permitted under this Agreement shall be in writing, may be made by personal delivery or facsimile transmission, effective on the day of such delivery or receipt of such transmission, or may be mailed by registered or certified mail, effective two (2) days after the date of mailing, addressed as follows:
To the Company:
Mid-Western Aircraft Systems, Inc.
Attention: Chairman of the Board, with a copy to the Secretary
3801 South Oliver
Wichita, KS 67210
Facsimile Number: (316) 523-8814
or such other person or address as designated in writing to Executive.
To Executive:
Jeff Turner
at his last known residence address or to such other address as designated by him in writing to Company.
13. Successors. Neither this Agreement nor any right or interest therein shall be assignable or transferable (whether by pledge, grant of a security interest, or otherwise) by Executive or Executive's beneficiaries or legal representatives, except by will, by the laws of descent and distribution, or inter vivos revocable living grantor trust as Executive's beneficiaries. This Agreement shall be binding upon and shall inure to the benefit of Company, its successors and assigns, and Executive and shall be enforceable by them and Executive's heirs, legatees, legal personal representatives.
14. Waiver, Modification, and Interpretation. No provisions of this
Agreement may be modified, waived, or discharged unless such waiver,
modification, or discharge is agreed to in a writing signed by Executive and an
appropriate officer of the Company empowered to sign the same by the Board. No
waiver by either party at any time of any breach by the party of, or compliance
with, any condition or provision of this Agreement to be performed by the other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same time or at any prior to subsequent time. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of Kansas; provided, however, that the
corporate law of the state of incorporation of the Company shall govern issues
related to the issuance of shares of its Common Stock. Except as provided in
Section 11, any action brought to enforce or interpret this Agreement shall be
maintained exclusively in the state and federal courts located in Chicago,
Illinois. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
15. Headings. The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement.
16. Entire Agreement. This Agreement (together with the documents expressly referenced herein) constitutes the entire agreement between the parties, supersedes in all respects any prior agreement between the Company and Executive and may not be changed except by a writing duly executed and delivered by the Company and Executive in the same manner as this Agreement.
17. Counterparts. Company and Executive may execute this Agreement in any number of counterparts, each of which shall be deemed to be an original but all of which shall constitute but one instrument. In proving this Agreement, it shall not be necessary to produce or account for more than one such counterpart.
18. Conflicting Terms. If the terms of this Agreement conflict with the terms of any of the Benefit Plans, the term that provides the greatest benefit to Executive shall prevail.
19. Miscellaneous Transfers. Upon request of Executive after the Closing
Date, Company shall transfer to Executive as part of his total compensation
package: a) title to automobile currently provided by Boeing (GMC Denali); and
b) ownership of country club membership.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
Mid-Western Aircraft Systems, Inc.
By: /s/ Nigel Wright ------------------------------------ Name: Nigel Wright Title: Vice President |
"Company"
/s/ Jeffrey L. Turner ---------------------------------------- Jeffrey L. Turner |
"Executive"
Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of the 3 day of August, 2005 (the "Effective Date"), by and between Spirit AeroSystems, Inc. a Delaware corporation (the "Company"), and Ulrich Schmidt ("Executive").
Recitals
WHEREAS, Executive has agreed to become the Chief Financial Officer of the Company pursuant to the terms and conditions of this Agreement; and
WHEREAS, the parties desire to enter into this Agreement, setting forth the terms and conditions for the employment relationship of the Executive with the Company during the Employment Period (as hereinafter defined).
NOW THEREFORE, in consideration of the foregoing, and the representations, warranties, and covenants hereinafter, the parties hereto agree as follows:
1. Employment. At all times during the Employment Period (as hereinafter defined), the Company shall employ Executive in the capacity of Chief Financial Officer of the Company. In such capacity, Executive shall devote his full business time and professional efforts to such position, shall be assigned and undertake those duties and tasks as are appropriate for a person in such position, which may include serving as a member of the Board of Directors of the Company (the "Board") or as an executive officer or member of the board of directors of Spirit AeroSystems Holdings, Inc. ("Parent") or any subsidiary of the Company or the Parent (the Parent, the Company, and any such subsidiaries, the "Affiliated Companies") at the Company's reasonable request, and shall exercise such authority as is customarily exercised by a Chief Financial Officer of the Company subject to the overall supervision of the Board and the Chief Executive Officer of the Company, and shall comply with all Company policies, including, but not limited to, those dealing with ownership of inventions, patents, and other intellectual property.
2. Employment Period. The term of this Agreement shall commence on August 15, 2005, or such other date as the parties may mutually agree, but not later than September 12, 2005 (the "Commencement Date"), and shall expire, subject to earlier termination of employment as hereinafter provided, on the third anniversary of the Commencement Date ("Employment Period"); provided, however, that on the second anniversary of the Commencement Date and each anniversary thereafter of such date, the Employment Period shall automatically be extended for an additional one (1) year period unless prior thereto: (a) either party has given written notice to the other that such party does not wish to extend the term of this Agreement, or (b) the parties have agreed to otherwise extend this Agreement.
3. Compensation. Except as otherwise provided for herein, throughout the Employment Period the Company shall pay or provide Executive with the following, and
Executive shall accept the same, as compensation for the performance of his undertakings and the services to be rendered by him throughout the Employment Period under this Agreement, including, without limitation, any services as a member of the Board (it being understood and agreed that Executive will not receive any additional compensation for serving as a member of the Board or as an officer or member of the board of directors of any other Affiliated Company at the Company's reasonable request):
(a) Annual Compensation.
(i) Base Salary: Four Hundred Thirty-Two Thousand Five Hundred Dollars ($432,500.00) per year (the "Base Salary"), payable in accordance with the Company's usual pay practices, to be reviewed annually by the Board (or, at the Board's direction, a committee of the Board) but the Base Salary may not be reduced by the Board to an amount that is less than the highest amount Executive has attained on an annualized basis, unless such reduction is part of (and no greater than the percentage of) a general salary reduction applied to all senior executives of the Company as a group. For purposes of the Agreement, the term "senior executives" shall mean, with respect to the Company, the highest paid ten officers of the Company. Notwithstanding the foregoing, for the portion of the Employment Period prior to September 12, 2005 (if any), Executive shall be paid a pro rated Base Salary, based on the actual number of days Executive is performing services for the Company at its offices in Wichita, Kansas.
(ii) Annual Incentive Compensation: In addition to Base Salary, Executive shall be provided target incentive compensation (either in cash or common stock of the Parent or any combination of the foregoing, as specified by the Board of Directors of the Parent or other administrative committee of the Company's Short-Term Incentive Plan, as in effect from time to time (the "STIP")) pursuant to the terms and conditions of the STIP; provided, however, that at least 50% of any benefits payable to Executive pursuant to the STIP each year shall be paid to Executive in cash. The first year incentives shall include 160% of Base Salary if target incentives are reached and 320% of Base Salary upon achievement of outstanding goals. For 2005, Executive shall receive a prorated bonus based on the number of days worked.
(b) Benefit Plans. Executive shall also participate in the Company's other employee benefit plans, policies, practices, and arrangements in which all senior executives are eligible to participate, or plans and arrangements substituted therefor or in addition thereto, including without limitation any defined benefit retirement plan, excess or supplementary plan, profit sharing plan, savings plan, health and dental plan, disability plan, survivor income and life insurance plan, executive financial planning program, other arrangement, or any successors thereto, the Executive Investment Plan ("EIP"), STIP, and such other benefit plans, any and all of which may be amended by the Company from time to time, (collectively hereinafter referred to as the "Benefit Plans"); provided, however, that Executive shall not participate in any of the Benefit Plans unless and until Executive commences performing services for the Company. The Executive's entitlement to any other compensation or benefits shall be determined in accordance with the terms and conditions of the Benefit Plans and other applicable programs, practices, and arrangements then in effect.
(c) Vacation. From and after September 12, 2005, Executive shall have vacation of no less than four (4) weeks per year, and all paid holidays given by the Company to its executive officers.
(d) Fringe Benefits. All fringe benefits and perquisites typically offered to senior executives of the Company, all in accordance with the Company's policies as the same may be amended from time to time.
(e) Withholding Taxes. Except as provided in Section 5(a)(vi), the Company shall have the right to deduct from all payments made to Executive hereunder any federal, state, or local taxes required by law to be withheld with respect to such payments.
(f) Expenses. During the Employment Period, the Company shall promptly pay or reimburse Executive for all reasonable out-of-pocket expenses incurred by Executive in the performance of duties hereunder in accordance with the Company's policies and procedures then in effect.
4. Office. Throughout the Employment Period the Company shall provide an office to Executive in Wichita, Kansas, the location and furnishings of which shall be equivalent to or better than the offices provided to other senior executives of the Company at the primary location of Executive's employment, and the Company shall provide secretarial services and other administrative services to Executive that shall be equivalent to or better than the secretarial services and other administrative services provided to other senior executives of the Company.
5. Transition Benefits. In consideration of Executive's agreement to accept employment with the Company and relocate to Wichita, Kansas, the Company will provide Executive with the following benefits in connection with such transition.
(a) Relocation Benefits. The Company will provide Executive with the following benefits in connection with Executive's relocation to Wichita, Kansas:
(i) Reimbursement of Executive's reasonable expenses of moving Executive and Executive's family and tangible personal property to Wichita, Kansas.
(ii) Reimbursement of the reasonable and customary brokerage commission incurred upon sale of Executive's home in Charlotte, North Carolina.
(iii) Reimbursement of Executive's reasonable temporary living expenses in Wichita, Kansas, including, without limitation, all commuting expenses of Executive and Executive's spouse between North Carolina and Kansas and all home, furniture, and vehicle rental expenses for Executive and Executive's spouse, for the lesser of (i) the period until Executive sells his house in Charlotte, North Carolina, or (ii) twenty-four (24) months after the Commencement Date, it being understood that Executive shall use commercially reasonably efforts to sell Executive's house in Charlotte, North Carolina in a timely manner.
(iv) Reimbursement of Executive's reasonable legal fees incurred in connection with Executive's relocation to Wichita, Kansas and the negotiation of Executive's employment agreement with the Company.
(v) Payment of a one-time cash payment equal to two (2) months of Executive's Base Salary to reimburse Executive for all other miscellaneous expenses associated with Executive's relocation to Wichita, Kansas, it being understood that such payment, along with the other amounts specifically set forth in this Section 5(a), shall represent all of the benefits to be provided by the Company in connection with Executive's relocation to Wichita, Kansas.
(vi) Payment of all taxes associated with Executive's receipt of the foregoing benefits so that after payment of all taxes by Executive, Executive shall have the total amount of such benefits. The Executive shall take such steps as the Company may reasonably request to substantiate any of the foregoing expenses.
(b) Benefits in Lieu of Foregone Executive Compensation. In consideration of all executive compensation benefits foregone by Executive upon termination of Executive's employment with The Goodrich Corporation ("Goodrich"), including, but not limited to, benefits under any supplemental executive retirement plan, excess benefit plan, benefit restoration plan, restricted stock plan, option plan, or any other plan, agreement, or arrangement providing executive compensation benefits, the Company will make a one-time cash payment to Executive of Four Million One Hundred Thousand Dollars ($4,100,000.00), it being understood that this amount has been determined on the assumption that Goodrich will not withhold payment of Executive's pro rated 2005 performance bonus and/or earned performance shares. Executive will vigorously pursue payment from Goodrich of both Executive's pro rated 2005 performance bonus and Executive's earned performance shares (collectively, the "Goodrich Amounts"), it being understood, however, that Executive may, but shall not be required to, commence legal action against Goodrich (other than exhaustion of administrative remedies, if any) in order to obtain payment of the Goodrich Amounts by Goodrich. Failing payment of the Goodrich Amounts by Goodrich, however, the Company will additionally compensate Executive for the Goodrich Amounts.
6. Termination. This Agreement shall terminate upon the following circumstances:
(a) Without Cause. At any time at the election of either Executive or Company for any reason or no reason, without cause. For purposes of this Agreement, termination of the Agreement by the Company without cause shall include, without limitation:
(i) Constructive Discharge. Executive's duties and responsibilities are materially and adversely altered and/or, except as provided in Section 3(a)(i), Executive's Base Salary is materially reduced by the Company, in either case without Executive's consent, and/or the Company commits a material breach of this Agreement.
(ii) Change in Control. Following a change in control of the Company (as determined under the EIP), Executive (A) is not offered continued employment with the Company (or its successor) in the position of Chief Financial Officer having duties,
compensation, and geographic location that are, in all material respects, at least as favorable as the position held by Executive with the Company at the time of the change in control (a "Comparable Position"), or (B) continues to perform services for the Company (or its successor) after the change in control but, within twelve months following the change in control, is assigned to a position that is not a Comparable Position.
(b) Cause. At any time at the election of Company for Cause. "Cause" for this purpose shall mean Executive committing a material breach of this Agreement or acts involving moral turpitude, including fraud, dishonesty, disclosure of confidential information, or the conviction of a felony, or direct and deliberate acts constituting a material breach of his duty of loyalty to Company. "Cause" for this purpose also shall mean Executive willfully or continuously refusing to, or willfully failing to, perform the material duties reasonably assigned to him by the Board that are consistent with the provisions of this Agreement and not resulting from a Disability, unless such refusal or failure is cured by Executive within a reasonable time not to exceed 30 days after written notice to the Executive by the Company. Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to Executive a copy of a resolution, duly adopted by the Board.
(c) Disability or Death. Executive's being unable to render the services required to be rendered by him during the Employment Period for a period of one hundred eighty (180) days during any twelve-month period ("Disability") or Executive's death.
7. Effect of Termination.
(a) Voluntary Termination. If Executive's employment is voluntarily terminated by Executive, the Company shall pay Executive's Base Salary through point of termination and pay one half (1/2) a pro rated bonus under the STIP for the time worked at the time incentive compensation would otherwise be payable under the STIP for the year of termination on the basis of the Company's performance relative to target achieved for that full year, provided that, following termination of Executive's employment, all benefits payable to Executive under the STIP shall be paid in cash. With regard to the EIP, Executive shall not be credited with any additional years of service for vesting purposes following voluntary termination of employment by Executive. Except as may otherwise be expressly provided in this Agreement, in any Benefit Plan or other agreement between the Company and Executive, Company shall have no further obligation to Executive other than to reimburse Executive for reasonable business expenses incurred prior to termination.
(b) Termination for Cause. If Executive's employment is terminated by Company for Cause, the Company shall pay Executive's Base Salary through point of termination. With regard to the EIP, Executive shall not be credited with any additional years of service for vesting purposes following termination of employment and shall acquire an interest in shares under the EIP only to the extent provided therein. Except as may otherwise be expressly provided in this Agreement, in any Benefit Plan or other agreement between the Company and Executive, Company shall have no further obligation to Executive other than to reimburse Executive for reasonable business expenses incurred prior to termination.
(c) Termination By Expiration of Agreement. If Executive's employment
is terminated because of the expiration of the Employment Period without
renewal, Company shall (i) continue to pay Executive his Base Salary in effect
immediately prior to the end of the Employment Period for a period (the "Expiry
Period") equal to the greater of: (A) 12 months from the end of the Employment
Period, or (B) the duration of the Non-Competition Period (as defined below);
(ii) with regard to the STIP, pay a bonus at the time incentive compensation
would otherwise be payable under the STIP for the year of termination on the
basis of the Company's performance relative to target achieved for that full
year and, in respect of the remainder of the Expiry Period, pay a bonus at the
time incentive compensation would otherwise be payable under the STIP for the
year or years (or part thereof) in the remaining portion of the Expiry Period on
the basis that the Company achieved target for such year or years, but pro rated
for the portion of each such year or years that fell within such remaining
portion of the Expiry Period, provided that, following termination of
Executive's employment, all benefits payable to Executive under the STIP shall
be paid in cash, and provided further that Executive shall acquire 100% of the
interest in any shares previously granted to Executive under the STIP in which
Executive has not yet acquired an interest pursuant to the STIP at the time of
termination of Executive's employment; and (iii) continue to pay the Company's
portion of the premium costs or other costs of coverage of medical benefits of
Executive and, if Executive's family has medical benefits with the Company at
the time Executive's employment terminates, Executive's family that portion of
such coverage paid by the Company for other executive officers at the level of
coverage elected by Executive during his employment) after termination during
the Expiry Period or until Executive commences full-time employment in an
executive position with another employer, if earlier.
In addition to the foregoing and notwithstanding any conflicting position of any other agreement (including, but not limited to, that certain Investor Stockholders Agreement, dated as of June 16, 2005, by and between Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems Holdings, Inc.) and its stockholders) (the "Stockholders Agreement"), upon termination of Executive's employment because of expiration of the Employment Period without renewal, Executive shall have the option to sell to the Company (the "Put Option") and the Company shall have the option to purchase from Executive (the "Call Option"), in either case for a period of 180 days following expiration of the Employment Period, all or any portion of the shares of stock in the Parent held by Executive at that time (which will not include shares granted pursuant to the EIP Plan in which Executive has not yet acquired an interest) for an amount equal to the Fair Market Value (as defined below) of such shares as of the date the Put Option or Call Option is exercised (or, if both such options are exercised at different times but with respect to the same shares, as of the earlier of the two exercise dates). For this purpose, "Fair Market Value" shall mean (i) if shares of stock in the Parent are not listed or quoted on a nationally recognized market or exchange, the amount determined by the Board of Directors of the Parent, in good faith, taking into account the value of comparable companies, historical performance of the Company and without regard to minority discounts, and reasonably anticipated future performance of the Company, and (ii) if shares of stock in the Parent are listed or quoted on a nationally recognized market or exchange, the closing price per share of such stock on the date of the exercise of the Put Option or Call Option, as applicable (or the next following business day, if such option is not exercised on a business day). An option described herein shall be exercisable only upon written notice from the exercising party to the other party given within the 180-day option period. The purchase price for the shares shall be payable in cash in a single
lump sum not later than thirty (30) days after the applicable exercise date; provided, however, that in the case of exercise of the Put Option, the Company will not pay the purchase price in cash if, at the time payment is due, there is an existing and continuing default or event of default under any of the Company's material debt obligations or payment of the purchase price would cause a default or event of default under any of the Company's material debt obligations. In the event the purchase price for the shares may not be paid hereunder in cash, the Company will pay the purchase price by issuance of a promissory note, which shall accrue interest at the prime rate, on terms acceptable to the Company's lenders, payment with respect to which shall be made (in whole or in part) at the earlier of (i) maturity, or (ii) the earliest date on which (a) no default or event of default under any of the Company's material debt obligations exists or is continuing, and (b) payment may be made without causing a default or event of default under any of the Company's material debt obligations. The Company may, with Executive's prior written consent (which consent shall not be unreasonably withheld), assign its obligations under this paragraph to any affiliate of the Company; provided, however, that such obligations may be assigned or transferred without Executive's prior written consent pursuant to a merger or consolidation in which the Company is not the continuing entity or a sale, liquidation, or other disposition of all or substantially all of the Company's assets, provided that the assignee or transferee is the successor to all or substantially all of the Company's assets and assumes the liabilities, obligations, and duties of the Company under this Agreement, either contractually or as a matter of law.
Except as may otherwise be expressly provided in this Agreement, in any Benefit Plan, or other agreement between the Company and Executive, Company shall have no further obligation to Executive other than to reimburse Executive for reasonable business expenses incurred prior to termination.
(d) Termination Without Cause. If Executive's employment is terminated by Company prior to the expiration of the Employment Period for any reason other than Cause and for so long as Executive is not in breach of his continuing obligations under Sections 8 and 9, Company shall (i) continue to pay Executive his Base Salary in effect immediately prior to the end of the Employment Period for a period of 24 months after the date of termination (the "Termination Period"); (ii) with regard to the STIP, pay a bonus at the time incentive compensation would otherwise be payable under the STIP for the year of termination on the basis of the Company's performance relative to target achieved for the full year and, in respect of the remainder of the Termination Period, pay a bonus at the time incentive compensation would otherwise be payable under the STIP for the year or years (or part thereof) in the remaining portion of the Termination Period on the basis that the Company achieved target for such year or years, but pro rated for the portion of each such year or years that fell within such remaining portion of the Termination Period, provided that, following termination of Executive's employment, all benefits payable to Executive under the STIP shall be paid in cash, and provided further that Executive shall acquire 100% of the interest in any shares previously granted to Executive under the STIP in which Executive has not yet acquired an interest pursuant to the STIP at the time of termination of Executive's employment; (iii) with regard to the EIP, Executive shall be credited with years of service for vesting purposes for the time that would have otherwise been remaining in the Employment Period but for the early termination, provided that in no event shall Executive be credited with fewer than four years of service for time-based vesting purposes under the EIP following termination of Executive's employment without cause;
and provided further that in the event four (but not five) actual years of service have been credited to Executive for time-based vesting purposes under the EIP at the time of Executive's termination of employment without cause, Executive shall be credited with a partial fifth year of service based on the actual number of whole months in such year worked prior to termination of employment, and the percentage under Section 5.02.C. of the EIP shall be adjusted proportionately to take into account such partial year of service; (iv) with regard to the EIP, in the event of a liquidity event (as defined in the EIP), if the return on invested capital (as defined in the EIP) is not less than 0% then Executive shall be entitled to the greater of (A) or (B) where: (A) equals the interest in shares acquired by applying the provisions of the EIP taking into account provision 7(d)(iii) above and (B) equals the interest in the shares acquired by applying the provisions of the EIP where the applicable percentage under Section 5.02.A. of the EIP is 25% and the applicable percentage under Section 5.02.C. of the EIP is 100%; and (v) continue to pay the Company's portion of the premium costs or other costs of coverage of medical and life insurance benefits of Executive and, if Executive's family is covered for such benefits with the Company at the time Executive's employment terminates, Executive's family (i.e., that portion of such coverage paid by the Company for other executive officers at the level of coverage elected by Executive during his employment), subject to the terms and provisions of any applicable benefit plan and subject to approval by any applicable insurance carrier, after termination for the duration of the Termination Period or until Executive commences full time employment in an executive position with another employer, if earlier. In the event coverage is not approved by insurance carrier, the Company will obtain coverage for Executive and Executive's family that is at least as favorable as the coverage Executive had before termination.
In addition to the foregoing, upon termination without cause, Executive and the Company shall have the Put Option and Call Option (respectively) described in Section 7(c) hereof.
Except as may otherwise be expressly provided in this Agreement, in any Benefit Plan, or other agreement between the Company and Executive, Company shall have no further obligation to Executive other than to reimburse Executive for reasonable business expenses incurred prior to termination.
(e) Disability. If this Agreement is terminated because of Executive's Disability, the Company shall continue to pay (in addition to disability payments) the following until Employee reaches the age of sixty-five (65) or until Executive commences full-time employment in an executive position with another employer, if earlier: Base Salary and the Company's portion of the premium costs or other costs of coverage of medical and life insurance benefits of Executive and, if Executive's family is covered for such benefits with the Company at the time Executive's employment terminates, Executive's family (i.e., that portion of such coverage paid by the Company for other executive officers at the level of coverage elected by Executive during his employment), subject to the terms and provisions of any applicable benefit plan and subject to approval by any applicable insurance carrier. In the event coverage is not approved by insurance carrier, the Company will obtain coverage for Executive and Executive's family that is at least as favorable as the coverage Executive had before termination. With regard to the STIP, Executive shall acquire 100% of the interest in any shares previously granted to Executive under the STIP in which Executive has not yet acquired an interest pursuant to the STIP at the time of termination of Executive's employment. With regard to the EIP, Executive
shall be credited with five (5) years of service for time-based vesting purposes under the EIP following termination of Executive's employment because of Executive's Disability.
In addition to the foregoing, upon termination due to Disability, Executive and the Company shall have the Put Option and Call Option (respectively) described in Section 7(c) hereof.
(f) Death. If Executive's employment is terminated because of
Executive's death, Company shall (i) continue to pay Executive's Base Salary
that would have otherwise been paid during the remaining Employment Period, but
for the early termination; (ii) with regard to the STIP, pay a bonus at the time
incentive compensation would otherwise be payable under the STIP for the year of
termination on the basis of the Company's performance relative to target
achieved for the full year, and one additional year at target, provided that,
following termination of Executive's employment, all benefits payable to
Executive (or Executive's beneficiary) under the STIP shall be paid in cash, and
provided further that Executive shall acquire 100% of the interest in any shares
previously granted to Executive under the STIP in which Executive has not yet
acquired an interest pursuant to the STIP at the time of termination of
Executive's employment; (iii) with regard to the EIP, credit Executive with five
(5) years of service for time-based vesting purposes under the EIP following
termination of Executive's employment because of Executive's death; and (iv)
continue to pay the Company's portion of premium costs or other cost or coverage
of medical benefits for Executive's family, if Executive's family has medical
benefits with the Company at the time Executive's employment terminates, for the
remaining Employment Period (ignoring early termination), subject to the terms
and provisions of any applicable benefit plan and subject to approval by any
applicable insurance carrier. In the event coverage is not approved by insurance
carrier, the Company will obtain coverage for Executive's family that is at
least as favorable as the coverage Executive had before termination.
In addition to the foregoing, upon termination due to death, Executive's personal representative shall have the Put Option described in Section 7(c) hereof and the Company shall have the Call Option described in Section 7(c) hereof.
Except as may otherwise be expressly provided in this Agreement, in any Benefit Plan, or other Agreement between the Company and Executive, Company shall have no further obligation to Executive other than to reimburse Executive for reasonable business expenses incurred prior to termination. Amounts payable shall be paid to Executive's designated beneficiary under this Agreement or, if Executive has not designated a beneficiary in writing to the Company, to the personal representative(s) of Executive's estate. For purposes of this Section, Executive may designate an inter vivos revocable living grantor trust as Executive's beneficiary.
8. Covenant Not to Compete. Without the consent of the Company, Executive shall not directly or indirectly at any time during the Employment Period and for a period of two (2) years thereafter, unless a shorter period of time is specified in writing by Company to Executive within 30 days following the termination of employment for any reason (the "Non-Competition Period"): (a) undertake employment as an owner, director, partner, officer, employee, affiliate, or consultant with any business entity directly engaged principally in the manufacture of
aerostructures; provided, however, that Executive shall not be deemed to have
breached this undertaking if his sole relation with such entity consists of his
holding, directly or indirectly, of not greater than two percent (2%) of the
outstanding securities of a company listed on or through a national securities
exchange; (b) undertake the solicitation of any customer of the Company, or the
Company's parent, or any subsidiary of the Company or Company's parent, except
for the benefit of the Company; or (c) contact any employee of the Company, the
Company's parent, or any subsidiary of the Company or Company's parent for the
purpose of hiring, diverting, or otherwise soliciting employment.
Notwithstanding the above, Executive shall not be deemed in violation of this
Section 8 if Executive undertakes employment with a competitor of the Company
but does not participate in the activities of the competitor that compete with
the Company (e.g., working in a division of a competing company where that
division sells non-competitive products).
9. Confidential Information. Without the express written consent of the Company, Executive shall not at any time (either during or after the termination of this Agreement for any reason) use (other than for the benefit of the Company) or disclose to any other business entity proprietary or confidential information concerning the Company, the Company's parent, or any of their affiliates, or the Company's, the Company's parent, or any of their affiliates' trade secrets or inventions of which Executive has gained knowledge during his employment with the Company. This Section 9 shall not apply to any such information that: (a) Executive is required to disclose by law; or (b) has been otherwise disseminated, disclosed, or made available to the public.
10. Effect of Breach. Executive agrees that a breach of Sections 8 or 9 cannot adequately be compensated by money damages and, therefore, Company shall be entitled, in addition to any other right or remedy available to it (including, but not limited to, an action for damages), to an injunction restraining such breach or a threatened breach and to specific performance of either such provision, and Executive hereby consents to the issuance of such injunction and to the ordering of specific performance.
11. Security Clearances. Executive covenants and agrees that Executive
will, at all times during the Employment Period, use his best efforts to obtain
and/or maintain appropriate United States security clearances. No breach of this
Section 11 shall be deemed to occur during the period that Executive's initial
application for United States security clearance is pending, unless and until
such application is denied. If Executive's employment with the Company is
terminated by the Company due to loss of, or failure to obtain, United States
security clearances, such termination shall be treated for purposes of this
Agreement as termination without cause; provided, however, that nothing in this
Section 11 shall prevent the Company from terminating Executive's employment for
Cause if a direct factor causing the loss of, or failure to obtain, such
security clearances is itself a basis for terminating Executive's employment for
Cause.
12. Alternative Dispute Resolution.
(a) Mediation. Executive and the Company agree to submit, prior to arbitration, all unsettled claims, disputes, controversies,, and other matters in question between them arising out of or relating to this Agreement (including but not limited to any claim that the Agreement or any of its provisions is invalid,, illegal, or otherwise voidable or void) or the
dealings or relationship between Executive and the Company ("Disputes") to mediation in Chicago, Illinois and in accordance with the Commercial Mediation Rules of the American Arbitration Association currently in effect. The mediation shall be private, confidential, voluntary, and nonbinding. Any party may withdraw from the mediation at any time before signing a settlement agreement upon written notice to each other party and to the mediator. The mediator shall be neutral and impartial. The mediator shall be disqualified as a witness, consultant, expert, or counsel for either party with respect to the matters in Dispute and any related matters. The Company and Executive shall pay their respective attorneys' fee and other costs associated with the mediation, and Company and Executive shall equally bear the costs and fees of the mediator. If a Dispute cannot be resolved through mediation within ninety (90) days of being submitted to mediation, the parties agree to submit the Dispute to arbitration.
(b) Arbitration. Subject to Section 12(a), all Disputes will be submitted for binding arbitration to the American Arbitration Association on demand of either party. Such arbitration proceeding will be conducted in Chicago, Illinois and, except as otherwise provided in this Agreement, will be heard by one (1) arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. All matters relating to arbitration will be governed by the federal Arbitration Act (9 U.S.C. Sections 1 et seq.) and not by any state arbitration law. The arbitrator will have the right to award or include in his award any relief which he deems proper under the circumstances, including, without limitation, money damages (with interest on unpaid amounts from the date due); specific performance, injunctive relief, and of this Agreement, reasonable attorneys' fees and costs, provided that the arbitrator will not have the right to amend or modify the terms of this Agreement. The award and decision of the arbitrator will be conclusive and binding upon all parties hereto, and judgment upon the award may be entered in any court of competent jurisdiction. Except as specified above, the Company and Executive shall pay their respective attorneys' fee and other costs associated with the arbitration, and the Company and Executive shall equally bear the costs and fees of the arbitrator.
(c) Confidentiality. Executive and Company agree that they will not disclose, or permit those acting on their behalf to disclose, any aspect of the proceedings under Section 12(a) and Section 12(b), including but not limited to the resolution or the existence or amount of any award, to any person, firm, organization, or entity of any character or nature, unless divulged (i) to an agency of the federal or state government, (ii) pursuant to a court order, (iii) pursuant to a requirement of law, (iv) pursuant to prior written consent of the Company or Executive, or (v) pursuant to a legal proceeding to enforce a settlement agreement or arbitration award. This provision is not intended to prohibit nor does it prohibit Executive's or Company's disclosures of the terms of any settlement or arbitration award to their attorney(s), accountant(s), financial advisor(s), or family members, provided that they comply with the provisions of this paragraph.
(d) Injunctions. Notwithstanding anything to the contrary contained in this Section 12, the Company, and Executive shall have the right in a proper case to obtain temporary restraining orders and temporary or preliminary injunctive relief from a court of competent jurisdiction; provided, however, that Company and Executive must contemporaneously submit the Disputes for non-binding mediation under Section 12(a) and then for arbitration under
Section 12(b) on the merits as provided herein if such Disputes cannot be resolved through mediation.
(e) Reimbursement of Fees. Company shall reimburse Executive at least quarterly for seventy-five (75) percent of all attorneys' fees, mediator fees, and arbitrator fees incurred by Executive, regardless of the outcome of any proceedings under this Section 12.
13. Notices. All notices required or permitted under this Agreement shall be in writing, may be made by personal delivery or facsimile transmission, effective on the day of such delivery or receipt of such transmission, or may be mailed by registered or certified mail, effective two (2) days after the date of mailing, addressed as follows:
To the Company:
Spirit AeroSystems, Inc.
Attention: Jeffrey L. Turner, Chief Executive Officer
3801 South Oliver
Wichita, KS 67210
Facsimile Number: (316) 523-8814
or such other person or address as designated in writing to Executive.
To Executive:
Ulrich Schmidt
at his last known residence address or to such other address as designated by him in writing to Company.
14. Successors. Neither this Agreement nor any right or interest therein shall be assignable or transferable (whether by pledge, grant of a security interest, or otherwise) by Executive or Executive's beneficiaries or legal representatives, except by will, by the laws of descent and distribution, or inter vivos revocable living grantor trust as Executive's beneficiaries. This Agreement shall be binding upon and shall inure to the benefit of Company, its successors and assigns, and Executive and shall be enforceable by them and Executive's heirs, legatees, legal personal representatives. The Company may not assign its rights or obligations under this Agreement without Executive's prior written consent (which consent shall not be unreasonably withheld), except that such rights and obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or a sale, liquidation, or other disposition of all or substantially all of the Company's assets, provided that the assignee or transferee is the successor to all or substantially all of the Company's assets and assumes the liabilities, obligations, and duties of the Company under this Agreement, either contractually or as a matter of law.
15. Waiver, Modification, and Interpretation. No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in a writing signed by Executive and an appropriate officer of the Company empowered to sign the,
same by the Board. No waiver by either party at any time of any breach by the party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior to subsequent time. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Kansas; provided, however, that the corporate law of the state of incorporation of the Company shall govern issues related to the issuance of shares of its Common Stock. Except as provided in Section 12, any action brought to enforce or interpret this Agreement shall be maintained exclusively in the state and federal courts located in Chicago, Illinois. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
16. No Mitigation/No Offset; Indemnification.
(a) No Mitigation/No Offset. In the event of any termination of his employment, Executive shall be under no obligation to seek other employment and, except as otherwise expressly provided herein, there shall be no offset against or reduction of amounts due to him on account of any remuneration or benefits provided by any subsequent employment he may obtain. Except as expressly provided herein, the Company's obligation to make any payment pursuant to, and otherwise perform its obligations under, this Agreement shall not be affected by any offset, counterclaim or other right that the Company may have against Executive for any reason, except that the Company shall be entitled to offset amounts payable hereunder against any and all amounts owed by Executive to the Company or an Affiliated Company due to Executive's material breach of this Agreement, fraudulent or dishonest conduct, or conviction of a felony with respect to assets of the Company or an Affiliated Company.
(b) Indemnification. The Company will indemnify Executive to the same extent the Company indemnifies its directors and will provide such indemnity on a basis substantially similar, in both form and substance, to the indemnity provided to the Company's directors.
17. Headings. The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement.
18. Entire Agreement. This Agreement (together with the documents expressly referenced herein) constitutes the entire agreement between the parties, supersedes in all respects any prior agreement between the Company and Executive and may not be changed except by a writing duly executed and delivered by the Company and Executive in the same manner as this Agreement.
19. Survival. Anything to the contrary notwithstanding, the rights and obligations under Sections 8, 9, 10, 12, 13, 14, 15, 16, 18, 21, and 22 shall survive the termination of this Agreement.
20. Counterparts. Company and Executive may execute this Agreement in any number of counterparts, each of which shall be deemed to be an original but all of which shall
constitute but one instrument. In proving this Agreement, it shall not be necessary to produce or account for more than one such counterpart.
21. Conflicting Terms. If the terms of this Agreement conflict with the terms of any of the Benefit Plans or the Stockholders Agreement, the term that provides the greatest benefit to Executive shall prevail.
22. Certain Additional Payments by the Company. In the event any amount (whether paid or payable or distributed or distributable) by the Company or an Affiliate Company to or for the benefit of Executive pursuant to this Agreement, the STIP, the EIP or otherwise would be subject to the excise tax imposed pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (or any successor provision thereto), or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively "Excise Taxes"), the Company shall make an additional payment or payments to Executive (a "Gross-Up Payment"). The Gross-Up Payment shall be in an amount such that, after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax. In addition to the foregoing, the Company shall pay to Executive the reasonable fees and expenses incurred by Executive in determining the amount of such Excise Taxes and any audit or contest of such Excise Taxes. All amounts shall be paid by the Company within a reasonable period of time after receipt of notice from Executive.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
23. Purchase of Shares and Matching Grant. On the Commencement Date, Executive agrees to purchase from the Parent and the Parent agrees to sell to Executive 100,000 shares of the parent's common stock at $10.00 per share, which investment will be matched on a 4 to 1 basis by a grant of restricted shares in Parent, subject to and in accordance with the terms and conditions of the EIP. In connection with the foregoing and as a condition to the purchase and granting of shares, Executive agrees to execute such documents and take such other action as may reasonably be required by Company or the Parent, including, but not limited to, executing a subscription agreement in a form satisfactory to the Parent and executing a counterpart to this Stockholders Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
SPIRIT AEROSYSTEMS, INC.
By: /s/ Seth Mersky ------------------------------------ Name: Seth Mersky Title: Director |
"Company"
SPIRIT AEROSYSTEMS HOLDINGS, INC. (which
is a party to this Agreement solely
respect to its obligation to deliver
shares to Executive pursuant to Section
23 of the Agreement and not as a
guarantor or surety of any obligation of
the Company or any other person under
this Agreement)
By: /s/ Seth Mersky ------------------------------------ Name: Seth Mersky Title: Director |
"Parent"
/s/ Ulrich Schmidt ---------------------------------------- Ulrich Schmidt |
"Executive"
SPIRIT AEROSYSTEMS, INC.
3801 SOUTH OLIVER
WICHITA, KANSAS 67210
August 3, 2005
Mr. Ulrich Schmidt
6907 Ancient Oak Lane
Charlotte, NC 28277
RE: Employment Agreement dated as of August 3, 2005, by and between Spirit AeroSystems, Inc. and Ulrich Schmidt (the "Employment Agreement")
Dear Rick:
Spirit AeroSystems, Inc. (the "Company") on the Commencement Date (as defined in the Employment Agreement) will pay to you in immediately available funds a portion of the amount set forth in Section 5(b) of the Employment Agreement. Such portion will be an amount which, after deduction of all withholding taxes on such amount, will equal S1,000,000, which Spirit AeroSystems Holdings, Inc. will accept in purchase of 100,000 of its shares in accordance with Section 23 of the Employment Agreement. The remainder of the $4,100,000 will be paid on or before January 15, 2006.
On the Commencement Date you will become a full-time employee of the Company entitled to all benefits under Section 3(b) of the Employment Agreement calculated on your Base Salary of $432,500 per year; however, for the period from the Commencement Date to September 12, 2005, the payment of your Base Salary under Section 3(a)(i) shall be calculated on the following basis:
Number of Days in Wichita $432,500 x -------------------------
The Company will offer you an Indemnification Agreement to be entered into between the Company and you providing indemnity similar to that provided to the Company's directors (similar to that in the draft Director Indemnification Agreement form provided to you).
Very truly yours,
SPIRIT AEROSYSTEMS, INC.
/s/ Seth Mersky ---------------------------------------- Seth Mersky, Director |
Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), effective as of the 13 day of September, 2005 (the "Effective Date"), is by and between SPIRIT AEROSYSTEMS, INC., a Delaware corporation (the "Company"), and H. DAVID WALKER ("Employee").
Recitals
WHEREAS, the Company is engaged in the manufacture, fabrication, maintenance, repair, overhaul, and modification of aircraft and aircraft components and markets and sells its services and products to its customers throughout the world (the "Business"); and
WHEREAS, the Company desires to hire Employee as its Senior Vice President of Sales/Marketing and to perform such other services as the Company may direct; and
WHEREAS, in the course of performing his duties for the Company, Employee is likely to gain certain confidential and proprietary information belonging to the Company, develop relationships that are vital to the Company's goodwill, and acquire other important benefits to which the Company has a protectable interest;
WHEREAS, Employee has been working in sales and marketing of aircraft component services and products for more than 20 years, developing experience and contacts within the industry, and
WHEREAS, the Company has agreed to hire Employee and Employee has agreed to accept such employment by the Company upon the terms, conditions, and restrictions contained in this Agreement.
Agreement
NOW THEREFORE, in consideration of the foregoing, and the representations, warranties, and covenants hereinafter, the parties hereto agree as follows:
Section 1. Employment. In reliance on the representations and warranties made herein, the Company hereby hires Employee to be its Senior Vice President of Sales/Marketing, and to perform such duties and services in and about the business of the Company as may from time to time be assigned to Employee. The job title and duties referred to in the preceding sentence may be changed by the Company in the Company's sole discretion at any time. Employee shall devote Employee's full time to this employment.
Section 2. Performance. Employee shall use Employee's best efforts and skill to faithfully enhance and promote the welfare and best interests of the Company. The Employee shall strictly obey all rules and regulations of the Company, follow all laws and regulations of appropriate
government authorities, and be governed by reasonable decisions and instructions of the Company as are consistent with job duties as described above.
Section 3. Executive Incentive Plan. Upon entering into this Agreement, Employee shall invest not less than $200,000 in cash in exchange for shares of the Company's parent's common stock, which investment will be matched by the Company on a 4 to 1 basis by a grant of restricted shares, subject to and in accordance with the terms and conditions of the Company's Executive Incentive Plan ("EIP"). Such investment shall be made by the Company applying $200,000 from the Sign-on-Bonus (as specified in Section 4(b) below). In connection with the foregoing and as a condition to the purchase of such shares, Employee agrees to execute such documents and take such other action as may reasonably be required by Company or the Company's parent, including, but not limited to, executing a subscription agreement in a form satisfactory to the Company's parent and executing a counterpart to the Investor Stockholders Agreement, dated as of June 16, 2005, by and between the Company's parent and the stockholders of the Company's parent.
Section 4. Compensation. Except as otherwise provided for herein, for all services to be performed by the Employee in any capacity hereunder, including without limitation any services as an officer, director, member of any committee, or any other duties assigned him, throughout the Employment Period the Company shall pay or provide Employee with the following, and Employee shall accept the same, as compensation for the performance of his undertakings and the services to be rendered by him:
(a) Base Salary. Initially, Employee will be entitled to an annual salary of Two Hundred Thousand Dollars ($200,000) (the "Base Salary"), which shall be paid in accordance with the Company's policies and procedures. The Base Salary may not be reduced for any reason during the first two years of Employee's employment with the Company unless the salaries of other comparable level executives with the Company are also reduced. Thereafter, the Employee's base salary may be changed at annual intervals, based on Employee's and Company's performance, which may include, without limitation, participation in a period salary evaluation program on the same basis as other employees of the Company of similar position.
(b) Sign on Bonus. On the Effective Date, the Company shall pay to Employee (or, as applicable, apply to the benefit of Employee as specified herein) an advance payment of (i) Two Hundred Thousand Dollars ($200,000), and (ii) an amount equal to all taxes associated with Employee's receipt of the foregoing payment so that after payment of all such taxes by Employee, Employee shall have the total amount of the foregoing payment; which advance payment shall be forgiven if Employee shall remain employed with the Company for a period of not less than one (1) year after the Effective Date. This advance payment shall also be forgiven if Employee is terminated without cause during the first year of this Agreement. Upon termination for cause within the first year of Employee's employment with the Company, the Company may deduct from Employee's paycheck(s) or other amounts owed Employee such advance payment (or any other advances previously made to Employee). To the extent that such deductions are insufficient to fully reimburse the Company, Employee shall be liable to the Company for the balance of the advances previously received.
(c) Annual Incentive Compensation. Employee shall be provided target incentive compensation (either in cash, phantom stock, or Common Stock of the Company's parent, as specified by the administrative committee of the Company's Short-Term Incentive Plan ("STIP")) pursuant to the terns and conditions of the STIP. Employee shall be treated as qualified to participate in the STIP during his first year of employment, even though he will not have been employed for an entire year at the time of such calculation and payment. The first year incentives shall include one hundred twenty percent (120%) of Base Salary in cash, stock, or phantom stock if target incentives are reached or exceeded (without reduction for partial periods), but if the target incentives are not reached, Employee shall only be entitled to a target incentive compensation (if any) otherwise provided by Company policy.
(d) Deferred Compensation Plan. From and after the Effective Date, Employee shall eligible to participate in the Mid-Western Aircraft Systems Holding, Inc. Deferred Compensation Plan ("DCP") pursuant to the terms and conditions of the DCP.
(e) Relocation Expenses. The Company will reimburse Employee's reasonable expenses under the Company's Relocation Procedure, Tier II for (1) moving Employee and Employee's family and tangible personal property to Wichita, Kansas, and (2) reasonable temporary living expenses in Wichita, Kansas.
(f) Other Benefit Plans. Employee shall also participate in the Company's other employee benefit plans, policies, practices, and arrangements as the same may be offered to Employee from time to time, including without limitation any defined benefit retirement plan, excess or supplementary plan, profit sharing plan, savings plan, health and dental plan, disability plan, survivor income and life insurance plan, executive financial planning program, other arrangement, or any successors thereto, the STIP, the EIP, the DCP, and such other benefit plans (collectively hereinafter referred to as the "Benefit Plans"). The Employee's entitlement to any other compensation or benefits shall be determined in accordance with the terms and conditions of the Benefit Plans and other applicable programs, practices, and arrangements then in effect.
(g) Vacation. An amount of paid vacation to which an employee with fifteen
(15) years of service with the Company is entitled to receive under the
Company's vacation policy (a minimum of four weeks), and all paid holidays given
by the Company to employees in Employee's position, or similar positions.
(h) Fringe Benefits. All fringe benefits and perquisites all in accordance with the Company's policies as the same may be amended from time to time.
(i) Withholding Taxes. The Company shall have the right to deduct from all payments made to Employee hereunder any federal, state, or local taxes required by law to be withheld.
(j) Expenses. During Employee's employment, the Company shall promptly pay or reimburse Employee for all reasonable out-of-pocket expenses incurred by Employee in the performance of duties hereunder in accordance with the Company's policies and procedures then in effect.
Section 5. Restrictions.
(a) Acknowledgements. Employee acknowledges and agrees that: (1) during the
term of Employee's employment, because of the nature of Employee's
responsibilities and the resources provided by the Company, Employee will
acquire valuable and confidential skills, information, trade secrets, and
relationships with respect to the Company's business practices and operations;
(2) Employee may develop on behalf of the Company a personal acquaintance and/or
relationship with various persons, including, but not limited to, customers and
suppliers, which acquaintances may constitute the Employee's only contact with
such persons, and, as a consequence of the foregoing, Employee will occupy a
position of trust and confidence with respect to the Company's affairs; (3) the
Business involves the marketing and sale of the Company's products and services
to customers throughout the entire world, that the Company's competitors, both
in the United States and internationally, consist of both domestic and
international businesses, and the services to be performed by Employee for the
Company involve aspects of both the Company's domestic and international
business; (4) it would be impossible or impractical for Employee to perform his
duties for the Company without access to the Company's confidential and
proprietary information and contact with persons that are valuable to the
goodwill of the Company. Employee acknowledges that if he went to work for or
otherwise performs services for a third party engaged in a business
substantially similar to the Business, the disclosure by Employee to a third
party of such confidential and proprietary information and/or the exploitation
of such relationships would be inevitable.
(b) Reasonableness. In view of the foregoing and in consideration of the remuneration to be paid to Employee, Employee agrees that it is reasonable and necessary for the protection of the goodwill and business of the Company that the Employee make the covenants contained in this Agreement regarding the conduct of Employee during and subsequent to Employee's employment by the Company, and that the Company will suffer irreparable injury if Employee engages in conduct prohibited by this Agreement.
(c) Non-Compete. (i) During the term of Employee's employment by the
Company, (ii) if Employee's employment is terminated by Employee or by the
Company with cause, then for a period of a period of two (2) years after such
termination, or (iii) if Employee's employment is terminated by the Company
without cause prior to the expiration of the two (2) years following the
Effective Date, then for a period of twelve (12) month after such termination:
neither Employee, nor any other person or entity with Employee's assistance, nor
any entity in which Employee directly or indirectly has any interest of any kind
(without limitation) shall anywhere in the world, directly or indirectly own,
manage, operate, control, be employed by, solicit sales for, invest in,
participate in, advise, consult with, or be connected with the ownership,
management, operation, or control of any business which is engaged, in whole or
in part, in the Business, or any business that is competitive therewith or any
portion thereof, except for the exclusive benefit of the Company.
(d) No Raiding. In addition, (i) during the term of Employee's employment
by the Company, (ii) if Employee's employment is terminated by Employee or by
the Company with cause, then for a period of a period of two (2) years after
such termination, or (iii) if Employee's employment is terminated by the Company
without cause prior to the expiration of the two (2) years following the
Effective Date, then for a period of twelve (12) month after such termination:
neither the Employee nor any person or entity with his assistance nor any entity
which the Employee or any person with his assistance or any person who he
directly or indirectly controls
shall, directly or indirectly, (1) solicit or take any action to induce any employee to quit or terminate their employment with the Company or the Company's affiliates, or (2) employ as an employee, independent contractor, consultant, or in any other position, any person who was an employee of the Company or the Company's affiliates during the aforementioned period.
(e) Confidentiality. Without the express written consent of the Company, Employee shall not at any time (either during or after the termination of the term of Employee's employment) use (other than for the benefit of the Company) or disclose to any other business entity proprietary or confidential information concerning the Company, the Company's parent's, or any of their affiliates, or the Company's, the Company's parent, or any of their affiliates' trade secrets or inventions of which Employee has gained knowledge during his employment with the Company. This paragraph shall not apply to any such information that: (1) Employee is required to disclose by law; (2) has been otherwise disseminated, disclosed, or made available to the public; (3) was obtained after his employment with the Company ended and from some source other than the Company, which source was under no obligation of confidentiality.
(f) Effect of Breach. Employee agrees that a breach of this Section 5 cannot adequately be compensated by money damages and, therefore, the Company shall be entitled, in addition to any other right or remedy available to it (including, but not limited to, an action for damages), to an injunction restraining such breach or a threatened breach and to specific performance of such provisions, and Employee hereby consents to the issuance of such injunction and to the ordering of specific performance, without the requirement of the Company to post a bond or other security.
(g) Other Rights Preserved. Nothing in this Section eliminates or diminishes rights which the Company may have with respect to the subject matter, hereof under other agreements, the governing statutes, or under provisions of law, equity, or otherwise. Without limiting the foregoing, this section does not limit any rights the Company may have under any agreement with Employee regarding trade secrets and confidential information.
Section 6. Termination. This Agreement shall terminate upon the following circumstances:
(a) Without Cause. At any time at the election of either Employee or the Company for any reason or no reason, without cause, but subject to the provisions of this Agreement. It is expressly understood that Employee's employment is strictly "at will."
(b) Cause. At any time at the election of the Company for Cause. "Cause"
for this purpose shall mean (i) Employee committing a material breach of this
Agreement or acts involving moral turpitude, including fraud, dishonesty,
disclosure of confidential information, or the commission of a felony, or direct
and deliberate acts constituting a material breach of his duty of loyalty to the
Company; (ii) Employee willfully or continuously refusing to perform the
material duties reasonably assigned to him by the Company that are consistent
with the provisions of this Agreement and not resulting from a Disability; or
(iii) the inability of Employee to obtain and maintain appropriate United States
security clearances.
(c) Disability. Employee's death or his being unable to render the services required to be rendered by him during the Employment Period for a period of one hundred eighty (180) days during any twelve-month period ("Disability").
Section 7. Effect of Termination.
(a) If Employee's employment is terminated (i) by Employee, or (ii) by the Company for Cause, the Company shall pay Employee's compensation only through the last day of the Employment Period (less any amounts the Company may off-set or deduct as specified in this Agreement), and, except as may otherwise be expressly provided in this Agreement or in any Benefit Plan, the Company shall have no further obligation to Employee.
(b) If Employee's employment is terminated by the Company prior to the expiration of two (2) years following the Effective Date for any reason other than Cause and for so long as Employee is not in breach of his continuing obligations under Section 5, the Company shall (i) continue to pay Employee an amount equal to his Base Salary in effect immediately prior to the termination of his employment for a period of twelve (12) months (less any amounts the Company may off-set or deduct as specified in this Agreement), and (ii) pay the costs of COBRA medical and dental benefits coverage which are offered to Employee after termination for a period of twelve (12) months. Except as may otherwise be expressly provided in this Agreement or in any Benefit Plan, the Company shall have no further obligation to Employee.
(c) On termination of employment, Employee shall deliver all trade secret, confidential information, records, notes, data, memoranda, and equipment of any nature that are in Employee's possession or under his control and that are the property of the Company or relate to the business of the Company, and Employee shall pay to the Company any amounts due and owning from Employee to the Company as specified in this Agreement.
(d) The obligations of Section 5 through Section 10 of this Agreement shall survive the expiration or termination of this Agreement.
Section 8. Representations and Warranties.
(a) No Conflicts. Employee represents and warrants to the Company that Employee is under no duty (whether contractual, fiduciary, or otherwise) that would prevent, restrict, or limit Employee from fully performing all duties and services for the Company, and the performance of such duties and services shall not conflict with any other agreement or obligation to which Employee is bound.
(b) No Hardship. Employee represents and acknowledges that Employee's experience and/or abilities are such that observance of the covenants contained in this Agreement will not cause Employee any undue hardship nor will they unreasonably interfere with Employee's ability to earn a livelihood.
Section 9. Alternative Dispute Resolution.
(a) Mediation. Employee and the Company agree to submit, prior to arbitration, all unsettled claims, disputes, controversies, and other matters in question between them arising out
of or relating to this Agreement (including but not limited to any claim that the Agreement or any of its provisions is invalid, illegal, or otherwise voidable or void) or the dealings or relationship between Employee and the Company ("Disputes") to mediation in Wichita, Kansas and in accordance with the Commercial Mediation Rules of the American Arbitration Association currently in effect. The mediation shall be private, confidential, voluntary, and nonbinding. Any party may withdraw from the mediation at any time before signing a settlement agreement upon written notice to each other party and to the mediator. The mediator shall be neutral and impartial. The mediator shall be disqualified as a witness, consultant, expert, or counsel for either party with respect to the matters in Dispute and any related matters. The Company and Employee shall pay their respective attorneys' fee and other costs associated with the mediation, and the Company and Employee shall equally bear the costs and fees of the mediator. If a Dispute cannot be resolved through mediation within ninety (90) days of being submitted to mediation, the parties agree to submit the Dispute to arbitration.
(b) Arbitration. Subject to Section 9(a), all Disputes will be submitted for binding arbitration to the American Arbitration Association on demand of either party. Such arbitration proceeding will be conducted in Wichita, Kansas and, except as otherwise provided in this Agreement, will be heard by one (1) arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. All matters relating to arbitration will be governed by the federal Arbitration Act (9 U.S.C. Sections 1 et. seq.) and not by any state arbitration law. The arbitrator will have the right to award or include in his award any relief which he deems proper under the circumstances, including, without limitation, money damages (with interest on unpaid amounts from the date due), specific performance, injunctive relief, and of this Agreement, reasonable attorneys' fees and costs, provided that the arbitrator will not have the right to amend or modify the terms of this Agreement. The award and decision of the arbitrator will be conclusive and binding upon all parties hereto, and judgment upon the award may be entered in any court of competent jurisdiction. Except as specified above, the Company and Employee shall pay their respective attorneys' fee and other costs associated with the arbitration, and the Company and Employee shall equally bear the costs and fees of the arbitrator.
(c) Confidentiality. Employee and the Company agree that they will not disclose, or permit those acting on their behalf to disclose, any aspect of the proceedings under Section 9(a) and Section 9(b), including but not limited to the resolution or the existence or amount of any award, to any person, firm, organization, or entity of any character or nature, unless divulged (i) to an agency of the federal or state government, (ii) pursuant to a court order, (iii) pursuant to a requirement of law, (iv) pursuant to prior written consent of the Company or Employee, or (v) pursuant to a legal proceeding to enforce a settlement agreement or arbitration award. This provision is not intended to prohibit nor does it prohibit Employee's or the Company's disclosures of the terms of any settlement or arbitration award to their attorney(s), accountant(s), financial advisor(s), or family members, provided that they comply with the provisions of this paragraph.
(d) Injunctions. Notwithstanding anything to the contrary contained in this
Section 9, the Company and Employee shall have the right in a proper case to
obtain temporary restraining orders and temporary or preliminary injunctive
relief from a court of competent jurisdiction; provided, however, that the
Company and Employee must contemporaneously submit the
Disputes for non-binding mediation under Section 9(a) and then for arbitration under Section 9(b) on the merits as provided herein if such Disputes cannot be resolved through mediation.
Section 10. General.
(a) Notices. All notices required or permitted under this Agreement shall be in writing, may be made by personal delivery or facsimile transmission, effective on the day of such delivery or receipt of such transmission, or may be mailed by registered or certified mail, effective two (2) days after the date of mailing, addressed as follows:
To the Company:
Spirit AeroSystems, Inc.
Attention: ___________
3801 S. Oliver
P.O. Box 780008, Mail Code ____
Wichita, KS 67278-0008
Facsimile Number: (___) ___-____
or such other person or address as designated in writing to Employee.
To Employee:
H. David Walker
at his last known residence address or to such other address as designated by him in writing to the Company.
(b) Successors. Neither this Agreement nor any right or interest therein shall be assignable or transferable (whether by pledge, grant of a security interest, or otherwise) by Employee or Employee's beneficiaries or legal representatives, except by will, by the laws of descent and distribution, or inter vivos revocable living grantor trust as Employee's beneficiaries. This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns, and Employee and shall be enforceable by them and Employee's heirs, legatees, legal personal representatives. If Employee dies during the term of this Agreement, the obligation to pay salary and provide benefits shall immediately cease; and, absent actual notice of any probate proceeding, the Company shall pay any compensation due for the period preceding Employee's death to the following person(s) in order of preference: (t) spouse of Employee; (ii) children of Employee eighteen years of age and over, in equal shares; (iii) father, mother, sisters, and brothers, in equal shares; or (d) the person to whom funeral expenses are due. Upon payment of such sum, the Company shall be relieved of all further obligations hereunder.
(c) Waiver, Modification, and Interpretation. No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in a writing signed by Employee and an appropriate officer of the Company empowered to sign the same by the Board of Directors of the Company. No waiver by either party at any time of any breach by the party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or at any prior to subsequent time. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Kansas; provided, however, that the corporate law of the state of incorporation of the Company's parent shall govern issues related to the issuance of shares of its Common Stock. Except as provided in Section 9, any action brought to enforce or interpret this Agreement shall be maintained exclusively in the state and federal courts located in Wichita, Kansas.
(d) Interpretation. The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement. No provision of this Agreement shall be interpreted for or against any party hereto on the basis that such party was the draftsman of such provision; and no presumption or burden of proof shall arise disfavoring or favoring any party by virtue of the authorship of any of the provisions of this Agreement.
(e) Counterparts. The Company and Employee may execute this Agreement in any number of counterparts, each of which shall be deemed to be an original but all of which shall constitute but one instrument. In proving this Agreement, it shall not be necessary to produce or account for more than one such counterpart.
(f) Invalidity of Provisions. If a court of competent jurisdiction shall
declare that any provision of this Agreement is invalid, illegal, or
unenforceable in any respect, and if the rights and obligations of the Parties
to this Agreement will not be materially and adversely affected thereby, in lieu
of such illegal, invalid, or unenforceable provision the court may add as a part
of this Agreement a legal, valid, and enforceable provision as similar in terms
to such illegal, invalid, or unenforceable provision as is possible. If such
court cannot so substitute or declines to so substitute for such invalid,
illegal, or unenforceable provision, (i) such provision will be fully severable;
(ii) this Agreement will be construed and enforced as if such illegal, invalid,
or unenforceable provision had never comprised a part hereof; and (iii) the
remaining provisions of this Agreement will remain in fun force and effect and
not be affected by the illegal, invalid, or unenforceable provision or by its
severance herefrom. The covenants contained in this Agreement shall each be
construed to be a separate agreement independent of any other provision of this
Agreement, and the existence of any claim or cause of action of Employee against
the Company, predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of any of said covenants.
(g) Entire Agreement. This Agreement (together with the documents expressly referenced herein) constitutes the entire agreement between the parties, supersedes in all respects any prior agreement between the Company and Employee and may not be changed except by a writing duly executed and delivered by the Company and Employee in the same manner as this Agreement.
[continues on next page]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date and year first written above.
SPIRIT AEROSYSTEMS, INC.
By: /s/ Suzanne Scott ------------------------------------ Name: Suzanne Scott Title: Director- Human Resources Support Services |
"Company"
/s/ H. David Walker ---------------------------------------- H. David Walker |
"Employee"
Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), effective as of the 28 day of December, 2005 (the "Effective Date"), is by and between SPIRIT AEROSYSTEMS, INC., a Delaware corporation (the "Company"), and JOHN LEWELLING ("Employee").
Recitals
WHEREAS, the Company is engaged in the manufacture, fabrication, maintenance, repair, overhaul, and modification of aircraft and aircraft components and markets and sells its services and products to its customers throughout the world (the "Business"); and
WHEREAS, the Company desires to hire Employee as its Senior Vice President of Strategy and Business Process and to perform such other services as the Company may direct; and
WHEREAS, in the course of performing his duties for the Company, Employee is likely to gain certain confidential and proprietary information belonging to the Company, develop relationships that are vital to the Company's goodwill, and acquire other important benefits to which the Company has a protectable interest; and
WHEREAS, the Company has agreed to hire Employee and Employee has agreed to accept such employment by the Company upon the terms, conditions, and restrictions contained in this Agreement.
Agreement
NOW THEREFORE, in consideration of the foregoing, and the representations, warranties, and covenants hereinafter, the parties hereto agree as follows:
Section 1. Employment. In reliance on the representations and warranties made herein, the Company hereby hires Employee to be its Senior Vice President of Strategy and Business Process, reporting to the Company's Chief Executive Officer, and to perform such duties and services in and about the business of the Company as may from time to time be assigned to Employee. The job title and duties referred to in the preceding sentence may be changed by the Company in the Company's sole discretion at any time. Employee shall devote Employee's full time to this employment. Employee's employment hereunder shall commence on the Effective Date and shall continue until termination of the Agreement in accordance with its terms (the "Employment Period").
Section 2. Performance. Employee shall use Employee's best efforts and skill to faithfully enhance and promote the welfare and best interests of the Company. The Employee shall strictly obey all rules and regulations of the Company, follow all laws and regulations of appropriate
government authorities, and be governed by reasonable decisions and instructions of the Company as are consistent with job duties as described above.
Section 3. Executive Incentive Plan. Upon entering into this Agreement, Employee shall invest not less than $300,000 in cash in exchange for shares of the Company's parent's common stock, which investment will be matched by the Company on a 4 to 1 basis by a grant of restricted shares, subject to and in accordance with the terms and conditions of the Company's Executive Incentive Plan ("EIP"). Such investment shall be made by the Company applying $300,000 from the sign-on bonus (as specified in Section 4(b) below). In connection with the foregoing and as a condition to the purchase of such shares, Employee agrees to execute such documents and take such other action as may reasonably be required by Company or the Company's parent, including, but not limited to, executing a subscription agreement in a form satisfactory to the Company's parent and executing a counterpart to the Investor Stockholders Agreement, dated as of June 16, 2005, by and between the Company's parent and the stockholders of the Company's parent.
Section 4. Compensation. Except as otherwise provided for herein, for all services to be performed by the Employee in any capacity hereunder, including without limitation any services as an officer, director, member of any committee, or any other duties assigned him, throughout the Employment Period the Company shall pay or provide Employee with the following, and Employee shall accept the same, as compensation for the performance of his undertakings and the services to be rendered by him:
(a) Base Salary. Initially, Employee will be entitled to an annual salary of Three Hundred Seventy-Five Thousand Dollars ($375,000) (the "Base Salary"), which shall be paid in accordance with the Company's policies and procedures. The Base Salary may not be reduced for any reason during the first two years of Employee's employment with the Company unless the salaries of other comparable level executives with the Company are also reduced. Thereafter, the Employee's base salary may be changed at annual intervals, based on Employee's and Company's performance, which may include, without limitation, participation in a periodic salary evaluation program on the same basis as other employees of the Company of similar position.
(b) Sign-on Bonus. On the Effective Date, the Company shall pay to
Employee (or, as applicable, apply to the benefit of Employee as specified
herein) an advance payment of (i) Three Hundred Thousand Dollars ($300,000), and
(ii) an amount equal to all taxes associated with Employee's receipt of the
foregoing payment, so that after payment of all such taxes by Employee, Employee
shall have the total amount of the foregoing payment. The advance payment
described in this Section 4(b) shall be conditioned upon the Employee remaining
employed with the Company for a period of not less than one (1) year after the
Effective Date and shall be repaid to the Company by the Employee in the event
such condition is not satisfied; provided, however, that the Employee shall not
be required to repay the advance payment to the Company if Employee is
terminated by the Company without cause within one (1) year after the Effective
Date. Upon termination of Employee's employment with the Company within one (1)
year after the Effective Date either (i) by Employee, or (ii) by the Company for
Cause, the Company may deduct from Employee's paycheck(s) or other amounts owed
Employee such
advance payment (or any other advances previously made to Employee). To the extent such deductions are insufficient to fully reimburse the Company, Employee shall be liable to the Company for the balance of the advances previously received.
(c) Annual Incentive Compensation. Employee shall be provided incentive compensation (either in cash, phantom stock, or Common Stock of the Company's parent, as specified by the administrative committee of the Company's Short-Term Incentive Plan ("STIP")) pursuant to the terms and conditions of the STIP. Employee shall be treated as qualified to participate in the STIP during his first year of employment; provided, however, that any award under the STIP shall be pro rated for such year if Employee's employment with the Company commences after the beginning of a plan year; and provided, further, that Employee shall not be qualified to participate in the STIP for a plan year if Employee's employment with the Company commences within the last 30 days of the plan year (in which case Employee shall be first qualified to participate in the STIP at the beginning of the plan year immediately following commencement of Employee's employment). The first year incentives shall include one hundred twenty percent (120%) of Base Salary in cash, stock, or phantom stock if target incentives are reached or exceeded, but if the target incentives are not reached, Employee shall only be entitled to incentive compensation (if any) otherwise provided by Company policy.
(d) Deferred Compensation Plan. From and after the Effective Date, Employee shall eligible to participate in the Spirit AeroSystems Holdings, Inc. Deferred Compensation Plan ("DCP") pursuant to the terms and conditions of the DCP.
(e) Relocation Expenses. The Company will reimburse Employee's reasonable expenses under the Company's Relocation Procedure, Tier II for (1) moving Employee and Employee's family and tangible personal property to Wichita, Kansas, and (2) reasonable temporary living expenses in Wichita, Kansas.
(f) Other Benefit Plans. Employee shall also participate in the Company's other employee benefit plans, policies, practices, and arrangements as the same may be offered to Employee from time to time, including, without limitation, any defined benefit retirement plan, excess or supplementary plan, profit sharing plan, savings plan, health and dental plan, disability plan, survivor income and life insurance plan, executive financial planning program, or other arrangement, or any successors thereto, and the STIP, the EIP, and the DCP (collectively hereinafter referred to as the "Benefit Plans"). The Employee's entitlement to any other compensation or benefits shall be determined in accordance with the terms and conditions of the Benefit Plans and other applicable programs, practices, and arrangements then in effect.
(g) Vacation. An amount of paid vacation to which an employee with fifteen
(15) years of service with the Company is entitled to receive under the
Company's vacation policy (a minimum of four weeks), and all paid holidays given
by the Company to employees in Employee's position, or similar positions.
(h) Fringe Benefits. All fringe benefits and perquisites all in accordance with the Company's policies as the same may be amended from time to time.
(i) Withholding Taxes. The Company shall have the right to deduct from all payments made to Employee hereunder any federal, state, or local taxes required by law to be withheld.
(j) Expenses. During Employee's employment, the Company shall promptly pay or reimburse Employee for all reasonable out-of-pocket expenses incurred by Employee in the performance of duties hereunder in accordance with the Company's policies and procedures then in effect.
Section 5. Restrictions.
(a) Acknowledgements. Employee acknowledges and agrees that: (1) during
the term of Employee's employment, because of the nature of Employee's
responsibilities and the resources provided by the Company, Employee will
acquire valuable and confidential skills, information, trade secrets, and
relationships with respect to the Company's business practices and operations;
(2) Employee may develop on behalf of the Company a personal acquaintance and/or
relationship with various persons, including, but not limited to, customers and
suppliers, which acquaintances may constitute the Employee's only contact with
such persons, and, as a consequence of the foregoing, Employee will occupy a
position of trust and confidence with respect to the Company's affairs; (3) the
Business involves the marketing and sale of the Company's products and services
to customers throughout the entire world, that the Company's competitors, both
in the United States and internationally, consist of both domestic and
international businesses, and the services to be performed by Employee for the
Company involve aspects of both the Company's domestic and international
business; (4) it would be impossible or impractical for Employee to perform his
duties for the Company without access to the Company's confidential and
proprietary information and contact with persons that are valuable to the
goodwill of the Company. Employee acknowledges that if he went to work for or
otherwise performs services for a third party engaged in a business
substantially similar to the Business, the disclosure by Employee to a third
party of such confidential and proprietary information and/or the exploitation
of such relationships would be inevitable.
(b) Reasonableness. In view of the foregoing and in consideration of the remuneration to be paid to Employee, Employee agrees that it is reasonable and necessary for the protection of the goodwill and business of the Company that the Employee make the covenants contained in this Agreement regarding the conduct of Employee during and subsequent to Employee's employment by the Company, and that the Company will suffer irreparable injury if Employee engages in conduct prohibited by this Agreement.
(c) Non-Compete. During the term of Employee's employment by the Company and for a period of two (2) years after termination of such employment, neither Employee nor any other person or entity with Employee's assistance nor any entity in which Employee directly or indirectly has any interest of any kind (without limitation) shall anywhere in the world, directly or indirectly own, manage, operate, control, be employed by, solicit sales for, invest in, participate in, advise, consult with, or be connected with the ownership, management, operation, or control of any business which is engaged, in whole or in part, in the Business, or any business
that is competitive therewith or any portion thereof, except for the exclusive benefit of the Company.
(d) No Raiding. In addition, during the term of Employee's employment by the Company and for a period of two (2) years after termination of such employment, neither Employee nor any person or entity with Employee's assistance nor any entity that the Employee or any person with his assistance or any person who he directly or indirectly controls shall, directly or indirectly, (1) solicit or take any action to induce any employee to quit or terminate their employment with the Company or the Company's affiliates, or (2) employ as an employee, independent contractor, consultant, or in any other position, any person who was an employee of the Company or the Company's affiliates during the aforementioned period.
(e) Confidentiality. Without the express written consent of the Company, Employee shall not at any time (either during or after the termination of the term of Employee's employment) use (other than for the benefit of the Company) or disclose to any other person or business entity proprietary or confidential information concerning the Company, the Company's parent's, or any of their affiliates, or the Company's, the Company's parent, or any of their affiliates' trade secrets or inventions of which Employee has gained knowledge during his employment with the Company. This paragraph shall not apply to any such information that: (1) Employee is required to disclose by law; (2) has been otherwise disseminated, disclosed, or made available to the public; (3) was obtained after his employment with the Company ended and from some source other than the Company, which source was under no obligation of confidentiality.
(f) Effect of Breach. Employee agrees that a breach of this Section 5 cannot adequately be compensated by money damages and, therefore, the Company shall be entitled, in addition to any other right or remedy available to it (including, but not limited to, an action for damages), to an injunction restraining such breach or a threatened breach and to specific performance of such provisions, and Employee hereby consents to the issuance of such injunction and to the ordering of specific performance, without the requirement of the Company to post a bond or other security.
(g) Other Rights Preserved. Nothing in this Section eliminates or diminishes rights which the Company may have with respect to the subject matter hereof under other agreements, the governing statutes, or under provisions of law, equity, or otherwise. Without limiting the foregoing, this section does not limit any rights the Company may have under any agreement with Employee regarding trade secrets and confidential information.
Section 6. Termination. This Agreement shall terminate upon the following circumstances:
(a) Without Cause. At any time at the election of either Employee or the Company for any reason or no reason, without cause, but subject to the provisions of this Agreement. It is expressly understood that Employee's employment is strictly "at will."
(b) Cause. At any time at the election of the Company for Cause. "Cause" for this purpose shall mean (i) Employee committing a material breach of this Agreement or acts involving moral turpitude, including fraud, dishonesty, disclosure of confidential information, or
the commission of a felony, or direct and deliberate acts constituting a material breach of his duty of loyalty to the Company; (ii) Employee willfully or continuously refusing to perform the material duties reasonably assigned to him by the Company that are consistent with the provisions of this Agreement and not resulting from a Disability; or (iii) the inability of Employee to obtain and maintain appropriate United States security clearances.
(c) Disability. Employee's death or his being unable to render the services required to be rendered by him for a period of one hundred eighty (180) days during any twelve-month period ("Disability").
Section 7. Effect of Termination.
(a) If Employee's employment is terminated (i) by Employee, or (ii) by the Company for Cause, the Company shall pay Employee's compensation only through the last day of the Employment Period (less any amounts the Company may off-set or deduct as specified in this Agreement), and, except as may otherwise be expressly provided in this Agreement or in any Benefit Plan, the Company shall have no further obligation to Employee.
(b) If Employee's employment is terminated by the Company prior to the expiration of two (2) years following the Effective Date for any reason other than Cause and for so long as Employee is not in breach of Employee's continuing obligations under Section 5, the Company shall (i) continue to pay Employee an amount equal to his Base Salary in effect immediately prior to the termination of his employment for a period of twelve (12) months (less any amounts the Company may off-set or deduct as specified in this Agreement), and (ii) pay the costs of COBRA medical and dental benefits coverage which are offered to Employee after termination for a period of twelve (12) months. Except as may otherwise be expressly provided in this Agreement or in any Benefit Plan, the Company shall have no further obligation to Employee.
(c) On termination of employment, Employee shall deliver all trade secret, confidential information, records, notes, data, memoranda, and equipment of any nature that are in Employee's possession or under Employee's control and that are the property of the Company or relate to the business of the Company, and Employee shall pay to the Company any amounts due and owning from Employee to the Company as specified in this Agreement.
(d) The obligations of Section 5 through Section 10 of this Agreement shall survive the expiration or termination of this Agreement.
Section 8. Representations and Warranties.
(a) No Conflicts. Employee represents and warrants to the Company that Employee is under no duty (whether contractual, fiduciary, or otherwise) that would prevent, restrict, or limit Employee from fully performing all duties and services for the Company, and the performance of such duties and services shall not conflict with any other agreement or obligation to which Employee is bound.
(b) No Hardship. Employee represents and acknowledges that Employee's experience and/or abilities are such that observance of the covenants contained in this Agreement will not cause Employee any undue hardship and will not unreasonably interfere with Employee's ability to earn a livelihood.
Section 9. Alternative Dispute Resolution.
(a) Mediation. Employee and the Company agree to submit, prior to arbitration, all unsettled claims, disputes, controversies, and other matters in question between them arising out of or relating to this Agreement (including but not limited to any claim that the Agreement or any of its provisions is invalid, illegal, or otherwise voidable or void) or the dealings or relationship between Employee and the Company ("Disputes") to mediation in Wichita, Kansas and in accordance with the Commercial Mediation Rules of the American Arbitration Association currently in effect. The mediation shall be private, confidential, voluntary, and nonbinding. Any party may withdraw from the mediation at any time before signing a settlement agreement upon written notice to each other party and to the mediator. The mediator shall be neutral and impartial. The mediator shall be disqualified as a witness, consultant, expert, or counsel for either party with respect to the matters in Dispute and any related matters. The Company and Employee shall pay their respective attorneys' fee and other costs associated with the mediation, and the Company and Employee shall equally bear the costs and fees of the mediator. If a Dispute cannot be resolved through mediation within ninety (90) days of being submitted to mediation, the parties agree to submit the Dispute to arbitration.
(b) Arbitration. Subject to Section 9(a), all Disputes will be submitted for binding arbitration to the American Arbitration Association on demand of either party. Such arbitration proceeding will be conducted in Wichita, Kansas and, except as otherwise provided in this Agreement, will be heard by one (1) arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. All matters relating to arbitration will be governed by the federal Arbitration Act (9 U.S.C. Sections 1 et seq.) and not by any state arbitration law. The arbitrator will have the right to award or include in his award any relief which he deems proper under the circumstances, including, without limitation, money damages (with interest on unpaid amounts from the date due), specific performance, injunctive relief, and reasonable attorneys' fees and costs, provided that the arbitrator will not have the right to amend or modify the terms of this Agreement. The award and decision of the arbitrator will be conclusive and binding upon all parties hereto, and judgment upon the award may be entered in any court of competent jurisdiction. Except as specified above, the Company and Employee shall pay their respective attorneys' fees and other costs associated with the arbitration, and the Company and Employee shall equally bear the costs and fees of the arbitrator.
(c) Confidentiality. Employee and the Company agree that they will not disclose, or permit those acting on their behalf to disclose, any aspect of the proceedings under Section 9(a) and Section 9(b), including but not limited to the resolution or the existence or amount of any award, to any person, firm, organization, or entity of any character or nature, unless divulged (i) to an agency of the federal or state government, (ii) pursuant to a court order, (iii) pursuant to a requirement of law, (iv) pursuant to prior written consent of the Company or Employee, or (v) pursuant to a legal proceeding to enforce a settlement agreement or arbitration award. This
provision is not intended to prohibit nor does it prohibit Employee's or the Company's disclosures of the terms of any settlement or arbitration award to their attorney(s), accountant(s), financial advisor(s), or family members, provided that they comply with the provisions of this paragraph.
(d) Injunctions. Notwithstanding anything to the contrary contained in this Section 9, the Company and Employee shall have the right in a proper case to obtain temporary restraining orders and temporary or preliminary injunctive relief from a court of competent jurisdiction; provided, however, that the Company and Employee must contemporaneously submit the Disputes for non-binding mediation under Section 9(a) and then for arbitration under Section 9(b) on the merits as provided herein if such Disputes cannot be resolved through mediation.
Section 10. General.
(a) Notices. All notices required or permitted under this Agreement shall be in writing, may be made by personal delivery or facsimile transmission, effective on the day of such delivery or receipt of such transmission, or may be mailed by registered or certified mail, effective two (2) days after the date of mailing, addressed as follows:
To the Company:
Spirit AeroSystems, Inc.
Attention: Gloria Flentje, VP Chief Legal Counsel
3801 S. Oliver
P.O. Box 780008, Mail Code K11-60
Wichita, KS 67278-0008
Facsimile Number: (316) 523-8814
or such other person or address as designated in writing to Employee.
To Employee:
John Lewelling
at his last known residence address or to such other address as designated by him in writing to the Company.
(b) Successors. Neither this Agreement nor any right or interest therein shall be assignable or transferable (whether by pledge, grant of a security interest, or otherwise) by Employee or Employee's beneficiaries or legal representatives, except by will, by the laws of descent and distribution, or inter vivos revocable living grantor trust as Employee's beneficiaries. This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns, and Employee and shall be enforceable by them and Employee's heirs, legatees, and legal personal representatives. If Employee dies during the term of this Agreement, the obligation to pay salary and provide benefits shall immediately cease; and, absent actual
notice of any probate proceeding, the Company shall pay any compensation due for the period preceding Employee's death to the following person(s) in order of preference: (i) spouse of Employee; (ii) children of Employee eighteen years of age and over, in equal shares; (iii) father, mother, sisters, and brothers, in equal shares; or (d) the person to whom funeral expenses are due. Upon payment of such sum, the Company shall be relieved of all further obligations hereunder.
(c) Waiver, Modification, and Interpretation. No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in a writing signed by Employee and an appropriate officer of the Company empowered to sign the same by the Board of Directors of the Company. No waiver by either party at any time of any breach by the party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior or subsequent time. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Kansas; provided, however, that the corporate law of the state of incorporation of the Company's parent shall govern issues related to the issuance of shares of its Common Stock. Except as provided in Section 9, any action brought to enforce or interpret this Agreement shall be maintained exclusively in the state and federal courts located in Wichita, Kansas.
(d) Interpretation. The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement. No provision of this Agreement shall be interpreted for or against any party hereto on the basis that such party was the draftsman of such provision; and no presumption or burden of proof shall arise disfavoring or favoring any party by virtue of the authorship of any of the provisions of this Agreement.
(e) Counterparts. The Company and Employee may execute this Agreement in any number of counterparts, each of which shall be deemed to be an original but all of which shall constitute but one instrument. In proving this Agreement, it shall not be necessary to produce or account for more than one such counterpart.
(f) Invalidity of Provisions. If a court of competent jurisdiction shall
declare that any provision of this Agreement is invalid, illegal, or
unenforceable in any respect, and if the rights and obligations of the Parties
to this Agreement will not be materially and adversely affected thereby, in lieu
of such illegal, invalid, or unenforceable provision the court may add as a part
of this Agreement a legal, valid, and enforceable provision as similar in terms
to such illegal, invalid, or unenforceable provision as is possible. If such
court cannot so substitute or declines to so substitute for such invalid,
illegal, or unenforceable provision, (i) such provision will be fully severable;
(ii) this Agreement will be construed and enforced as if such illegal, invalid,
or unenforceable provision had never comprised a part hereof; and (iii) the
remaining provisions of this Agreement will remain in full force and effect and
not be affected by the illegal, invalid, or unenforceable provision or by its
severance herefrom. The covenants contained in this Agreement shall each be
construed to be a separate agreement independent of any other provision of this
Agreement, and the existence of any claim or cause of action of Employee
against the Company, predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of any of said covenants.
(g) Entire Agreement. This Agreement (together with the documents expressly referenced herein) constitutes the entire agreement between the parties, supersedes in all respects any prior agreement between the Company and Employee and may not be changed except by a writing duly executed and delivered by the Company and Employee in the same manner as this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date and year first written above.
SPIRIT AEROSYSTEMS, INC.
By: /s/ Suzanne Scott ---------------------------------------------- Name: Suzanne Scott --------------------------------------------- Title: Director- Human Resources Support Services -------------------------------------------- |
"Company"
/s/ John Lewelling --------------------------------------------------- John Lewelling |
"Employee"
Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), effective as of the 30th day of December, 2005 (the "Effective Date"), is by and between SPIRIT AEROSYSTMES, INC., a Delaware corporation (the "Company"), and JANET S. NICOLSON ("Employee").
Recitals
WHEREAS, the Company is engaged in the manufacture, fabrication, maintenance, repair, overhaul, and modification of aircraft and aircraft components and markets and sells its services and products to its customers throughout the world (the "Business"); and
WHEREAS, the Company desires to hire Employee as its Senior Vice President of Human Resources and to perform such other services as the Company may direct; and
WHEREAS, in the course of performing Employee's duties for the Company, Employee is likely to gain certain confidential and proprietary information belonging to the Company, develop relationships that are vital to the Company's goodwill, and acquire other important benefits to which the Company has a protectable interest; and
WHEREAS, the Company has agreed to hire Employee and Employee has agreed to accept such employment by the Company upon the terms, conditions, and restrictions contained in this Agreement.
Agreement
NOW THEREFORE, in consideration of the foregoing, and the representations, warranties, and covenants hereinafter, the parties hereto agree as follows:
Section 1. Employment. In reliance on the representations and warranties made herein, the Company hereby hires Employee to be its Senior Vice President of Human Resources, reporting to the Company's Chief Executive Officer, and to perform such duties and services in and about the business of the Company as may from time to time be assigned to Employee. The job title and duties referred to in the preceding sentence may be changed by the Company in the Company's sole discretion at any time. Employee shall devote Employee's full time to this employment. Employee's employment hereunder shall commence on the Effective Date and shall continue until termination of the Agreement in accordance with its terms (the "Employment Period").
Section 2. Performance. Employee shall use Employee's best efforts and skill to faithfully enhance and promote the welfare and best interests of the Company. The Employee shall strictly obey all rules and regulations of the Company, follow all laws and regulations of appropriate government authorities, and be governed by reasonable decisions and instructions of the Company as are consistent with job duties as described above.
Section 3. Executive Incentive Plan. Upon entering into this Agreement, Employee shall invest not less than $200,000 in cash in exchange for shares of the Company's parent's common stock, which investment will be matched by the Company on a 4 to 1 basis by a grant of restricted shares, subject to and in accordance with the terms and conditions of the Company's Executive Incentive Plan ("EIP"). Such investment shall be made by the Company applying $200,000 from the payments specified in Section 4(b) below. In connection with the foregoing and as a condition to the purchase of such shares, Employee agrees to execute such documents and take such other action as may reasonably be required by Company or the Company's parent, including, but not limited to, executing a subscription agreement in a form satisfactory to the Company's parent and executing a counterpart to the Investor Stockholders Agreement, dated as of June 16, 2005, by and between the Company's parent and the stockholders of the Company's parent.
Section 4. Compensation. Except as otherwise provided for herein, for all services to be performed by the Employee in any capacity hereunder, including without limitation any services as an officer, director, member of any committee, or any other duties assigned Employee, throughout the Employment Period the Company shall pay or provide Employee with the following, and Employee shall accept the same, as compensation for the performance of Employee's undertakings and the services to be rendered by Employee:
(a) Base Salary. Initially, Employee will be entitled to an annual salary of Two Hundred Fifty Thousand Dollars ($250,000) (the "Base Salary"), which shall be paid in accordance with the Company's policies and procedures. The Base Salary may not be reduced for any reason during the first two years of Employee's employment with the Company unless the salaries of other comparable level executives with the Company are also reduced. Thereafter, the Employee's base salary may be changed at annual intervals, based on Employee's and Company's performance, which may include, without limitation, participation in a periodic salary evaluation program on the same basis as other employees of the Company of similar position.
(b) One-Time Payment in Lieu of Foregone Executive Compensation. In consideration of all employee and executive compensation benefits foregone by Employee upon termination of Employee's employment with Mercer Human Resource Consulting ("Mercer"), including, but not limited to, benefits under any defined benefit retirement plan, supplemental executive retirement plan, excess benefit plan, benefit restoration plan, restricted stock plan, option plan, or any other plan, agreement, or arrangement providing employee retirement or executive compensation benefits, the Company will make a one-time advance cash payment to Employee of (i) Five Hundred Seventeen Thousand Dollars ($517,000.00), and (ii) an amount equal to all taxes associated with Employee's receipt of the foregoing payment, so that after payment of all such taxes by Employee, Employee shall have the total amount of the foregoing payment. The advance payment described in this Section 4(b) shall be conditioned upon the Employee remaining employed with the Company for a period of not less than two (2) years after the Effective Date, and in the event such condition is not satisfied, Employee shall be required to repay to the Company a portion of the advance payment determined by multiplying the total advance payment by a fraction the numerator of which is the number of days remaining
in the two-year period and the denominator of which is 730; provided, however,
that the Employee shall not be required to repay any portion of the advance
payment to the Company if Employee is terminated by the Company without cause
within two (2) years after the Effective Date. Upon termination of Employee's
employment with the Company within two (2) years after the Effective Date either
(i) by Employee, or (ii) by the Company for Cause, the Company may deduct from
Employee's paycheck(s) or other amounts owed Employee such portion of the
advance payment required to be repaid hereunder (or any other advances
previously made to Employee). To the extent such deductions are insufficient to
fully reimburse the Company, Employee shall be liable to the Company for the
balance of the advances previously received.
The amount of the advance payment described above has been determined on the assumption that Mercer will not withhold payment of Employee's $85,000 2005 performance bonus (the "Mercer Bonus"). Employee will vigorously pursue payment from Mercer of the Mercer Bonus. Failing payment of the Mercer Bonus on or before March 1, 2006, however, the Company will increase the amount of the advance payment described above by the unpaid portion of the Mercer Bonus.
(c) Annual Incentive Compensation. Employee shall be provided incentive compensation (either in cash, phantom stock, or Common Stock of the Company's parent, as specified by the administrative committee of the Company's Short-Term Incentive Plan ("STIP")) pursuant to the terms and conditions of the STIP. Employee shall be treated as first qualified to participate in the STIP during the plan year beginning January 1, 2006. The first year incentives shall include one hundred twenty percent (100%) of Base Salary in cash, stock, or phantom stock if target performance goals are reached or exceeded, but if the target performance goals are not reached, Employee shall only be entitled to incentive compensation (if any) otherwise provided by Company policy.
(d) Deferred Compensation Plan. From and after the Effective Date, Employee shall be eligible to participate in the Spirit AeroSystems Holdings, Inc. Deferred Compensation Plan ("DCP") pursuant to the terms and conditions of the DCP. In addition to any salary reduction contributions Employee may timely elect to make under the DCP, the Company will make an annual employer discretionary contribution to the DCP equal to one and one-half percent (1 1/2%) of Base Salary, which amount(s) shall be contributed to an employer discretionary contribution account established for Employee under the DCP and shall be held and administered in accordance with the terms and conditions of the DCP (including, but not limited to, the conditions set forth in Article VI thereof).
(e) Relocation Expenses. The Company will reimburse Employee's reasonable expenses under the Company's Relocation Procedure, Tier II for (1) moving Employee and Employee's family and tangible personal property to Wichita, Kansas, and (2) reasonable temporary living expenses in Wichita, Kansas for a period not to exceed the lesser of (i) the period until Employee sells Employee's existing primary residence, or (ii) twelve (12) months after the Effective Date, it being understood that Employee shall use commercially reasonably efforts to sell Employee's existing primary residence in a timely manner.
(f) Other Benefit Plans. Employee shall also participate in the Company's other employee benefit plans, policies, practices, and arrangements as the same may be offered to Employee from time to time, including, without limitation, any defined benefit retirement plan, excess or supplementary plan, profit sharing plan, savings plan, health and dental plan, disability plan, survivor income and life insurance plan, executive financial planning program, or other arrangement, or any successors thereto, and the STIP and the DCP (collectively hereinafter referred to as the "Benefit Plans"). The Employee's entitlement to any other compensation or benefits shall be determined in accordance with the terms and conditions of the Benefit Plans and other applicable programs, practices, and arrangements then in effect.
(g) Vacation. An amount of paid vacation to which an employee with fifteen
(15) years of service with the Company is entitled to receive under the
Company's vacation policy (a minimum of four weeks), and all paid holidays given
by the Company to employees in Employee's position, or similar positions.
(h) Fringe Benefits. All fringe benefits and perquisites all in accordance with the Company's policies as the same may be amended from time to time.
(i) Withholding Taxes. The Company shall have the right to deduct from all payments made to Employee hereunder any federal, state, or local taxes required by law to be withheld.
(j) Expenses. During Employee's employment, the Company shall promptly pay or reimburse Employee for all reasonable out-of-pocket expenses incurred by Employee in the performance of duties hereunder in accordance with the Company's policies and procedures then in effect.
Section 5. Restrictions.
(a) Acknowledgements. Employee acknowledges and agrees that: (1) during
the term of Employee's employment, because of the nature of Employee's
responsibilities and the resources provided by the Company, Employee will
acquire valuable and confidential skills, information, trade secrets, and
relationships with respect to the Company's business practices and operations;
(2) Employee may develop on behalf of the Company a personal acquaintance and/or
relationship with various persons, including, but not limited to, customers and
suppliers, which acquaintances may constitute the Employee's only contact with
such persons, and, as a consequence of the foregoing, Employee will occupy a
position of trust and confidence with respect to the Company's affairs; (3) the
Business involves the marketing and sale of the Company's products and services
to customers throughout the entire world, that the Company's competitors, both
in the United States and internationally, consist of both domestic and
international businesses, and the services to be performed by Employee for the
Company involve aspects of both the Company's domestic and international
business; (4) it would be impossible or impractical for Employee to perform
Employee's duties for the Company without access to the Company's confidential
and proprietary information and contact with persons that are valuable to the
goodwill of the Company. Employee acknowledges that if Employee went to work for
or otherwise performs services for a third party engaged in a business
substantially similar to the
Business, the disclosure by Employee to a third party of such confidential and proprietary information and/or the exploitation of such relationships would be inevitable.
(b) Reasonableness. In view of the foregoing and in consideration of the remuneration to be paid to Employee, Employee agrees that it is reasonable and necessary for the protection of the goodwill and business of the Company that the Employee make the covenants contained in this Agreement regarding the conduct of Employee during and subsequent to Employee's employment by the Company, and that the Company will suffer irreparable injury if Employee engages in conduct prohibited by this Agreement.
(c) Non-Compete. During the term of Employee's employment by the Company and for a period of two (2) years after termination of such employment, neither Employee nor any other person or entity with Employee's assistance nor any entity in which Employee directly or indirectly has any interest of any kind (without limitation) shall anywhere in the world, directly or indirectly own, manage, operate, control, be employed by, solicit sales for, invest in, participate in, advise, consult with, or be connected with the ownership, management, operation, or control of any business which is engaged, in whole or in part, in the Business, or any business that is competitive therewith or any portion thereof, except for the exclusive benefit of the Company.
(d) No Raiding. In addition, during the term of Employee's employment by the Company and for a period of two (2) years after termination of such employment, neither Employee nor any person or entity with Employee's assistance nor any entity that the Employee or any person with Employee's assistance or any person who Employee directly or indirectly controls shall, directly or indirectly, (1) solicit or take any action to induce any employee to quit or terminate their employment with the Company or the Company's affiliates, or (2) employ as an employee, independent contractor, consultant, or in any other position, any person who was an employee of the Company or the Company's affiliates during the aforementioned period.
(e) Confidentiality. Without the express written consent of the Company, Employee shall not at any time (either during or after the termination of the term of Employee's employment) use (other than for the benefit of the Company) or disclose to any other person or business entity proprietary or confidential information concerning the Company, the Company's parent's, or any of their affiliates, or the Company's, the Company's parent, or any of their affiliates' trade secrets or inventions of which Employee has gained knowledge during Employee's employment with the Company. This paragraph shall not apply to any such information that: (1) Employee is required to disclose by law; (2) has been otherwise disseminated, disclosed, or made available to the public; (3) was obtained after Employee's employment with the Company ended and from some source other than the Company, which source was under no obligation of confidentiality.
(f) Effect of Breach. Employee agrees that a breach of this Section 5 cannot adequately be compensated by money damages and, therefore, the Company shall be entitled, in addition to any other right or remedy available to it (including, but not limited to, an action for damages), to an injunction restraining such breach or a threatened breach and to specific performance of such provisions, and Employee hereby consents to the issuance of such
injunction and to the ordering of specific performance, without the requirement of the Company to post a bond or other security.
(g) Other Rights Preserved. Nothing in this Section eliminates or diminishes rights which the Company may have with respect to the subject matter hereof under other agreements, the governing statutes, or under provisions of law, equity, or otherwise. Without limiting the foregoing, this section does not limit any rights the Company may have under any agreement with Employee regarding trade secrets and confidential information.
Section 6. Termination. This Agreement shall terminate upon the following circumstances:
(a) Without Cause. At any time at the election of either Employee or the Company for any reason or no reason, without cause, but subject to the provisions of this Agreement. It is expressly understood that Employee's employment is strictly "at will."
(b) Cause. At any time at the election of the Company for Cause. "Cause" for this purpose shall mean (i) Employee committing a material breach of this Agreement or acts involving moral turpitude, including fraud, dishonesty, disclosure of confidential information, or the commission of a felony, or direct and deliberate acts constituting a material breach of Employee's duty of loyalty to the Company; (ii) Employee willfully or continuously refusing to perform the material duties reasonably assigned to Employee by the Company that are consistent with the provisions of this Agreement and not resulting from a Disability; or (iii) the inability of Employee to obtain and maintain appropriate United States security clearances.
(c) Disability. Employee's death or Employee's being unable to render the
services required to be rendered by Employee for a period of one hundred eighty
(180) days during any twelve-month period ("Disability").
Section 7. Effect of Termination.
(a) If Employee's employment is terminated (i) by Employee, or (ii) by the Company for Cause, the Company shall pay Employee's compensation only through the last day of the Employment Period (less any amounts the Company may off-set or deduct as specified in this Agreement), and, except as may otherwise be expressly provided in this Agreement or in any Benefit Plan, the Company shall have no further obligation to Employee.
(b) If Employee's employment is terminated by the Company for any reason other than Cause and for so long as Employee is not in breach of Employee's continuing obligations under Section 5, the Company shall (i) continue to pay Employee an amount equal to Employee's Base Salary in effect immediately prior to the termination of Employee's employment for a period of twelve (12) months (less any amounts the Company may off-set or deduct as specified in this Agreement), and (ii) pay the costs of COBRA medical and dental benefits coverage which are offered to Employee after termination for a period of twelve (12) months. Except as may otherwise be expressly provided in this Agreement or in any Benefit Plan, the Company shall have no further obligation to Employee.
(c) On termination of employment, Employee shall deliver all trade secret, confidential information, records, notes, data, memoranda, and equipment of any nature that are in Employee's possession or under Employee's control and that are the property of the Company or relate to the business of the Company, and Employee shall pay to the Company any amounts due and owning from Employee to the Company as specified in this Agreement.
(d) The obligations of Section 5 through Section 10 of this Agreement shall survive the expiration or termination of this Agreement.
Section 8. Representations and Warranties.
(a) No Conflicts. Employee represents and warrants to the Company that Employee is under no duty (whether contractual, fiduciary, or otherwise) that would prevent, restrict, or limit Employee from fully performing all duties and services for the Company, and the performance of such duties and services shall not conflict with any other agreement or obligation to which Employee is bound.
(b) No Hardship. Employee represents and acknowledges that Employee's experience and/or abilities are such that observance of the covenants contained in this Agreement will not cause Employee any undue hardship and will not unreasonably interfere with Employee's ability to earn a livelihood.
Section 9. Alternative Dispute Resolution.
(a) Mediation. Employee and the Company agree to submit, prior to arbitration, all unsettled claims, disputes, controversies, and other matters in question between them arising out of or relating to this Agreement (including but not limited to any claim that the Agreement or any of its provisions is invalid, illegal, or otherwise voidable or void) or the dealings or relationship between Employee and the Company ("Disputes") to mediation in Wichita, Kansas and in accordance with the Commercial Mediation Rules of the American Arbitration Association currently in effect. The mediation shall be private, confidential, voluntary, and nonbinding. Any party may withdraw from the mediation at any time before signing a settlement agreement upon written notice to each other party and to the mediator. The mediator shall be neutral and impartial. The mediator shall be disqualified as a witness, consultant, expert, or counsel for either party with respect to the matters in Dispute and any related matters. The Company and Employee shall pay their respective attorneys' fee and other costs associated with the mediation, and the Company and Employee shall equally bear the costs and fees of the mediator. If a Dispute cannot be resolved through mediation within ninety (90) days of being submitted to mediation, the parties agree to submit the Dispute to arbitration.
(b) Arbitration. Subject to Section 9(a), all Disputes will be submitted for binding arbitration to the American Arbitration Association on demand of either party. Such arbitration proceeding will be conducted in Wichita, Kansas and, except as otherwise provided in this Agreement, will be heard by one (1) arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. All matters relating to arbitration will be governed by the federal Arbitration Act (9 U.S.C. Sections 1 et seq.) and not by any state
arbitration law. The arbitrator will have the right to award or include in his award any relief which he deems proper under the circumstances, including, without limitation, money damages (with interest on unpaid amounts from the date due), specific performance, injunctive relief, and reasonable attorneys' fees and costs, provided that the arbitrator will not have the right to amend or modify the terms of this Agreement. The award and decision of the arbitrator will be conclusive and binding upon all parties hereto, and judgment upon the award may be entered in any court of competent jurisdiction. Except as specified above, the Company and Employee shall pay their respective attorneys' fees and other costs associated with the arbitration, and the Company and Employee shall equally bear the costs and fees of the arbitrator.
(c) Confidentiality. Employee and the Company agree that they will not disclose, or permit those acting on their behalf to disclose, any aspect of the proceedings under Section 9(a) and Section 9(b), including but not limited to the resolution or the existence or amount of any award, to any person, firm, organization, or entity of any character or nature, unless divulged (i) to an agency of the federal or state government, (ii) pursuant to a court order, (iii) pursuant to a requirement of law, (iv) pursuant to prior written consent of the Company or Employee, or (v) pursuant to a legal proceeding to enforce a settlement agreement or arbitration award. This provision is not intended to prohibit nor does it prohibit Employee's or the Company's disclosures of the terms of any settlement or arbitration award to their attorney(s), accountant(s), financial advisor(s), or family members, provided that they comply with the provisions of this paragraph.
(d) Injunctions. Notwithstanding anything to the contrary contained in this Section 9, the Company and Employee shall have the right in a proper case to obtain temporary restraining orders and temporary or preliminary injunctive relief from a court of competent jurisdiction; provided, however, that the Company and Employee must contemporaneously submit the Disputes for non-binding mediation under Section 9(a) and then for arbitration under Section 9(b) on the merits as provided herein if such Disputes cannot be resolved through mediation.
Section 10. General.
(a) Notices. All notices required or permitted under this Agreement shall be in writing, may be made by personal delivery or facsimile transmission, effective on the day of such delivery or receipt of such transmission, or may be mailed by registered or certified mail, effective two (2) days after the date of mailing, addressed as follows:
To the Company:
Spirit AeroSystems, Inc.
Attention: Gloria Farha Flentje Vice President General Counsel
3801 S. Oliver
P.O. Box 780008, Mail Code K11-60
Wichita, KS 67278-0008
Facsimile Number: (316) 523-8814
or such other person or address as designated in writing to Employee.
To Employee:
Janet S. Nicolson
at Employee's last known residence address or to such other address as designated by Employee in writing to the Company.
(b) Successors. Neither this Agreement nor any right or interest therein shall be assignable or transferable (whether by pledge, grant of a security interest, or otherwise) by Employee or Employee's beneficiaries or legal representatives, except by will, by the laws of descent and distribution, or inter vivos revocable living grantor trust as Employee's beneficiaries. This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns, and Employee and shall be enforceable by them and Employee's heirs, legatees, and legal personal representatives. If Employee dies during the term of this Agreement, the obligation to pay salary and provide benefits shall immediately cease; and, absent actual notice of any probate proceeding, the Company shall pay any compensation due for the period preceding Employee's death to the following person(s) in order of preference: (i) spouse of Employee; (ii) children of Employee eighteen years of age and over, in equal shares; (iii) father, mother, sisters, and brothers, in equal shares; or (d) the person to whom funeral expenses are due. Upon payment of such sum, the Company shall be relieved of all further obligations hereunder.
(c) Waiver, Modification, and Interpretation. No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in a writing signed by Employee and an appropriate officer of the Company empowered to sign the same by the Board of Directors of the Company. No waiver by either party at any time of any breach by the party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior or subsequent time. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Kansas; provided, however, that the corporate law of the state of incorporation of the Company's parent shall govern issues related to the issuance of shares of its Common Stock. Except as provided in Section 9, any action brought to enforce or interpret this Agreement shall be maintained exclusively in the state and federal courts located in Wichita, Kansas.
(d) Interpretation. The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement. No provision of this Agreement shall be interpreted for or against any party hereto on the basis that such party was the draftsman of such provision; and no presumption or burden of proof shall arise disfavoring or favoring any party by virtue of the authorship of any of the provisions of this Agreement.
(e) Counterparts. The Company and Employee may execute this Agreement in any number of counterparts, each of which shall be deemed to be an original but all of which shall constitute but one instrument. In proving this Agreement, it shall not be necessary to produce or account for more than one such counterpart.
(f) Invalidity of Provisions. If a court of competent jurisdiction shall
declare that any provision of this Agreement is invalid, illegal, or
unenforceable in any respect, and if the rights and obligations of the Parties
to this Agreement will not be materially and adversely affected thereby, in lieu
of such illegal, invalid, or unenforceable provision the court may add as a part
of this Agreement a legal, valid, and enforceable provision as similar in terms
to such illegal, invalid, or unenforceable provision as is possible. If such
court cannot so substitute or declines to so substitute for such invalid,
illegal, or unenforceable provision, (i) such provision will be fully severable;
(ii) this Agreement will be construed and enforced as if such illegal, invalid,
or unenforceable provision had never comprised a part hereof; and (iii) the
remaining provisions of this Agreement will remain in full force and effect and
not be affected by the illegal, invalid, or unenforceable provision or by its
severance herefrom. The covenants contained in this Agreement shall each be
construed to be a separate agreement independent of any other provision of this
Agreement, and the existence of any claim or cause of action of Employee against
the Company, predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of any of said covenants.
(g) Entire Agreement. This Agreement (together with the documents expressly referenced herein) constitutes the entire agreement between the parties, supersedes in all respects any prior agreement between the Company and Employee and may not be changed except by a writing duly executed and delivered by the Company and Employee in the same manner as this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date and year first written above.
SPIRIT AEROSYSTEMS, INC.
By: /s/ Suzanne Scott ----------------------------------------- Name: Suzanne Scott ----------------------------------------- Title: Director Human Resources Support Services ----------------------------------------- |
"Company"
/s/ Janet S. Nicolson ------------------------------------------------ Janet S. Nicolson |
"Employee"
EXHIBIT 10.6
Mr. Neil McManus
Managing Director
BAE Systems
Building 90
Prestwick International Airport
Ayrshire KA9 2TW
20 March, 2006
Dear Neil,
Further to our recent telephone conversation, I am now pleased to be able to
offer you the post of Vice President and Managing Director for Spirit
AeroSystems (Europe) Limited starting on 31 March 2006 at a salary of
(pound)105,000.00 per annum on the terms set out in the attached Statement of
Terms and Conditions of Employment.
If the terms of this offer are acceptable, please sign and date the enclosed copy of the Statement on page 9 return it to me. A stamped addressed envelope is enclosed for this purpose.
I look forward to with you.
Yours sincerely
/s/ Jan Nicolson --------------------------- -------------------------------- Ron Brunton Jan Nicolson |
Chief Operating Officer Sr. Vice President Human Resources Spirit AeroSystems, Inc. Spirit AeroSystems, Inc. |
STATEMENT OF TERMS AND CONDITIONS OF EMPLOYMENT
1. COMMENCEMENT OF EMPLOYMENT
Your employment starts on the date stated in the letter offering you employment (offer letter) (or such other date as may be agreed) and that date shall be the date from which your period of continuous employment shall be calculated (unless the offer letter states that it is to be calculated from an earlier date).
2. JOB TITLE
Your job title and the person to whom you are to report are stated in your offer letter but, in addition to your normal duties, you may be required to undertake other duties from time to time. The Company reserves the right to change your job title and to vary your duties if the needs of the Company's business so require. The Company may also change your reporting line in accordance with the needs of its business from time to time.
3. PLACE OF WORK
Your normal place of work will be Spirit AeroSystems (Europe) Limited, Prestwick International Airport, Ayrshire, United Kingdom, but the Company reserves the right to require you to work elsewhere if the interests of the Company's business so require.
4. SALARY
Your salary per annum at the start of your employment is as stated in your offer letter. It shall be paid monthly in arrears in equal instalments into a Bank or Building Society account nominated by you on or about the fifteenth day of each calendar month. [Unless your offer letter states otherwise, you will not be entitled to payment for overtime.]
5. EXPENSES
The Company shall refund to you out of pocket expenses properly and reasonably incurred by you (including travelling and entertainment expenses) in or about the performance of your duties provided you submit expense claims for approval at weekly intervals supported by all appropriate vouchers and in accordance with the Company's expense reimbursement policy applicable from time to time.
6. HOURS OF WORK
The Company's standard working week is [35] hours per week (Monday to Friday
[9.30 am to 5.30 pm] exclusive of one hour lunch break). You are required to
work such additional hours as may be necessary for the proper performance of
your duties and the proper functioning of the business.
7. HOLIDAY AND HOLIDAY PAY
(a) You will be entitled to 25 working days paid annual holiday to be taken at times approved of by and agreed with the Company in advance. The holiday year is 1st January to 31st December]. No more than [10] days may normally be taken at one time.
(b) In addition to annual holiday, you will also be entitled to all public holidays applicable to England and Wales and will be paid in respect of these days. [The Company may require you to work on a public holiday if the needs of the business require it but in this event you will be granted a compensatory day's holiday.]
(c) If you start or leave your employment during a holiday year, your holiday
entitlement in respect of that year will be calculated at the rate of
[1.67] days for each complete month of service.
(d) Upon termination of your employment you will be entitled to pay in lieu of any unused holiday entitlement or required to repay to the Company pay received for holiday taken in excess of your holiday entitlement. Any sums so due to the Company may be deducted from any money owing to you by the Company. For the purpose of calculating pay due to you or owed by you to the Company, one days pay shall be calculated at the rate of 1/260th of your annual salary.
8. MATERNITY PATERNITY AND ADOPTION LEAVE AND PAY
Statutory Maternity Paternity and Adoption Leave (as appropriate) will be given and Statutory Maternity Paternity or Adoption Pay (as appropriate) will be paid to qualifying employees subject to and in accordance with the relevant statutory rules.
9. ABSENCE OTHER THAN THROUGH SICKNESS, HOLIDAYS AND MATERNITY
Normally, additional time off will only be granted exceptionally and without pay. However, the Company may at its discretion give additional time off with pay (less any allowances which you may be entitled to receive from a third party in respect of the absence) where the absence is to be for a substantial reason (eg bereavement and funeral of a very close relative or the need to attend court as a witness or juryman). You will not be paid for days of unauthorised absence.
10. PENSION
You are eligible to become a member of the Company's Pension Scheme, subject to the terms of its trust deed and rules from time to time in force. A contracting-out certificate is not currently in force in respect of your employment. The Company may deduct from any monies due to you from the Company any contributions you may be liable to make in respect of the Scheme. The Company reserves the right to amend, vary or discontinue the Scheme at any time in appropriate circumstances.
11. COMPANY CAR
You are eligible to receive a Company car allowance in the amount of
(pound)10,000.00 per month.
12. TERMINATION OF EMPLOYMENT
(a) Your employment may be terminated by written notice given by the Company or you as follows:
(i) 6 month's minimum notice required by the Company for reasons other than gross misconduct.
(ii) 3 month's minimum notice required by yourself.
(b) In respect of any period when notice is running the Company reserves the right to suspend you and/or to exclude you from Company premises. During any period of suspension or exclusion you will be paid and be entitled to benefits as if you were working normally.
(c) No notice or payment in lieu of notice will be given where the Company is entitled to dismiss you on a summary basis. The Company reserves the right to suspend you with pay from duty in connection with the investigation of any misconduct or gross neglect by you.
(d) Your employment will automatically terminate without the need for prior notice upon your attaining the age of 65 if you are still in the Company's employment immediately before your 65th birthday.
(e) On the termination of your employment you must return all Company property including, but not limited to, any Company equipment, computer discs, books, keys, documents, correspondence, records, credit cards and passes which are in your possession or under your control and, if required to do so by the Company, sign a declaration that you have complied with these obligations.
(f) You shall not at any time after the termination of your employment represent yourself as being interested in or employed by or in any way connected with the Company or any Associated Company.
(g) You shall not for a period of [12] months after the termination of your employment either alone or jointly with or on behalf of any person directly or indirectly solicit or entice away or endeavour to solicit or entice away from the Company any person who at the date of termination of your employment or at any time in 12 months prior to that date is employed by the Company and with whom you have worked during the course of your employment.
13. COMPANY PROPERTY
All Company property issued to you and entrusted to your care, [including any Company vehicle,] must be maintained in good order (at the Company's expense) and must be returned by you as required. You may not remove from the Company's premises any Company property without the prior written authorization of your Manager.
14. INTELLECTUAL PROPERTY
[(a) It is foreseen that you may create make or discover Intellectual Property in the course of your duties and in this respect you have a special obligation to further the interests of the Company. (b) Subject to the relevant provisions of the Patents Act 1977 the Registered Designs Act 1949 and the Copyright Designs and Patents Act 1988, if at any time in the course of your employment you create make or discover or participate in the creation making or discovery of any Intellectual Property you must immediately disclose full details of |
such Intellectual Property to the Company and at the request and expense of the Company you must from time to time do all things and execute all deeds and documents which may be necessary or desirable for obtaining appropriate forms of protection for the Intellectual Property in such parts of the world as may be specified by the Company and for vesting all rights in the same in the Company or its nominee and for perfecting the power of attorney specified in paragraph 21(c) below. (c) You irrevocably appoint the Company to be your attorney in your name and on your behalf to sign execute or do any instrument or thing and generally to use your name for the purpose of giving the Company or its nominee the full benefit of the provisions of paragraph 21(b) above and in favour of any third party a certificate in writing signed by any director or the secretary of the Company that any instrument or act falls within the authority conferred by this paragraph shall be conclusive evidence that such is the case. (d) You waive all moral rights (as defined in the Copyright Designs and Patents Act 1988) in respect of any acts of the Company or any acts of third parties done with the Company's authority in relation to any Intellectual Property which is the property of the Company by virtue of paragraph 21(b) above. (e) If at any time during the period of your employment you shall create make or discover any Intellectual Property other than in the course of your employment you must immediately disclose full details of such Intellectual Property to the Company who shall have the right to acquire for itself or its nominee such Intellectual Property within 3 months after notification on fair and reasonable terms to be agreed or as settled by a single arbitrator. (f) All rights and obligations in respect of Intellectual Property created made or discovered by you during your employment shall continue in full force and effect after the termination of your employment and shall be binding upon your personal representatives. (g) The term "Intellectual Property" means letters patent, trade marks, service marks, designs, copyrights, utility models, design rights, applications for registration of any of the foregoing and the right to apply for them in any part of the world, inventions, drawings, computer programs, Confidential Information, know-how and rights of like nature arising or subsisting anywhere in the world in relation to all of the foregoing whether registered or unregistered.] 15. CONFIDENTIALITY (a) You acknowledge that the Company possess and will continue to possess confidential information which is of commercial value to the business of the Company and that your employment creates a relationship of confidence and trust between you and the Company in respect thereof. (b) You must not (other than in the proper performance of your duties or without the written consent of the Company or unless ordered by a court of competent jurisdiction) at any time whether during the continuance of your employment or after its termination disclose or communicate to any person or use for your own benefit or the benefit of any person |
other than the Company or any Associated Company any Confidential Information which may come to your knowledge in the course of your employment and you shall during the continuance of your employment use your best endeavours to prevent the unauthorised publication or misuse of any confidential information provided that such restrictions shall cease to apply to any confidential information which may enter the public domain other that through your default.
(c) All notes and memoranda of any trade secret or confidential information concerning the business of the Company and the Associated Companies or any of its or their suppliers, agents, distributors, customers or others which shall have been acquired received or made by you during the course of your employment shall be the property of the Company and shall be surrendered by you to someone duly authorised in the behalf at the termination of your employment or at the request of the Company at any time during the course of your employment.
(d) [The term "confidential information" includes but is not limited to the matters set out in the Appendix to these Terms and Conditions of Employment.]
16. OTHER ACTIVITIES
You may not without the Company's written consent engage in any other trade or business. The Company will not unreasonably refuse to consent to your undertaking such activity if it does not, in its reasonable judgment, detract from your capacity to fulfil your duties and is not prejudicial to the Company's interests. The Company reserves the right to withdraw an approval but will not do so unreasonably. This paragraph does not affect your right to participate in public affairs.
17. HEALTH AND SAFETY
You will comply with the Company's safety and security procedures and observe in full the requirements of all Health and Safety legislation.
18. CHANGES TO YOUR TERMS OF EMPLOYMENT
The Company reserves the right to make reasonable changes to any of your terms and conditions of employment. Any major changes will be notified to you in writing and minor ones by notice [on the Company notice board.]
19. OTHER MATTERS
(a) The Company shall be entitled at any time during your employment or on its termination to deduct from your salary or any other sums due to you from the Company any monies due from you to the Company in respect of any overpayment of any kind made to you or in respect of any debt or other sum due from you.
(b) References in these Terms and Conditions to "Associated Company" and "Associated Companies" are references to any company which is a holding company or a subsidiary of the company or a subsidiary of the Company' s holding company [as defined in s736 Companies Act 1985].
(c) There are no collective agreements applicable to your employment.
(d) The terms of your employment shall be governed by English Law.
I accept the terms set out above.
Signed /s/ Neil McManus ------------------------------- Neil McManus |
Exhibit 10.7
MID-WESTERN
AIRCRAFT SYSTEMS
HOLDINGS, INC.
EXECUTIVE
INCENTIVE PLAN
June 16, 2005
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.
EXECUTIVE INCENTIVE PLAN
Table of Contents
ARTICLE I -- PURPOSE...................................................... 1 Section 1.01. Purpose................................................ 1 ARTICLE II -- DEFINITIONS................................................. 1 Section 2.01. Affiliate.............................................. 1 Section 2.02. Board of Directors..................................... 2 Section 2.03. Change in Control...................................... 2 Section 2.04. Closing Date........................................... 2 Section 2.05. Committee.............................................. 2 Section 2.06. Company................................................ 2 Section 2.07. Employee............................................... 2 Section 2.08. Employer............................................... 2 Section 2.09. Liquidity Event........................................ 2 Section 2.10. Market Value........................................... 2 Section 2.11. Onex................................................... 3 Section 2.12. Participant............................................ 3 Section 2.13. Person................................................. 3 Section 2.14. Plan................................................... 3 Section 2.15. Plan Year.............................................. 3 Section 2.16. Return on Invested Capital............................. 4 Section 2.17. Separation from Service................................ 4 Section 2.18. Sole Discretion........................................ 4 Section 2.19. Termination For Cause.................................. 4 ARTICLE III -- ELIGIBILITY................................................ 5 Section 3.01. Eligibility............................................ 5 ARTICLE IV -- PURCHASES OF STOCK.......................................... 5 Section 4.01. Purchases of Stock..................................... 5 Section 4.02. Purchase Price......................................... 5 ARTICLE V -- GRANTS OF RESTRICTED SHARES.................................. 5 Section 5.01. Grants of Restricted Shares............................ 5 Section 5.02. Interest in Restricted Shares.......................... 6 |
Section 5.03. Dividends.............................................. 11 Section 5.04. No Rights of Stockholder............................... 11 ARTICLE VI -- CONDITIONS AND RESTRICTIONS................................. 11 Section 6.01. General Conditions and Restrictions.................... 11 Section 6.02. Restriction on Transfer of Shares...................... 12 Section 6.03. Legends................................................ 12 ARTICLE VII -- ADMINISTRATION............................................. 12 Section 7.01. Committee.............................................. 12 Section 7.02. Reliance on Certificates, etc.......................... 13 ARTICLE VIII -- AMENDMENT AND TERMINATION................................. 13 Section 8.01. Amendment and Termination.............................. 13 ARTICLE IX -- MISCELLANEOUS............................................... 13 Section 9.01. Effective Date......................................... 13 Section 9.02. Payments Net of Withholding............................ 14 Section 9.03. Binding on Successors.................................. 14 Section 9.04. State Law.............................................. 14 Section 9.05. Headings............................................... 14 Section 9.06. Notices................................................ 14 Section 9.07 Severability........................................... 14 Section 9.08. No Contract of Employment.............................. 14 Section 9.09. Government and Other Regulations....................... 14 Section 9.10. Nonexclusivity of the Plan............................. 15 |
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.
EXECUTIVE INCENTIVE PLAN
WITNESSETH: THAT;
WHEREAS, the Company desires to provide Participants with the opportunity to acquire an equity interest in the Company through the purchase and granting of shares of Class B Common Stock, par value $0.01 per share (the "Common Stock"), in the Company on the terms and conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has reviewed the terms and provisions hereof and found them satisfactory.
NOW, THEREFORE, the Company hereby adopts the Plan on the terms and conditions set forth herein, which Plan shall be known as the "Mid-Western Aircraft Systems Holdings, Inc. Executive Incentive Plan."
ARTICLE I -- PURPOSE
Section 1.01. Purpose. The purpose of the Plan is to provide Participants with the opportunity to acquire an equity interest in the Company through the sale and/or grant of shares of Common Stock ("Shares") by the Company to the Participants, subject to certain conditions and restrictions, as set forth in the Plan. The maximum aggregate number of Shares that may be purchased by or granted to the Participants under the Plan shall be 5,000,000 Shares.
ARTICLE II -- DEFINITIONS
For purposes of the Plan, the following terms shall have the following meanings, unless the context clearly indicates otherwise.
Section 2.01. Affiliate means, with respect to any Person, (a) any director or executive officer of such Person, (b) any spouse, parent, sibling, descendant or trust for the exclusive benefit of such Person or his or her spouse, parent, sibling or descendant (or the spouse, parent, sibling or descendant of any director or executive officer of such Person), and (c) any other Person that, directly or indirectly, controls or is controlled by or is under common control with such Person. For the purpose of this definition, (i) "control" (including with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, status as a general partner, or by contract or otherwise and (ii) Onex shall be deemed to control any Person controlled by Gerald W. Schwartz so long as Mr. Schwartz controls Onex Corporation.
Section 2.02. Board of Directors means the Board of Directors of the Company.
Section 2.03. Change in Control means a transaction pursuant to which a Person, or more than one Person acting as a group (in either case, however, excluding Onex), acquires (i) more than 50% of the total voting power of the stock of the Company (including, but not limited to, acquisition by merger, consolidation, recapitalization, reorganization or sale or transfer of the Company's equity interests) or (ii) all or substantially all of the assets of the Company or Mid-Western Aircraft Systems, Inc. and all or substantially all of the proceeds from such transaction are distributed to the stockholders of the Company.
Section 2.04. Closing Date means June 16, 2005, being the closing date of the sale of assets from The Boeing Company to Mid-Western Aircraft Systems, Inc., pursuant to that certain Asset Purchase Agreement by and between The Boeing Company and Mid-Western Aircraft Systems, Inc., dated as of February 22, 2005 (the "Asset Purchase Agreement").
Section 2.05. Committee means the Board of Directors or a committee appointed by, and serving at the pleasure of, the Board of Directors for purposes of administering the Plan, which committee shall operate under rules and procedures established by the Board of Directors from time to time for such purpose.
Section 2.06. Company means Mid-Western Aircraft Systems Holdings, Inc., a Delaware corporation, or its successor.
Section 2.07. Employee means a consultant or independent contractor of the Employer or any individual who is employed and compensated (by a payroll check issued directly from the Employer or Employer agent to the Employee or direct payroll deposit made to the Employee's account) by the Employer or Employer agent.
Section 2.08. Employer means the Company, Mid-Western Aircraft Systems, Inc. (or its successor), and any other entity that adopts this Plan with the consent and approval of the Committee.
Section 2.09. Liquidity Event means any of the following events:
A. A Change in Control; or
B. A sale of Shares or other equity securities of the Company by Onex
(whether by merger, consolidation, recapitalization, reorganization or
sale or transfer of the Company's equity interests) which does not
constitute a Change in Control, other than a sale of Shares (i) to a
Person included in the definition of "Onex" contained in this Plan, or
(ii) within 180 days following the Closing Date, to one or more of
Onex's institutional co-investors.
Section 2.10. Market Value means, with respect to a Share at the time of a Liquidity Event (or deemed Liquidity Event), an amount equal to A. divided by B. where:
(a) "A" equals (i) the unencumbered value of the Company, determined in accordance with recommendations from management of the Company or Mid-Western Aircraft Systems, Inc., which recommendations shall be based upon appropriate valuation factors, including earnings and multiples of earnings of comparable companies, less (ii) total outstanding debts, capitalized leases, and other obligations of the Company, whether secured or unsecured, and the preference amount of any outstanding preferred stock; and
(b) "B" equals the total number of outstanding shares of common stock of the Company plus the total number of shares of common stock of the Company issued or issuable upon exercise, exchange, or conversion of any outstanding options, warrants, or other rights or convertible securities exercisable or exchangeable for, or convertible into, common stock of the Company, less any shares or other equity interests in which the holder thereof has not acquired an interest on or before the date of the Liquidity Event (or deemed Liquidity Event), determined, if necessary, on an iterated basis (e.g., in the case of Restricted Shares, which shall be iterated to the nearest one-hundredth of a percent of Return on Invested Capital).
The determination of Market Value shall be made by the Board of Directors, in its Sole Discretion; provided, however, that (i) on an initial public offering, the Market Value shall equal the sale price in such initial public offering, net of underwriting commissions and discounts, and (ii) following an initial public offering, if the stock of the Company becomes listed or quoted on a nationally recognized market or exchange, from and after that date, Market Value shall mean the closing price per share of common stock of the Company.
Section 2.11. Onex means Onex Partners LP, Onex Corporation or any
Affiliate of Onex Partners or Onex Corporation, including, for purposes of this
Plan, (a) any Person which has granted to Onex Partners, Onex Corporation or any
of their respective Affiliates the right to vote or dispose of such Person's
Shares (other than pursuant to the Stockholders Agreement (as defined below) and
(b) any employee, officer or director of Onex Corporation.
Section 2.12. Participant means an Employee who has been designated by the Committee as eligible to participate in this Plan pursuant to Section 3.01. Where the context requires, the term "Participant" also shall include a former Participant.
Section 2.13. Person means an individual, trust, estate, partnership, limited liability company, association, corporation, or other entity.
Section 2.14. Plan means this Mid-Western Aircraft Systems Holdings, Inc. Executive Incentive Plan, as amended.
Section 2.15. Plan Year means the 12-month period commencing January 1 each year; provided, however, that the initial Plan Year shall be a short year commencing on the Closing Date and ending on December 31, 2005.
Section 2.16. Return on Invested Capital means, as of the date (the "Measurement Date") of a Liquidity Event (or deemed Liquidity Event, in accordance with Section 5.02.D.3), the result produced using the XIRR function of Microsoft Excel (or comparable software package that provides for a similar calculation or algorithm), for the following values and dates: (1) each amount actually received by Onex in respect of Shares (input as a positive number), on a cumulative basis, as a result of all Liquidity Events occurring on or prior to the applicable Measurement Date, as of the date of receipt by Onex; (2) the Applicable Percentage (as defined below) of each dividend (input as a positive number), on a cumulative basis, actually paid by the Company to Onex on or prior to the applicable Measurement Date, as of the date of receipt by Onex; and (3) the Applicable Percentage of the amount of each equity investment made by Onex in the Company (input as a negative number) as of the date of such investment. "Applicable Percentage" means the percentage determined under Section 5.02.B.
The determination of Return on Invested Capital shall be made by the Committee, in its Sole Discretion.
Section 2.17. Separation from Service means the termination of employment
(including termination of a consulting or independent contractor arrangement)
with the Employer. The term includes, but is not limited to, a termination which
arises from a Participant's death, disability, discharge (with or without
cause), or voluntary termination. In the case of an employee, the term shall not
include any temporary absences due to vacation, sickness, or other leaves of
absence granted to a Participant by the Employer. A Separation from Service
shall not be deemed to occur, however, upon a transfer involving any combination
of any entity comprising the Employer.
Section 2.18. Sole Discretion means the right and power to decide a matter, which right may be exercised arbitrarily at any time and from time to time.
Section 2.19. Termination For Cause means, with respect to a Participant, a Separation from Service involving (i) gross negligence or willful misconduct in the exercise of a Participant's responsibilities; (ii) breach of fiduciary duty with respect to the Employer; (iii) material breach of any provision of an employment or consulting contract; (iv) the commission of a felony crime or crime involving moral turpitude; (v) theft, fraud, misappropriation, or embezzlement (or suspicion of the same); (vi) willful violation of any federal, state, or local law (except traffic violations and other similar matters not involving moral turpitude); or (vii) refusal to obey any resolution or direction of the Participant's supervisor or the Board of Directors. The Committee shall determine, in its Sole Discretion, whether, for purposes of the Plan, a Participant has incurred a Separation from Service that is a Termination for Cause. The foregoing definition of Termination For Cause shall apply only to this Plan and no other plan, agreement or arrangement to which the Company or any of its subsidiaries is a party.
ARTICLE III -- ELIGIBILITY
Section 3.01. Eligibility. The Committee shall have the unrestricted right and power, which may be exercised in its Sole Discretion at any time and from time to time, to designate Employees who are eligible to participate in the Plan.
ARTICLE IV -- PURCHASES OF STOCK
Section 4.01. Purchases of Stock. Shares of common stock in the Company ("Shares") may be offered for purchase by Participants in accordance with the terms and provisions of the Plan at such time and in such manner as the Committee may determine, in its Sole Discretion. If the total number of Shares subscribed for by Participants in an offering exceeds the total number of Shares available for purchase by Participants under the Plan, the Committee shall make an allocation of the available Shares as it shall determine to be equitable (it being understood that neither the Board of Directors nor the Committee shall be obligated to sell or grant all of the Shares allocated by the Company for issuance under this Plan). Participation by a Participant in any offer of Shares under the Plan shall neither limit nor require participation by the Participant in any other offer of Shares under Plan, it being within the Sole Discretion of the Committee to determine the individuals eligible to participate in the Plan and in any offer of Shares under Plan. The Shares may be either previously issued Shares that have been reacquired by the Company or authorized but unissued Shares, as the Board of Directors shall from time to time determine. If any Shares offered for purchase by Participants under the Plan are not purchased, such Shares shall again become available to be offered for purchase by Participants pursuant to the Plan.
Section 4.02. Purchase Price. The price per Share offered for purchase by Participants under the Plan shall be approved by the Board of Directors in its Sole Discretion. A Participant purchasing Shares under the Plan shall pay the purchase price for such Shares in immediately available funds or such other consideration, as determined by the Committee in its Sole Discretion, delivered to the Company at the time and in the manner established by the Committee.
ARTICLE V -- GRANTS OF RESTRICTED SHARES
Section 5.01. Grants of Restricted Shares. The Committee shall have the right from time to time to grant Shares with such restrictions and contingencies described in this Plan (the "Restricted Shares") to Participants (it being understood that neither the Board of Directors nor the Committee shall be obligated to sell or grant all of the Shares allocated by the Company for issuance under this Plan). Participation by a Participant in any grant of Shares under the Plan shall neither limit nor require participation by the Participant in any other grant of Shares under Plan, it being within the Sole Discretion of the Committee to determine the individuals eligible to participate in the Plan and in a grant of Shares under Plan. The Shares may be either previously issued Shares that have been reacquired by the Company or authorized but unissued Shares, as the Board of Directors shall from time to time determine, in its Sole Discretion. If any Participant's interest in Shares granted under
the Plan terminates, any Shares in which the Participant has no further interest shall again become available to be granted under the Plan.
Section 5.02. Interest in Restricted Shares. A Participant granted Restricted Shares by the Company under the Plan shall have no interest in those Restricted Shares upon grant and shall acquire an interest in those Restricted Shares only as provided in this Section 5.02.
Upon a Liquidity Event, the interest in Shares acquired by a Participant at such time shall, subject to Section 5.02.D., be determined in accordance with the following formula:
X = (A x B x C x D) - E
Solve for X where:
A = The percentage determined under Paragraph A below
B = The percentage determined under Paragraph B below
C = The percentage determined under Paragraph C below
D = Total number of Restricted Shares granted to a Participant under this Plan
E = Total number of Restricted Shares, if any, for which a Participant has acquired an interest under the Plan
A. Return on Invested Capital at Liquidity. The percentage determined under this Paragraph A. upon a Liquidity Event shall be the applicable percentage that corresponds to the Return on Invested Capital realized by Onex upon such Liquidity Event, determined in accordance with the following table.
Return on Applicable Invested Capital Percentage ---------------- ---------- 0% or less 0.00% More than 0% but not more than 10% 25.00% 11% 28.13% 12% 31.25% 13% 34.38% 14% 37.50% 15% 40.63% 16% 43.75% 17% 46.88% 18% 75.00% 19% 78.13% 20% 81.25% 21% 84.38% 22% 87.50% 23% 90.63% 24% 93.75% 25% 96.88% |
26% or more 100.00% |
For purposes of the foregoing, if the Return on Invested Capital is greater than 10% but less than 26% and is not a whole percentage, the applicable percentage shall be interpolated to take into account the partial percentage of Return on Invested Capital; provided, however, that for purposes of interpolating the applicable percentage that corresponds to a Return on Invested Capital of greater than 17% but less than 18%, the applicable percentage corresponding to a Return on Capital of 18% shall be deemed to be 50.00%. For example, if the Return on Invested Capital is 17.5%, the applicable percentage is 48.44% (46.88% plus one-half the difference between 46.88% and 50.00%). All percentages shall be rounded to the nearest one-hundredth of a percent.
Notwithstanding the foregoing, the Committee may, in its Sole Discretion, increase the percentage determined under this Paragraph A. with respect to a Participant, if the Committee determines it is in the best interests of the Company to do so.
B. Portion of Interest Liquidated. The percentage determined under this Paragraph B. upon a Liquidity Event shall be the total percentage of Onex's total equity investment in the Company that has been liquidated, taking into account the current Liquidity Event and all prior Liquidity Events (if any).
Notwithstanding the foregoing, the Committee may, in its Sole Discretion, increase the percentage determined under this Paragraph B. with respect to a Participant, if the Committee determines it is in the best interests of the Company to do so.
C. Period of Service. The percentage determined under this Paragraph C. upon a Liquidity Event shall be as follows:
1. For each Participant actively performing services for the Employer on the date of the Liquidity Event, 100%; and
2. For each Participant not actively performing services for the Employer of the date of the Liquidity Event, the applicable percentage corresponding to the number of years of service after the Grant Date (as defined below) with which the Participant has been credited under the Plan, determined by the Committee in its Sole Discretion in accordance with the following table.
Years Applicable of Service Percentage ---------- ---------- Less than 1 0.00% 1 but less than 2 20.00% |
2 but less than 3 40.00% 3 but less than 4 60.00% 4 but less than 5 80.00% 5 or more 100.00% |
A Participant shall be credited with one year of service after the Closing Date for each 12-month period ending on an anniversary of the date Restricted Shares was granted to the Participant (the "Grant Date," except that if the date of grant is within 60 days of the Closing Date, the Grant Date shall be deemed to be the Closing Date) during which the Participant had continuously performed services for the Employer.
Notwithstanding the foregoing, the Committee may, in its Sole Discretion, credit a Participant with additional years of service after the applicable Grant Date or otherwise increase the percentage determined under this Paragraph C., if the Committee, in its Sole Discretion, determines it is in the best interests of the Company to do so.
D. Operating Rules. The following rules also shall apply.
1. Future Liquidity Events. Following the occurrence of a Liquidity Event, the provisions of this Section 5.02 may again be applied to such Participant upon a later Liquidity Event to determine whether the Participant may acquire an interest in any remaining Restricted Shares granted to the Participant under the Plan.
2. Change in Control. In the event of a Change in Control in which Onex retains a portion of its equity interest in the Company, if a Participant actively performing services for the Employer on the date of the Change in Control has been credited with fewer than 5 years of service after the applicable Grant Date at such time, the following rules shall apply for purposes of determining the value of "C" in the formula in Section 5.02 above for any future Liquidity Event (or deemed Liquidity Event).
a. For any Participant that either (i) is not offered continued employment with the Employer (or its successor) in a position having a title, duties, compensation, and geographic location that are, in all material respects, comparable to, or more favorable than, the position held by the Participant with the Employer at the time of the Change in Control (a "Comparable Position"), or (ii) continues to perform services for the Employer (or its successor) after the Change in Control but, within twelve months following the Change in Control, (a) is involuntarily terminated (other than a Termination For Cause) or (b) is assigned to a position that is
not a Comparable Position, the value of "C" in the formula in Section 5.02 shall be 100%.
b. For any Participant that is offered a Comparable Position with the Employer (or its successor) following the Change in Control and declines to accept such offer and does not continue performing services for the Employer (or its successor), the value of "C" in the formula in Section 5.02 shall be the applicable percentage corresponding to the number of years service after the applicable Grant Date with which the Participant was credited at the time of the Change in Control, determined under the following table.
Years Applicable of Service Percentage ---------- ---------- Less than 1 50.00% 1 but less than 2 60.00% 2 but less than 3 70.00% 3 but less than 4 80.00% 4 but less than 5 90.00% 5 or more 100.00% |
c. For any Participant who is offered a Comparable Position with the Employer (or its successor) following the Change in Control, accepts such position, and is not involuntarily terminated (other than a Termination For Cause) or assigned to a position that is not a Comparable Position within twelve months following the Change in Control, the value of "C" in the formula in Section 5.02 shall continue to be determined under Paragraph C. above.
3. Ten-Year Limit. On the 10th anniversary of the Closing Date, if a Liquidity Event that is a Change in Control has not occurred, the provisions of this Section 5.02 shall be applied as if a Liquidity Event occurred on such date, and a final determination shall be made at that time whether or to what extent the Participant will acquire an interest in any remaining Shares granted to the Participant under the Plan. For purposes of applying the provisions of this Section 5.02 in such event, (i) the percentage determined under Paragraph B. above shall be deemed to be 100%, and (ii) the "Return on Invested Capital" shall be calculated using the Market Value of Onex's Shares as of the 10th anniversary of the Closing Date as one of the amounts included under clause (1) of Section 2.16 and such 10th anniversary as the applicable date.
4. Termination of Interest in Restricted Shares.
a. Separation from Service. Except as provided in this Section 5.02, in the event a Participant incurs a Separation from Service, the Participant will no longer be credited with any additional years of service after the applicable Grant Date. To the extent such Participant would acquire an interest in additional Restricted Shares under the Plan only upon crediting of additional years of service after the applicable Grant Date, such interest shall terminate upon such Separation from Service and such additional Restricted Shares shall be forfeited to the Company without any payment therefor.
Notwithstanding any other provision of the Plan, if a Participant incurs a Separation from Service that is a Termination For Cause, the Participant shall not acquire any additional interest in Restricted Shares granted to the Participant under the Plan in connection with any subsequent Liquidity Event, and such Restricted Shares shall be forfeited to the Company without any payment therefor.
b. Final Determination of Interests. Upon disposition by Onex of all of its equity interest or remaining equity interest in the Company or upon the occurrence of a deemed Liquidity Event in accordance with Section 5.02.D.3. above, any Participant's interest in Restricted Shares that the Participant does not acquire at such time shall terminate and shall be forfeited to the Company without any payment therefor.
E. Example. The provisions of this Section 5.02 may be illustrated in part by the following example.
A Participant has been granted 100 Restricted Shares under the Plan. Common stock of Mid-Western Aircraft Systems Holdings, Inc. held by Onex representing 20% of Onex's equity investment is sold in a private sale. The Participant is actively performing services for the Employer on the date of the sale. Return on Invested Capital is calculated as of the date of the sale and is determined to be 18%. The percentage determined under Paragraph A. above is 75%, because that is the applicable percentage corresponding to the Return on Invested Capital. The percentage determined under Paragraph B. above is 20%, because that is the portion of Onex's equity investment in the Company that has been liquidated. The percentage determined under Paragraph C. above is 100%, because the Participant is actively performing services for the Employer on the date of the sale. Accordingly, the Participant acquires an interest in 15 of the 100 Restricted Shares ([.75 x .20 x 1.00 x 100] - 0 = 15).
One year later, another Liquidity Event occurs, and Onex disposes of an additional 40% of its equity interest in the Company (for a total of 60%). At the time of the Liquidity Event, the Participant is actively performing services for the Employer and has been credited with 5 years of service after the Closing Date. Return on Invested Capital is calculated as of the date of the Liquidity Event and is determined to be 22%. The percentage determined under Paragraph A. above is 87.50%, because that is the applicable percentage corresponding to the Return on Invested Capital. The percentage determined under Paragraph B. above is 60%, because that is the total amount of Onex's total equity investment in the Company that has been liquidated in all Liquidity Events (including the current Liquidity Event). The percentage determined under Paragraph C. above is 100%, because the Participant is actively performing services for the Employer on the date of the Liquidity Event. Accordingly, the Participant acquires an interest in 37.5 of the remaining 85 Restricted Shares ([.875 x .60 x 1.0 x 100] - 15 = 37.5).
Whether and to what extent the Participant will acquire an interest in the 47.5 Restricted Shares the Participant continues to hold will be determined at the time of any future Liquidity Event (or deemed Liquidity Event).
Section 5.03. Dividends. Dividends declared by the Board of Directors with respect to Shares shall, with respect to any Restricted Shares, be cumulated and paid to the Participant only at the time, and to the extent that, the Participant acquires an interest in any such Restricted Shares in accordance with this Article V.
Section 5.04. No Rights of Stockholder. Restricted Shares shall not be subject to transfer or assignment, and a Participant shall not have the rights of a stockholder in the Company with respect to any Restricted Shares unless and until the Participant acquires an interest in such Restricted Shares in accordance with this Article V.
ARTICLE VI -- CONDITIONS AND RESTRICTIONS
Section 6.01. General Conditions and Restrictions. The Committee shall have the unrestricted right and power, in its Sole Discretion, to determine the number of Shares to be offered or granted to a Participant under the Plan and to establish such other terms, conditions, restrictions, or procedures related to an offer or grant of Shares as the Committee deems necessary or appropriate, including, but not limited to, requiring, as a condition precedent to the sale and purchase of Shares under the Plan, that a Participant execute the Investor Stockholders Agreement, dated as of June 16, 2005, between the Company and its shareholders (the "Stockholders Agreement"), and such other agreements with the Company and/or other shareholders in the Company as the Committee deems necessary or appropriate, in such form and substance as may be satisfactory to the Committee. Shares of stock in the Company acquired under the Plan shall be subject to any and all terms, conditions, and restrictions set forth in the Company's certificate of incorporation and bylaws, as well as the Stockholders Agreement and any other agreement entered into with respect to such Shares.
Section 6.02. Restriction on Transfer of Shares. Shares acquired under this Plan shall be subject to such conditions and restrictions on transfer as are set forth in the Company's certificate of incorporation and bylaws, as well as the Stockholders Agreement and any other agreement entered into with respect to such Shares.
Section 6.03. Legends. All certificates representing Shares (including Restricted Shares) issued under this Plan shall bear (until, in the opinion of counsel, which opinion must be reasonably satisfactory in form and substance to counsel for the Company, it is no longer necessary or required) the following legends:
The securities represented by this document have not been registered under the Securities Act of 1933, as amended (the "Act"), and may not be sold, transferred, offered for sale, pledged, or hypothecated in the absence of an effective registration statement as to the securities under the Act or an opinion of counsel satisfactory to Mid-Western Aircraft Systems Holdings, Inc. and its counsel that such registration is not required.
The securities represented by this document are subject to the terms and conditions, including restrictions on transfer, of a Stockholders Agreement among Mid-Western Aircraft Systems Holdings, Inc. and its stockholders, as amended from time to time, a copy of which is on file at the principal office of Mid-Western Aircraft Systems Holdings, Inc.
In addition, certificates representing Restricted Shares shall bear (until, in the opinion of counsel, which opinion must be reasonably satisfactory in form and substance to counsel for the Company, it is no longer necessary or required) the following legend:
The securities represented by this document are subject to the terms, conditions, restrictions, and contingencies, including restrictions on transfer and risk of forfeiture, contained in the Mid-Western Aircraft Systems Holdings, Inc. Executive Incentive Plan, as amended from time to time, a copy of which is on file at the principal office of Mid-Western Aircraft Systems Holdings, Inc.
ARTICLE VII -- ADMINISTRATION
Section 7.01. Committee. The Committee shall have full power to administer this Plan in all of its details, which powers shall include, but are not limited to, the authority, in addition to all other powers provided by this Plan, to:
A. Determine in its Sole Discretion the eligibility of any individual to participate in the Plan;
B. Make discretionary interpretations regarding the terms of the Plan and make factual findings with respect to any issue arising under the Plan, including, but not limited to, the power to determine whether an individual is eligible to participate in the Plan or receive benefits under the Plan and whether an individual has incurred a Separation from Service, with its interpretation to be final and conclusive;
C. Make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of this Plan;
D. Appoint such agents, specialists, legal counsel, accountants, consultants, or other persons as the Committee deems advisable to assist in administering the Plan; and
E. Maintain all records of the Plan.
Section 7.02. Reliance on Certificates, etc. The members of the Committee, the Board of Directors, and the officers and employees of the Company shall be entitled to rely on all certificates and reports made by any duly appointed accountants and on all opinions given by any duly appointed legal counsel. Such legal counsel may be counsel for the Employer.
ARTICLE VIII -- AMENDMENT AND TERMINATION
Section 8.01. Amendment and Termination. The Board of Directors may, at any time, suspend or terminate the Plan and shall have the right to alter or amend the Plan or any part thereof at any time and from time to time as it may, in its Sole Discretion, deem proper and in the best interests of the Company; provided, however, that no such termination, suspension, alteration, or amendment shall, without the consent of the Participant, deprive a Participant of any interest in Shares previously acquired by the Participant under this Plan, subject to the terms and conditions of the Company's certificate of incorporation and bylaws, the Stockholders Agreement, and any other agreement entered into with respect to such Shares. Any termination, suspension, alteration, or amendment of the Plan may be made by the Board of Directors without action on the part of the stockholders of the Company. Upon termination of the Plan, the rights of each Participant in any Shares the Participant is not entitled to receive shall terminate.
ARTICLE IX -- MISCELLANEOUS
Section 9.01. Effective Date. The Plan shall be effective from and after the date of its adoption and approval by the Board of Directors and the stockholders of the Company, and Shares may be purchased immediately after such adoption.
Section 9.02. Payments Net of Withholding. Notwithstanding any other provision of the Plan, all transfers or payments shall be net of any amount sufficient to satisfy all federal, state, and local withholding tax requirements, and shall also be net of all amounts owed by Participant to the Employer.
Section 9.03. Binding on Successors. This Plan shall be binding upon all Participants, their respective heirs, and personal representatives, and upon the Employer, its successors, and assigns.
Section 9.04. State Law. This Plan and all agreements entered into under the Plan shall be governed, construed, administered, and regulated in all respects under the laws of the State of Delaware, without regard to the principles of conflicts of law, to the extent such laws are not preempted by the laws of the United States of America. Any action concerning the Plan or any agreement entered into under the Plan shall be maintained exclusively in the state or federal courts in Delaware.
Section 9.05. Headings. The headings used in this Plan are inserted for reference purposes only and shall not be deemed to limit or affect in any way the meaning or interpretation of any of the terms or provisions herein.
Section 9.06. Notices. Any notices or communications permitted or required to be given herein by any Participant, the Company, the Committee, the Employer, or any other person shall be deemed given either (i) when delivered, or (ii) three days after being placed in the United States mail in an envelope addressed to the last communicated address of the person to whom the notice is being given, with adequate postage thereon prepaid.
Section 9.07 Severability. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions thereof, and the Plan shall be construed and enforced as if such provisions had not been included.
Section 9.08. No Contract of Employment. Nothing contained herein shall be construed to constitute a contract of employment between any employee and any employer. Nothing herein contained shall be deemed to give any employee the right to be retained in the employ of an employer or to interfere with the right of the employer to discharge any employee at any time without regard to the effect such discharge might have on the employee as a Participant under this Plan.
Section 9.09. Government and Other Regulations. The obligation of the Company to sell and deliver Shares under the Plan shall be subject to all applicable laws, rules, and regulations and such approvals by any governmental agencies as may be required, including, but not limited to, the effectiveness of a registration statement under the Securities Act of 1933, as amended, as deemed necessary or appropriate by legal counsel for the Company.
Section 9.10. Nonexclusivity of the Plan. The adoption of the Plan by the Board of Directors shall not be construed as creating any limitations on the power of the Board of Directors to adopt such other incentive arrangements as it may deem desirable.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a duly authorized officer as of the date first set forth above.
MID-WESTERN AIRCRAFT SYSTEMS
HOLDINGS, INC.
By: /s/ Nigel Wright ------------------------------------ Its: Vice President |
Exhibit 10.8
MID-WESTERN
AIRCRAFT SYSTEMS
HOLDINGS, INC.
SUPPLEMENTAL
EXECUTIVE
RETIREMENT PLAN
June 16, 2005
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Table of Contents
ARTICLE I -- PURPOSE....................................................... 1 Section 1.01. Purpose.................................................. 1 ARTICLE II -- DEFINITIONS.................................................. 1 Section 2.01. Affiliate................................................ 1 Section 2.02. Beneficiary or Beneficiaries............................. 2 Section 2.03. Board of Directors....................................... 2 Section 2.04. Change in Control........................................ 2 Section 2.05. Closing Date............................................. 2 Section 2.06. Code..................................................... 2 Section 2.07. Committee................................................ 2 Section 2.08. Company.................................................. 2 Section 2.09. Employee................................................. 2 Section 2.10. Employer................................................. 2 Section 2.11. Liquidity Event.......................................... 3 Section 2.12. Market Value............................................. 3 Section 2.13. Onex..................................................... 3 Section 2.14. Participant.............................................. 4 Section 2.15. Person................................................... 4 Section 2.16. Plan..................................................... 4 Section 2.17. Plan Year................................................ 4 Section 2.18. Separation from Service.................................. 4 Section 2.19. Sole Discretion.......................................... 4 Section 2.20. Unit or Units............................................ 4 Section 2.21. Valuation Date........................................... 4 ARTICLE III -- ELIGIBILITY................................................. 5 Section 3.01. Eligibility.............................................. 5 ARTICLE IV -- BENEFITS..................................................... 5 Section 4.01. SERP Benefit............................................. 5 Section 4.02. SERP Swap - Phantom Stock................................ 5 Section 4.03. Phantom Stock Units...................................... 5 |
ARTICLE V -- PAYMENT OF BENEFITS........................................... 5 Section 5.01. SERP Annuity Benefit..................................... 5 Section 5.02. Phantom Stock Benefit.................................... 6 Section 5.03. Payments in the Event of Death........................... 7 ARTICLE VI -- SOURCE OF BENEFITS........................................... 7 Section 6.01. Source of Benefits....................................... 7 Section 6.02. Multiple Employers....................................... 7 ARTICLE VII -- ADMINISTRATION.............................................. 8 Section 7.01. Committee................................................ 8 Section 7.02. Reliance on Certificates, etc............................ 8 ARTICLE VIII -- AMENDMENT AND TERMINATION.................................. 9 Section 8.01. Amendment................................................ 9 Section 8.02. Termination.............................................. 9 ARTICLE IX -- RESTRICTIONS ON ALIENATION................................... 9 Section 9.01. Restrictions on Alienation............................... 9 ARTICLE X -- CLAIMS PROCEDURES............................................. 10 Section 10.01. Claims................................................... 10 Section 10.02. Claims Review............................................ 10 Section 10.03. Appeal of Claim Denial................................... 10 Section 10.04. Review on Appeal......................................... 11 Section 10.05. Litigation of Claim...................................... 11 ARTICLE XI -- MISCELLANEOUS................................................ 12 Section 11.01. Effective Date........................................... 12 Section 11.02. No Guarantee of Interests................................ 12 Section 11.03. Payments Net of Withholding and Other Amounts............ 12 Section 11.04. Binding on Successors.................................... 12 Section 11.05. Adoption by Other Employers.............................. 12 Section 11.06. Minors and Incompetents.................................. 12 Section 11.07. Erroneous Payments....................................... 12 Section 11.08. Headings................................................. 13 Section 11.09. Notices.................................................. 13 Section 11.10. Severability............................................. 13 Section 11.11. No Contract of Employment................................ 13 |
Section 11.12. Certain Limitations...................................... 13 Section 11.13. Governing Law............................................ 13 Section 11.14. Nonexclusivity of the Plan............................... 13 Section 11.15. Changes in Time or Form of Distribution.................. 13 Section 11.16. No Acceleration.......................................... 14 |
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WITNESSETH: THAT;
WHEREAS, the Company desires to provide specified unfunded deferred compensation benefits for a select group of management or highly compensated employees on the terms and conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has reviewed the terms and provisions hereof and found them satisfactory.
NOW, THEREFORE, the Company hereby adopts the Plan on the terms and conditions set forth herein, which Plan shall be known as the "Mid-Western Aircraft Systems Holdings, Inc. Supplemental Executive Retirement Plan."
ARTICLE I -- PURPOSE
Section 1.01. Purpose. The purpose of the Plan is to provide specified unfunded deferred compensation benefits for a select group of management or highly compensated employees who are eligible to participate in the Plan. It is the intention of the Company that this program shall be administered as an unfunded plan of deferred compensation for income tax purposes and as an unfunded employee benefit plan established and maintained primarily for a select group of management and highly compensated employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
ARTICLE II -- DEFINITIONS
For purposes of the Plan, the following terms shall have the following meanings, unless the context clearly indicates otherwise.
Section 2.01. Affiliate means, with respect to any Person, (a) any director or executive officer of such Person, (b) any spouse, parent, sibling, descendant or trust for the exclusive benefit of such Person or his or her spouse, parent, sibling or descendant (or the spouse, parent, sibling or descendant of any director or executive officer of such Person), and (c) any other Person that, directly or indirectly, controls or is controlled by or is under common control with such Person. For the purpose of this definition, (i) "control" (including with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, status as a general partner,
7/5/2005
or by contract or otherwise and (ii) Onex shall be deemed to control any Person controlled by Gerald W. Schwartz so long as Mr. Schwartz controls Onex Corporation.
Section 2.02. Beneficiary or Beneficiaries means the person, persons, entity, or entities entitled to receive any benefits under this Plan pursuant to the designation of the Participant (or in default of such designation) as provided in Section 5.03 hereof.
Section 2.03. Board of Directors means the Board of Directors of the Company.
Section 2.04. Change in Control means a transaction pursuant to which a Person, or more than one Person acting as a group (in either case, however, excluding Onex), acquires (i) more than 50% of the total voting power of the stock of the Company (including, but not limited to, acquisition by merger, consolidation, recapitalization, reorganization or sale or transfer of the Company's equity interests) or (ii) all or substantially all of the assets of the Company or Mid-Western Aircraft Systems, Inc. and all or substantially all of the proceeds from such transaction are distributed to the stockholders of the Company.
Section 2.05. Closing Date means June 16, 2005, being the closing date of the sale of assets from The Boeing Company to Mid-Western Aircraft Systems, Inc., pursuant to that certain Asset Purchase Agreement by and between The Boeing Company and Mid-Western Aircraft Systems, Inc., dated as of February 22, 2005 (the "Asset Purchase Agreement").
Section 2.06. Code means the Internal Revenue Code of 1986, as amended.
Section 2.07. Committee means the Board of Directors or a committee appointed by, and serving at the pleasure of, the Board of Directors for purposes of administering the Plan, which committee shall operate under rules and procedures established by the Board of Directors from time to time for such purpose.
Section 2.08. Company means Mid-Western Aircraft Systems Holdings, Inc., or its successor.
Section 2.09. Employee means any individual who is employed and compensated (by a payroll check issued directly from the Employer or Employer agent to the Employee or direct payroll deposit made to the Employee's account) by the Employer or Employer agent. In no event shall the term "Employee" include any individual classified or treated or otherwise characterized by the Employer as an independent contractor, consultant, leased employee, or temporary agency employee or otherwise not treated by the Employer as an "Employee" for purposes of this Plan. The foregoing determination shall apply for all purposes of this Plan and regardless of whether such individual is later classified by any governmental agency, court, tribunal, governing body or any other person as a common law employee of the Employer.
Section 2.10. Employer means the Company, Mid-Western Aircraft Systems, Inc. (or its successor), and any other entity that adopts this Plan with the consent and approval of the Committee.
Section 2.11. Liquidity Event means any of the following events:
A. A Change in Control; or
B. A sale of shares of Common Stock ("Shares") or other equity securities of the Company by Onex (whether by merger, consolidation, recapitalization, reorganization, or sale or transfer of the Company's equity interests) which does not constitute a Change in Control, other than a sale of Shares (i) to a Person included in the definition of "Onex" contained in this Plan, or (ii) within 180 days following the Closing Date, to one or more of Onex's institutional co-investors.
Section 2.12. Market Value means, with respect to a Share on the Valuation Date, an amount equal to A. divided by B. where:
(a) "A" equals (i) the unencumbered value of the Company, determined in accordance with recommendations from management of the Company or Mid-Western Aircraft Systems, Inc., which recommendations shall be based upon appropriate valuation factors, including earnings and multiples of earnings of comparable companies, less (ii) total outstanding debts, capitalized leases, and other obligations of the Company, whether secured or unsecured, and the preference amount of any outstanding preferred stock; and
(b) "B" equals the total number of outstanding shares of common stock of the Company plus the total number of shares of common stock of the Company issued or issuable upon exercise, exchange, or conversion of any outstanding options, warrants, or other rights or convertible securities exercisable or exchangeable for, or convertible into, common stock of the Company, less any shares or other equity interests in which the holder thereof has not acquired an interest on or before the Valuation Date, determined, if necessary, on an iterated basis (e.g., in the case of Restricted Shares granted under the Mid-Western Aircraft Systems Holdings, Inc. Executive Incentive Plan (the "Incentive Plan"), which shall be iterated to the nearest one-hundredth of a percent of Return on Invested Capital, as determined under the Incentive Plan).
The determination of Market Value shall be made by the Board of Directors, in its Sole Discretion; provided, however, that (i) on an initial public offering, the Market Value shall equal the sale price in such initial public offering, net of underwriting commissions and discounts, and (ii) following an initial public offering, if the stock of the Company becomes listed or quoted on a nationally recognized market or exchange, from and after that date, Market Value shall mean the closing price per share of common stock of the Company.
Section 2.13. Onex means Onex Partners LP, Onex Corporation, or any Affiliate of Onex Partners or Onex Corporation, including, for purposes of this Plan, (a) any Person
which has granted to Onex Partners, Onex Corporation, or any of their respective Affiliates the right to vote or dispose of such Person's Shares (other than pursuant to the Investor Stockholders Agreement, dated as of June 16, 2005, between the Company and its shareholders) and (b) any employee, officer or director of Onex Corporation.
Section 2.14. Participant means an Employee who is eligible to participate in this Plan pursuant to Section 3.01. Where the context requires, the term "Participant" also shall include a former Participant.
Section 2.15. Person means an individual, trust, estate, partnership, limited liability company, association, corporation, or other entity.
Section 2.16. Plan means this Mid-Western Aircraft Systems Holdings, Inc. Supplemental Executive Retirement Plan, as amended.
Section 2.17. Plan Year means the 12-month period commencing January 1 each year; provided, however, that the initial Plan Year shall be a short year commencing on the Closing Date and ending on December 31, 2005.
Section 2.18. Separation from Service means the termination of employment with the Employer. The term includes, but is not limited to, terminations of employment which arise from a Participant's death, disability, retirement, discharge (with or without cause), or voluntary termination. The term shall not include any temporary absences due to vacation, sickness, or other leaves of absence granted to a Participant by the Employer. A Separation from Service shall not be deemed to occur, however, upon a transfer involving any combination of any entity comprising the Employer or any entity affiliated with the Employer within the meaning of Sections 414(b) and (c) of the Internal Revenue Code, as amended.
Section 2.19. Sole Discretion means the right and power to decide a matter, which right may be exercised arbitrarily at any time and from time to time.
Section 2.20. Unit or Units means a book entry representing the right of the Participant to whom the Unit or Units are issued to receive certain benefits as provided by the Plan, which right shall consist at all times of the Company's unsecured and unfunded promise to pay the same. One or more classes of Units may be issued.
Section 2.21. Valuation Date means (i) in the event of a Liquidity Event, the date of the Liquidity Event, and (ii) with respect to any other event requiring valuation of the common stock of the Company, the last day of the most recently completed Plan Year prior to the date such event occurs or such other date or dates as the Committee may from time to time declare in its Sole Discretion. In the event the common stock of the Company becomes listed or quoted on a nationally recognized market or exchange, from and after that date the term Valuation Date shall mean each business day of the relevant market or exchange.
ARTICLE III -- ELIGIBILITY
Section 3.01. Eligibility. Each Employee with an accrued benefit under the Supplemental Executive Retirement Plan for Employees of The Boeing Company the liability for which is assumed by Mid-Western Aircraft Systems Holdings, Inc. or a subsidiary thereof pursuant to the Asset Purchase Agreement shall be eligible to participate in the Plan.
ARTICLE IV -- BENEFITS
Section 4.01. SERP Benefit. Except to the extent the Participant makes an election in accordance with Section 4.02 hereof, a Participant shall be entitled to receive, at the time and in the manner prescribed in Section 5.01 hereof, benefits under this Plan in the amount set forth in the Participant's individual schedule of benefits (the "SERP Benefit"), subject to certain reductions, as described on Exhibit A hereto.
Section 4.02. SERP Swap - Phantom Stock. Within 30 days after the Closing
Date, a Participant may elect in writing, in such amount, form, and manner as
the Committee may prescribe, to convert all or any portion of the present value
of the Participant's SERP Benefit, to the extent permitted by the Committee,
into Units of phantom stock having a value equivalent to the present value of
the benefit converted. The value of one Unit of phantom stock shall equal the
value on the Closing Date of one share of the Company's Class B Common Stock,
par value $0.01 per share (the "Class B Common Stock") (i.e., $10.00). To the
extent a Participant makes the election described in this Section 4.02, the
Participant shall be entitled to receive benefits under the Plan with respect to
the Units issued to the Participant at the time and in the manner set forth in
Section 5.02 hereof.
Section 4.03. Phantom Stock Units. Units of phantom stock granted to a Participant under Section 4.02 of the Plan shall be evidenced by an appropriate ledger entry on the books of the Company. If fractional Units are granted, the fractional amount shall be rounded off to the nearest one-hundredth. If, after the date on which any ledger entry is made, the number of outstanding shares of the Company's common stock shall be adjusted by stock dividends, stock splits, combination of shares, or other similar capital adjustment, the number of Units represented by the ledger entry shall be similarly adjusted. Further, in the event the corporate form of doing business is changed, converted, or merged into any other form of doing business, then the terms hereof shall apply mutatis mutandis. The Committee may, in its Sole Discretion, issue certificates evidencing the Units of phantom stock issued under the Plan, but in the event of a discrepancy between a certificate and any ledger entry on the books of the Company, the ledger entry shall control.
ARTICLE V -- PAYMENT OF BENEFITS
Section 5.01. SERP Annuity Benefit. To the extent a Participant is entitled to receive a SERP Benefit under Section 4.01 hereof, such benefit shall be payable, at the
election of the Participant, in the form of a single-life annuity, a joint and 50% survivor annuity, a life and 5-year certain annuity, or a life and 10-year certain annuity.
Payment shall commence as follows:
A. In the event a Participant incurs a Separation from Service prior to age 55, payment shall commence on the first day of the month coincident with or immediately following the date the Participant reaches age 55.
B. In the event a Participant incurs a Separation from Service on or after age 55, payment will commence on the first day of the month coincident with or immediately following the earlier of (i) the date the Participant incurs a Separation from Service, or (ii) the date the Participant reaches age 65.
A Participant shall elect, within 30 days after the Closing Date and on a form provided by the Committee, the form of payment to be provided hereunder. The failure to make a timely election by a Participant shall require payment to be made in the form of (i) in the case of a married Participant, a joint and 50% survivor annuity, and (ii) in the case of a single Participant, a single-life annuity.
Subject to the provisions of Section 11.15 hereof, a Participant may make a written request to the Committee to delay the commencement of payment and/or change an election as to the form of payment and may elect to commence payment at a later date and/or receive payment over a longer period than previously elected. The Committee may, in its Sole Discretion, grant such request(s).
Section 5.02. Phantom Stock Benefit. To the extent a Participant is
entitled to receive benefits under Section 4.02, such benefits shall be payable
in a lump sum payment as soon as administratively practicable after the later of
(i) a Liquidity Event, or (ii) the first to occur of (a) the date the
Participant incurs a Separation from Service, or (b) the date of a Change in
Control. On the date payment is made, the amount of benefits payable to a
Participant (if any) shall be determined by multiplying (i) the number of Units
of phantom stock with respect to which the Participant is entitled to receive
benefits by (ii) the sum of (a) Market Value of one share of Class B Common
Stock as of the Valuation Date, and (b) the amount of all dividends (other than
stock dividends) actually paid on one share of Class B Common Stock in the
Company during the period beginning on the Closing Date and ending on the date
payment is made under this Section 5.02. Payment under this Section 5.02 may be
made in cash or in shares of Class B Common Stock valued at Market Value, at the
election of the Committee in its Sole Discretion.
Upon payment of benefits, any certificates representing Units of phantom stock with respect to which payment is made shall automatically be cancelled without any action on the part of the Company or the Participant, and the surrender of the actual certificates shall not be required.
Section 5.03. Payments in the Event of Death. In the event a Participant dies before payment of benefits under Section 5.01 commences, a death benefit based on the Participant's accrued SERP benefit at the time of the Participant's death will be payable to the Participant's surviving spouse (if any), if the Participant has elected, or is deemed to have elected, to receive payment in the form of a joint and 50% survivor annuity. No death benefit will be payable to a nonspouse beneficiary in such event.
In the event a Participant dies after payment of benefits under Section 5.01 has commenced, benefits will be payable in accordance with the Participant's election, or deemed election, as to the form of payment.
In the event a Participant dies before receiving payment of all amounts payable to the Participant in accordance with Section 5.02, payment of the remaining amounts shall be made to the Participant's Beneficiary.
The Beneficiary of a Participant shall be the person(s) or entity(ies) designated by the Participant on a beneficiary designation form provided by the Committee. A Participant shall have the right to change the Participant's Beneficiary designation at any time; provided, however, that no change of a beneficiary shall be effective until received and accepted by the Committee. In the event a Participant dies without having a Beneficiary designation in force, or in the event no designated Beneficiary is alive or in being at the time of the Participant's death, the Participant's Beneficiary shall be deemed to be the Participant's surviving spouse or, if the Participant leaves no surviving spouse, the Participant's estate.
If the Committee has any doubt as to the proper person(s) or entity(ies) to receive payments hereunder, it shall have the right to withhold payment until the matter is finally adjudicated. Any payment made in good faith and in accordance with the provisions of the Plan and a Participant's Beneficiary designation form shall fully discharge the Employer from all further obligations with respect to such payment.
ARTICLE VI -- SOURCE OF BENEFITS
Section 6.01. Source of Benefits. Amounts payable hereunder shall be paid exclusively from the general assets of the Employer. The Employer's obligation under this Plan shall constitute a mere promise to pay benefits in the future, and no person entitled to payment hereunder shall have any claim, right, security interest, or other interest in any fund, trust, account, insurance contract, or other asset of Employer. The Employer is not obligated to invest in any specific assets or fund, but it may invest in any asset or assets it deems advisable in order to provide a means for the payment of any liabilities under this Plan. Each Participant shall be an unsecured general creditor of the Employer and shall have no interest whatsoever in any such assets or fund. The Employer's liability for the payment of benefits hereunder shall be evidenced only by this Plan.
Section 6.02. Multiple Employers. In the event a Participant is or has been employed by two or more Employers and is entitled to a benefit from more than one
Employer under this Plan, the liability for the payment of such Participant's benefits under this Plan shall be apportioned among the Employers based upon a determination made by the Committee in its Sole Discretion. A Participant may only secure payment of benefits from the Employer to whom the Committee has apportioned liability for the benefits.
ARTICLE VII -- ADMINISTRATION
Section 7.01. Committee. The Committee shall have full power to administer this Plan in all of its details, which powers shall include, but are not limited to, the authority, in addition to all other powers provided by this Plan, to:
A. Determine in its Sole Discretion the eligibility of any individual to participate in the Plan;
B. Make discretionary interpretations regarding the terms of the Plan and make factual findings with respect to any issue arising under the Plan, including, but not limited to, the power to determine whether an individual is eligible to participate in the Plan or receive benefits under the Plan and whether an individual has incurred a Separation from Service, with its interpretation to be final and conclusive;
C. Compute the amounts payable for any Participant or other person in accordance with the provisions of the Plan, determine the manner and time for making such payments in accordance with the provisions of the Plan, and determine and authorize the person or persons to whom such payments will be paid;
D. Receive and review claims for benefits and render decisions respecting such claims under the Plan;
E. Make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of this Plan;
F. Appoint such agents, specialists, legal counsel, accountants, consultants, or other persons as the Committee deems advisable to assist in administering the Plan; and
G. Maintain all records of the Plan.
Section 7.02. Reliance on Certificates, etc. The members of the Committee, the Board of Directors, and the officers and employees of the Company shall be entitled to rely on all certificates and reports made by any duly appointed accountants and on all opinions given by any duly appointed legal counsel. Such legal counsel may be counsel for the Employer.
ARTICLE VIII -- AMENDMENT AND TERMINATION
Section 8.01. Amendment. The Board of Directors reserves the right, at will, at any time and from time to time, to modify, alter, or amend this Plan (including without limitation a retroactive modification, alteration, or amendment), in whole or in part, and any such modification, alteration, or amendment shall be binding upon the Company, the Committee, each Participant, any adopting Employer, and all other persons; provided, however, that no amendment will reduce the amount of the benefit that a Participant is then entitled to receive (the same as if the Participant had incurred a Separation from Service as of such date) without the Participant's (or present interest Beneficiary's) written consent. Notwithstanding the foregoing, no consent shall be required and the Board of Directors shall have the right to modify, alter, or amend this Plan (including a retroactive modification, alteration or amendment), at will and at any time, if it determines, in its Sole Discretion, that such amendment is necessary to comply with applicable law, which shall include, but shall not be limited to, the right to retroactively apply any amendments necessary to keep this Plan an unfunded employee benefit plan described in Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA or to comply with Section 409A of the Code or any other applicable provision of the Code or ERISA or any judicial or administrative guidance interpreting such provisions.
Section 8.02. Termination. The Company has established this Plan with the bona fide intention and expectation that it will be continued indefinitely, but the Company will have no obligation whatsoever to maintain this Plan for any given length of time and may, at will and at any time, discontinue or terminate this Plan in whole or in part. In addition, an adopting Employer shall have the right to discontinue or terminate its participation in this Plan as to its Employees. Upon a complete or partial termination of the Plan, each affected Participant (and present interest Beneficiary) shall be given notice of the termination and shall be entitled to receive benefits in accordance with Article V.
ARTICLE IX -- RESTRICTIONS ON ALIENATION
Section 9.01. Restrictions on Alienation. Until the actual receipt of any benefit under this Plan by a Participant or Beneficiary, no right or benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, assignment, transfer, pledge, encumbrance, garnishment, execution, levy, or charge of any kind, whether voluntary or involuntary, including assignment or transfer to satisfy any liability for alimony or other payments for property settlement or support of a spouse or former spouse or other relative of a Participant or Beneficiary, whether upon divorce, legal separation, or otherwise. Any attempt to anticipate, alienate, sell, assign, transfer, pledge, encumber, garnish, execute upon, levy upon, or charge any right or benefit under the Plan shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of the person entitled to such benefit, and no right or benefit hereunder shall be considered an asset of such person in the event of his or her divorce, insolvency, or bankruptcy. The rights of a Participant or a Beneficiary hereunder shall not be subject in any
manner to attachment or other legal process for the debts of the Participant or such Beneficiary.
ARTICLE X -- CLAIMS PROCEDURES
Section 10.01. Claims. Benefit claim determinations arising under this Plan shall be made in accordance with the provisions of this Article and procedures established by the Committee. These claim procedures are designed to establish reasonable processes and safeguards to ensure that benefit claim determinations are made in accordance with the provisions thereof. All claims for or relating to benefits, whether made by a Participant or other person, shall be made in a writing addressed and delivered to the Committee at the Committee's main office, and such claim shall contain the claimant's name, mailing address, and telephone number, if any, and shall identify the claim in a manner reasonably calculated to make the claim understandable to the Committee.
Section 10.02. Claims Review. If a claim is wholly or partially denied, the Committee shall, within a reasonable period of time not to exceed 90 days, notify the claimant in writing of any adverse benefit determination, unless the Committee determines that special circumstances require an extension of time for processing the claim. If the Committee determines that an extension of time for processing the claim is necessary, written notice of the same shall be provided to the claimant prior to the expiration of the 90-day period and shall indicate the special circumstances which require the extension of time and the date by which the Committee expects to render the determination. The extension of time shall not exceed a 90-day period of time, beginning at the end of the initial 90-day period. The Committee's notice shall be written in a manner calculated to be understood by the claimant and shall set forth:
A. The specific reason or reasons for the denial;
B. Specific reference to pertinent Plan provisions on which the denial is based;
C. A description of any additional material or information necessary for the claimant to perfect the claim, together with an explanation of why such material or information is necessary; and
D. An explanation of the claim review procedure set forth in Sections 10.03 and 10.04 below (including a statement of the claimant's right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination).
Section 10.03. Appeal of Claim Denial. A claimant or the claimant's duly authorized representative shall have 60 days within which to appeal an adverse benefit determination to the Committee. During the pendency of the review, the following provisions shall apply:
A. The claimant shall have the opportunity to submit written comments, documents, records, and other information relating to the claim to the Committee; and
B. The claimant shall be provided, upon request and free of charge, reasonable access to and copies of, all documents, records, and other relevant information relating to the claim for benefits.
Section 10.04. Review on Appeal. A decision on review shall be rendered within a reasonable period of time, not to exceed 60 days after the claimant's request for review, unless the Committee determines that special circumstances require an extension of time for processing the appeal. If the Committee determines that an extension of time for processing the appeal is necessary, written notice of the extension shall be furnished to the claimant prior to the expiration of the 60-day period and shall indicate the special circumstances requiring the extension and the date by which the Committee expects to render the determination. The extension of time shall not exceed a 60-day period of time beginning at the end of the initial 60-day period. The Committee's decision on review shall be communicated in writing to the claimant and, if adverse, shall take into account all comments, documents, records, and other information submitted by the claimant (without regard to whether such information was submitted or considered in the initial benefit determination). The decision on review shall be written in a manner calculated to be understood by the claimant and shall set forth the following:
A. The specific reason or reasons for the adverse determination;
B. Specific reference to pertinent plan provisions on which the benefit determination is based; and
C. A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant's claim for benefits; and
D. A statement of the claimant's right to bring an action under ERISA
Section 502(a).
Section 10.05. Litigation of Claim. Prior to initiating legal action concerning a claim in any court, state or federal, against the Plan, any trust used in conjunction with the Plan, the Employer, the Company, or the Committee, a claimant must first exhaust the administrative remedies provided in this Article X. Failure to exhaust the administrative remedies provided for in this Article X shall be a bar to any civil action concerning a claim for benefits under the Plan.
ARTICLE XI -- MISCELLANEOUS
Section 11.01. Effective Date. The Plan shall be effective from and after the date of its adoption by the Board of Directors.
Section 11.02. No Guarantee of Interests. Neither the Employer, Committee, nor Board of Directors (nor any of their members) may guarantee the payment of any amounts which may be or becomes due to any person or entity under this Plan. The liability to make any payment under this Plan is limited to the then available assets of the Employer.
Section 11.03. Payments Net of Withholding and Other Amounts.
Notwithstanding any other provision of the Plan, all transfers or payments shall
be net of any amount sufficient to satisfy all federal, state, and local
withholding tax requirements, and shall also be net of all amounts owed by
Participant or by Participant's Beneficiary, to the Employer.
Section 11.04. Binding on Successors. This Plan shall be binding upon all Participants, their respective heirs, and personal representatives, and upon the Employer, its successors, and assigns.
Section 11.05. Adoption by Other Employers. Any employer, corporation or other entity with employees now in existence or hereafter formed or acquired, which is not already an Employer under this Plan, and which is otherwise legally eligible, may in the future, with the consent and approval of the Company adopt this Plan, and thereby, from and after the specified effective date, become an Employer under this Plan. However, the sole and absolute right to amend the Plan is reserved to the Company. It shall not be necessary for the adopting corporation or entity to sign or execute the original or the amended Plan documents. The administrative powers and control of the Company as provided in the Plan, including the sole right of amendment and of appointment and removal of the Committee, shall not be diminished by reason of the participation of any such adopting entity in this Plan.
Section 11.06. Minors and Incompetents. If any person to whom a benefit is payable under this Plan is legally incompetent, either by reason of age or by reason of mental or physical disability, the Committee is authorized to cause the payments becoming due to such person to be made to another for his or her benefit without responsibility of the Company, the Employer, the Committee or the Board of Directors to see to the application of such payments. Payments made pursuant to this authority shall constitute a complete discharge of all obligations hereunder.
Section 11.07. Erroneous Payments. If any person receives any amount of benefits that the Committee in its Sole Discretion later determines that such person was not entitled to receive under the terms of the Plan, such person shall be required to immediately make reimbursement to the Employer. In addition, the Committee shall have the right to offset any future claims for benefits under the Plan against amounts that person was not otherwise entitled to receive.
Section 11.08. Headings. The headings used in this Plan are inserted for reference purposes only and shall not be deemed to limit or affect in any way the meaning or interpretation of any of the terms or provisions herein.
Section 11.09. Notices. Any notices or communications permitted or required to be given herein by any Participant, the Company, the Committee, the Employer, or any other person shall be deemed given either (i) when delivered, or (ii) three days after being placed in the United States mail in an envelope addressed to the last communicated address of the person to whom the notice is being given, with adequate postage thereon prepaid.
Section 11.10. Severability. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions thereof, and the Plan shall be construed and enforced as if such provisions had not been included.
Section 11.11. No Contract of Employment. Nothing contained herein shall be construed to constitute a contract of employment between any employee and any employer. Nothing herein contained shall be deemed to give any employee the right to be retained in the employ of an employer or to interfere with the right of the employer to discharge any employee at any time without regard to the effect such discharge might have on the employee as a Participant under this Plan.
Section 11.12. Certain Limitations. In the event the Employer is subject to legal limitations on the payment of benefits, then benefit payments hereunder shall be reduced or eliminated, as the case may be, to comply with such legal limitations.
Section 11.13. Governing Law. It is the Company's intention that the Plan comply with and satisfy the applicable provisions of the Code and ERISA, including, but not limited to, Section 409A of the Code, and, consistent with such provisions of the laws of the United States of America and in all other respects, the Plan and all agreements entered into under the Plan shall be governed, construed, administered, and regulated in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law, to the extent such laws are not preempted by the laws of the United States of America. Any action concerning the Plan or any agreement entered into under the Plan shall be maintained exclusively in the state or federal courts in Delaware.
Section 11.14. Nonexclusivity of the Plan. The adoption of the Plan by the Board of Directors shall not be construed as creating any limitations on the power of the Board of Directors to adopt such other incentive arrangements as it may deem desirable.
Section 11.15. Changes in Time or Form of Distribution. Notwithstanding any other provision of the Plan, any subsequent election by a Participant under the Plan that has the effect of delaying the time or changing the form of any distribution or payment under the Plan shall satisfy the following requirements:
A. Such election shall not take effect until at least 12 months after the date on
which the election is made;
B. In the case of an election related to distribution or payment on account of Separation from Service or reaching a specified time, the first payment with respect to which the election is made must be deferred for a period of not less than 5 years from the date such payment otherwise would have been made; and
C. In the case of an election related to a distribution or payment on account of reaching a specified time, the election shall not be made less than 12 months before the date of the first scheduled payment with respect to such distribution.
Section 11.16. No Acceleration. Except as otherwise permitted by law, no interpretation, modification, alteration, amendment, or complete or partial termination of the Plan or any provision of the Plan shall cause or permit acceleration of the time or schedule of any payment under the Plan.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a duly authorized officer as of the date first set forth above.
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS,
INC.
By: /s/ Nigel Wright ------------------------------------ Its: Vice President |
EXHIBIT A
REDUCTIONS
1. If, at the time the Participant incurs a Separation from Service, the Participant is either (i) age 55 and credited with at least 10 years of service (as determined by the Committee, in its Sole Discretion), or (ii) age 62, the Participant's SERP benefit will be reduced by 1/4% for each month that the date of commencement of payment precedes the Participant's 65th birthday.
2. In all other cases, the Participant's SERP benefit will be reduced by 1/2% for each month that the date of commencement of payment precedes the Participant's 65th birthday.
3. Optional forms of payment shall be the actuarial equivalent of the benefit otherwise payable.
4. All calculations and other determinations under the Plan shall be based on the principles set forth in the Supplemental Executive Retirement Plan for Employees of The Boeing Company, as amended and restated on June 30, 2003.
Exhibit 10.9
MID-WESTERN
AIRCRAFT SYSTEMS
HOLDINGS, INC.
SHORT-TERM
INCENTIVE PLAN
June 16, 2005
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.
SHORT-TERM INCENTIVE PLAN
Table of Contents
ARTICLE I -- PURPOSE....................................................... 1 Section 1.01. Purpose................................................ 1 ARTICLE II -- DEFINITIONS.................................................. 1 Section 2.01. Beneficiary or Beneficiaries........................... 1 Section 2.02. Board of Directors..................................... 1 Section 2.03. Closing Date........................................... 1 Section 2.04. Code................................................... 1 Section 2.05. Committee.............................................. 2 Section 2.06. Company................................................ 2 Section 2.07. Employee............................................... 2 Section 2.08. Employer............................................... 2 Section 2.09. Participant............................................ 2 Section 2.10. Plan................................................... 2 Section 2.11. Plan Year.............................................. 2 Section 2.12. Separation from Service................................ 2 Section 2.13. Sole Discretion........................................ 2 ARTICLE III -- ELIGIBILITY................................................. 2 Section 3.01. Eligibility............................................ 2 ARTICLE IV -- BENEFITS..................................................... 3 Section 4.01. Benefits............................................... 3 Section 4.02. Grants of Shares....................................... 3 Section 4.03. Interest in Shares..................................... 3 Section 4.04. Conditions............................................. 4 Section 4.05. Restriction on Transfer of Shares...................... 4 Section 4.06. Dividends.............................................. 4 Section 4.07. No Rights of Stockholder............................... 4 ARTICLE V -- PAYMENT OF BENEFITS........................................... 4 Section 5.01. Payment of Cash Benefits............................... 4 Section 5.02. Payments in the Event of Death......................... 5 |
ARTICLE VI -- SOURCE OF BENEFITS........................................... 5 Section 6.01. Source of Benefits..................................... 5 Section 6.02. Multiple Employers..................................... 5 ARTICLE VII -- ADMINISTRATION.............................................. 6 Section 7.01. Committee.............................................. 6 Section 7.02. Reliance on Certificates, etc.......................... 6 ARTICLE VIII -- AMENDMENT AND TERMINATION.................................. 6 Section 8.01. Amendment.............................................. 6 Section 8.02. Termination............................................ 7 ARTICLE IX -- RESTRICTIONS ON ALIENATION................................... 7 Section 9.01. Restrictions on Alienation............................. 7 ARTICLE X -- MISCELLANEOUS................................................. 8 Section 10.01. Effective Date......................................... 8 Section 10.02. Payments Net of Withholding............................ 8 Section 10.03. Binding on Successors.................................. 8 Section 10.04. Adoption by Other Employers............................ 8 Section 10.05. Minors and Incompetents................................ 8 Section 10.06. Erroneous Payments..................................... 8 Section 10.07. Headings............................................... 8 Section 10.08. Notices................................................ 9 Section 10.09. Severability........................................... 9 Section 10.10. No Contract of Employment.............................. 9 Section 10.11. Certain Limitations.................................... 9 Section 10.12. State Law.............................................. 9 Section 10.13. Government and Other Regulations....................... 9 Section 10.14. Nonexclusivity of the Plan............................. 10 |
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.
SHORT-TERM INCENTIVE PLAN
WITNESSETH: THAT;
WHEREAS, the Company desires to provide specified incentive benefits to Participants in the form of cash or shares of the Company's Class B Common Stock, par value $0.01 per share ("Shares") or both, on the terms and conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has reviewed the terms and provisions hereof and found them satisfactory.
NOW, THEREFORE, the Company hereby adopts the Plan on the terms and conditions set forth herein, which Plan shall be known as the "Mid-Western Aircraft Systems Holdings, Inc. Short-Term Incentive Plan."
ARTICLE I -- PURPOSE
Section 1.01. Purpose. The purpose of the Plan is to provide specified incentive benefits, in the form of cash or Shares or both, to Employees who are eligible to participate in the Plan, subject to certain conditions and restrictions, as set forth in the Plan. The maximum aggregate number of Shares that may be granted to Participants under the Plan shall be _________ Shares.
ARTICLE II -- DEFINITIONS
For purposes of the Plan, the following terms shall have the following meanings, unless the context clearly indicates otherwise.
Section 2.01. Beneficiary or Beneficiaries means the person, persons, entity, or entities entitled to receive any benefits under this Plan pursuant to the designation of the Participant (or in default of such designation) as provided in Section 5.02 hereof.
Section 2.02. Board of Directors means the Board of Directors of the Company.
Section 2.03. Closing Date means June 16, 2005, being the closing date of the sale of assets from The Boeing Company to Mid-Western Aircraft Systems, Inc., pursuant to that certain Asset Purchase Agreement by and between The Boeing Company and Mid-Western Aircraft Systems, Inc., dated as of February 22, 2005.
Section 2.04. Code means the Internal Revenue Code of 1986, as amended.
-1- 6/27/2005
Section 2.05. Committee means the Board of Directors or a committee appointed by, and serving at the pleasure of, the Board of Directors for purposes of administering the Plan, which committee shall operate under rules and procedures established by the Board of Directors from time to time for such purpose.
Section 2.06. Company means Mid-Western Aircraft Systems Holdings, Inc., a Delaware corporation, or its successor.
Section 2.07. Employee means a consultant or independent contractor of the Employer or any individual who is employed and compensated (by a payroll check issued directly from the Employer or Employer agent to the Employee or direct payroll deposit made to the Employee's account) by the Employer or Employer agent.
Section 2.08. Employer means the Company, Mid-Western Aircraft Systems, Inc. (or its successor), and any other entity that adopts this Plan with the consent and approval of the Committee.
Section 2.09. Participant means an Employee who has been designated by the Committee as eligible to participate in this Plan pursuant to Section 3.01. Where the context requires, the term "Participant" also shall include a former Participant.
Section 2.10. Plan means this Mid-Western Aircraft Systems Holdings, Inc. Short-Term Incentive Plan, as amended.
Section 2.11. Plan Year means the 12-month period commencing January 1 each year; provided, however, that the initial Plan Year shall be a short year commencing on the Closing Date and ending on December 31, 2005.
Section 2.12. Separation from Service means the termination of employment
(including termination of a consulting or independent contractor arrangement)
with the Employer. The term includes, but is not limited to, a termination which
arises from a Participant's death, disability, discharge (with or without
cause), or voluntary termination. In the case of an employee, the term shall not
include any temporary absences due to vacation, sickness, or other leaves of
absence granted to a Participant by the Employer. A Separation from Service
shall not be deemed to occur, however, upon a transfer involving any combination
of any entity comprising the Employer.
Section 2.13. Sole Discretion means the right and power to decide a matter, which right may be exercised arbitrarily at any time and from time to time.
ARTICLE III -- ELIGIBILITY
Section 3.01. Eligibility. The Committee shall have the unrestricted right and power, which may be exercised in its Sole Discretion at any time and from time to time, to designate Employees who are eligible to participate in this Plan. The Committee also shall
have the right, in its Sole Discretion, to terminate an individual's future participation in this Plan.
ARTICLE IV -- BENEFITS
Section 4.01. Benefits. For each Plan Year, the Committee may, in its Sole Discretion, establish an individual schedule or schedules for each Participant setting forth certain performance targets or goals for such Participant and corresponding incentive benefits available to such Participant under the Plan, which schedule may be revised by the Committee at any time and from time to time, in its Sole Discretion. Benefits may be offered under the Plan in the form of cash, Shares, or both, in such amounts as the Committee may determine in its Sole Discretion. No Participant shall have the right or be offered the opportunity to elect the form or amount of the Participant's benefit under the Plan, it being within the Sole Discretion of the Committee to determine the form and amount of benefits to be offered under the Plan (if any).
Section 4.02. Grants of Shares. In the event Shares are granted to a Participant under the Plan (which Shares shall be subject to the restrictions contained in this Plan, "Restricted Shares"), the Committee shall have the unrestricted right and power, in its Sole Discretion, to establish such terms, conditions, restrictions, or procedures related to a grant of such Restricted Shares as the Committee deems necessary or appropriate, including, but not limited to, requiring, as a condition precedent to a grant of such Restricted Shares under the Plan, that a Participant execute the Investor Stockholders Agreement, dated as of June June 16, 2005, between the Company and its shareholders (the "Stockholders Agreement"), and such other agreements with the Company and/or other shareholders in the Company as the Committee deems necessary or appropriate, in such form and substance as may be satisfactory to the Committee in its Sole Discretion. Participation by a Participant in any grant of Restricted Shares under the Plan shall neither limit nor require participation by the Participant in any other benefits under Plan, it being within the Sole Discretion of the Committee to determine the individuals eligible to participate in the Plan and in a grant of benefits under the Plan. The Restricted Shares may be either previously issued Shares that have been reacquired by the Company or authorized but unissued Shares, as the Board of Directors shall from time to time determine. If any Participant's interest in Restricted Shares granted under the Plan terminates, any Shares in which the Participant has no further interest shall again become available to be granted under the Plan.
Section 4.03. Interest in Shares. A Participant granted Restricted Shares shall have no interest in those Shares upon grant and shall only acquire an interest in those Shares upon the Participant being credited with one year of service after the date such Shares are granted to the Participant. A Participant shall be credited with one year of service after the date Shares are granted to the Participant if the Participant is continuously performing services (or deemed to be continuously performing services) for the Employer for the 12-month period ending on the anniversary of the date the Restricted Shares are granted to the Participant. Restricted Shares granted to a Participant shall be deemed to have been granted as of the date designated and prescribed by the Committee. If a Separation from Service occurs during the
12-month period following the grant of a Restricted Share, the Participant interest in such Share shall automatically terminate and be of no further force or effect.
Notwithstanding the foregoing, the Committee may at any time, in its Sole Discretion, credit a Participant with a year of service after the date Restricted Shares are granted to the Participant or otherwise increase the number of, or any Participant's interest in, Restricted Shares granted under the Plan if the Committee determines, in its Sole Discretion, it is in the best interests of the Company to do so.
Section 4.04. Conditions. Shares acquired under the Plan shall be subject to any and all terms, conditions, and restrictions set forth in the Company's certificate of incorporation and bylaws, as well as the Stockholders Agreement and any other agreement entered into with respect to such Shares.
Section 4.05. Restriction on Transfer of Shares. Shares acquired under this Plan shall be subject to such conditions and restrictions on transfer as are set forth in the Company's certificate of incorporation and bylaws, as well as the Stockholders Agreement, and any other agreement entered into with respect to such Shares. Any voluntary or involuntary sale, assignment, transfer, or exchange of Shares acquired under the Plan that fails to satisfy or comply with any applicable condition or restriction on such sale, assignment, transfer, or exchange shall be void and of no effect and shall not bind or be recognized by the Company. No Shares may be transferred unless the transferee first executes, acknowledges, and delivers to the Company such instruments as the Company may deem necessary or advisable to effect the transfer.
Section 4.06. Dividends. Dividends declared by the Board of Directors with respect to Shares shall, with respect to any Restricted Shares, be cumulated and paid to the Participant only if and at the time, and to the extent that, the Participant acquires an interest in any such Restricted Shares in accordance with this Article IV.
Section 4.07. No Rights of Stockholder. Restricted Shares shall not be subject to transfer or assignment, and a Participant shall not have the rights of a stockholder in the Company with respect to Restricted Shares unless and until the Participant acquires an interest in such Restricted Shares in accordance with this Article IV.
ARTICLE V -- PAYMENT OF BENEFITS
Section 5.01. Payment of Cash Benefits. To the extent a Participant is entitled to receive a cash benefit under Section 4.01 hereof with respect to services performed during a Plan Year, such benefit shall be payable in a lump sum as soon as administratively practicable after the end of such Plan Year, but in no event later than 2 1/2 months after the end of such Plan Year, subject to any timely election to defer payment of all or part of such benefit in accordance with the terms and provisions of the Mid-Western Aircraft Systems Holdings, Inc. Deferred Compensation Plan.
Section 5.02. Payments in the Event of Death. In the event a Participant dies before receiving all benefits payable to Participant under the Plan, payment of the remaining amounts shall be made to the Participant's Beneficiary. The Beneficiary of a Participant shall be the person, persons, entity, or entities designated by the Participant on a beneficiary designation form provided by the Committee. A Participant shall have the right to change the Participant's Beneficiary designation at any time; provided, however, that no change of a beneficiary shall be effective until received and accepted by the Committee. In the event a Participant dies without having a Beneficiary designation in force, or in the event no designated Beneficiary is alive or in being at the time of the Participant's death, the Participant's Beneficiary shall be deemed to be the Participant's surviving spouse or, if the Participant leaves no surviving spouse, the Participant's estate.
If the Committee has any doubt as to the proper person(s) or entity(ies) to receive payments hereunder, it shall have the right to withhold payment until the matter is finally adjudicated. Any payment made in good faith and in accordance with the provisions of the Plan and a Participant's Beneficiary designation form shall fully discharge the Employer from all further obligations with respect to such payment.
ARTICLE VI -- SOURCE OF BENEFITS
Section 6.01. Source of Benefits. Amounts payable hereunder shall be paid exclusively from the general assets of the Employer. The Employer's obligation under this Plan shall constitute a mere promise to pay benefits in the future, and no person entitled to payment hereunder shall have any claim, right, security interest, or other interest in any fund, trust, account, insurance contract, or other asset of Employer. The Employer is not obligated to invest in any specific assets or fund, but it may invest in any asset or assets it deems advisable in order to provide a means for the payment of any liabilities under this Plan and may contribute amounts to a trust conforming to the requirements of Revenue Procedure 92-64, as amended. With respect to cash benefits (if any), each Participant shall be an unsecured general creditor of the Employer and shall have no interest whatsoever in any such assets or fund. The Employer's liability for the payment of benefits hereunder shall be evidenced only by this Plan.
Section 6.02. Multiple Employers. In the event a Participant is or has been employed by two or more Employers and is entitled to a benefit from more than one Employer under this Plan, the liability for the payment of such Participant's benefits under this Plan shall be apportioned among the Employers based upon a determination made by the Committee in its Sole Discretion. A Participant may only secure payment of benefits from the Employer to whom the Committee has apportioned liability for the benefits.
ARTICLE VII -- ADMINISTRATION
Section 7.01. Committee. The Committee shall have full power to administer this Plan in all of its details, which powers shall include, but are not limited to, the authority, in addition to all other powers provided by this Plan, to:
A. Determine in its Sole Discretion the eligibility of any individual to participate in the Plan;
B. Make discretionary interpretations regarding the terms of the Plan and make factual findings with respect to any issue arising under the Plan, including, but not limited to, the power to determine whether an individual is eligible to participate in the Plan or receive benefits under the Plan and whether an individual has incurred a Separation from Service, with its interpretation to be final and conclusive;
C. Compute the amounts payable for any Participant or other person in accordance with the provisions of the Plan, determine the manner and time for making such payments in accordance with the provisions of the Plan, and determine and authorize the person or persons to whom such payments will be paid;
D. Receive and review claims for benefits and render decisions respecting such claims under the Plan;
E. Make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of this Plan;
F. Appoint such agents, specialists, legal counsel, accountants, consultants, or other persons as the Committee deems advisable to assist in administering the Plan; and
G. Maintain all records of the Plan.
Section 7.02. Reliance on Certificates, etc. The members of the Committee, the Board of Directors, and the officers and employees of the Company shall be entitled to rely on all certificates and reports made by any duly appointed accountants and on all opinions given by any duly appointed legal counsel. Such legal counsel may be counsel for the Employer.
ARTICLE VIII -- AMENDMENT AND TERMINATION
Section 8.01. Amendment. The Board of Directors reserves the right, at will, at any time and from time to time, to modify, alter, or amend this Plan (including without limitation a retroactive modification, alteration, or amendment), in whole or in part, and any such
modification, alteration, or amendment shall be binding upon the Company, the Committee, each Participant, any adopting Employer, and all other persons; provided, however, that no amendment shall, without the Participant's (or present interest Beneficiary's) written consent, reduce the amount of the benefit that a Participant (or present interest Beneficiary) is then entitled to receive (the same as if the Participant had incurred a Separation from Service as of such date), including, but not limited to, any interest in Shares the Participant may have acquired under the Plan, subject to the terms and conditions of the Company's certificate of incorporation and bylaws, the Stockholders Agreement, and any other agreement entered into with respect to such Shares. Notwithstanding the foregoing, no consent shall be required and the Board of Directors shall have the right to modify, alter, or amend this Plan (including a retroactive modification, alteration or amendment), at will and at any time, if it determines, in its Sole Discretion, that such amendment is necessary to comply with applicable law, which shall include, but shall not be limited to, the right to retroactively apply any amendments necessary to comply with any provision of the Code or any judicial or administrative guidance interpreting such provision.
Section 8.02. Termination. The Company will have no obligation whatsoever to maintain this Plan for any given length of time and may, at will and at any time, discontinue or terminate this Plan in whole or in part. In addition, an adopting Employer shall have the right to discontinue or terminate its participation in this Plan as to its Employees. Upon a complete or partial termination of the Plan, each affected Participant (and present interest Beneficiary) shall be entitled to receive benefits in accordance with Article V. Further, upon termination of the Plan, the rights of each Participant to acquire an interest in the Shares granted to such Participant under the Plan shall terminate.
ARTICLE IX -- RESTRICTIONS ON ALIENATION
Section 9.01. Restrictions on Alienation. Until the actual receipt of any benefit under this Plan by a Participant or Beneficiary, no right or benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, assignment, transfer, pledge, encumbrance, garnishment, execution, levy, or charge of any kind, whether voluntary or involuntary, including assignment or transfer to satisfy any liability for alimony or other payments for property settlement or support of a spouse or former spouse or other relative of a Participant or Beneficiary, whether upon divorce, legal separation, or otherwise. Any attempt to anticipate, alienate, sell, assign, transfer, pledge, encumber, garnish, execute upon, levy upon, or charge any right or benefit under the Plan shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of the person entitled to such benefit, and no right or benefit hereunder shall be considered an asset of such person in the event of his or her divorce, insolvency, or bankruptcy. The rights of a Participant or a Beneficiary hereunder shall not be subject in any manner to attachment or other legal process for the debts of the Participant or such Beneficiary.
ARTICLE X -- MISCELLANEOUS
Section 10.01. Effective Date. The Plan shall be effective from and after the date of its adoption and approval by the Board of Directors and the stockholders of the Company.
Section 10.02. Payments Net of Withholding. Notwithstanding any other provision of the Plan, all transfers or payments shall be net of any amount sufficient to satisfy all federal, state, and local withholding tax requirements, and shall also be net of all amounts owed by Participant to the Employer.
Section 10.03. Binding on Successors. This Plan shall be binding upon all Participants, their respective heirs, and personal representatives, and upon the Employer, its successors, and assigns.
Section 10.04. Adoption by Other Employers. Any employer, corporation or other entity with employees now in existence or hereafter formed or acquired, which is not already an Employer under this Plan, and which is otherwise legally eligible, may in the future, with the consent and approval of the Company, adopt this Plan, and thereby, from and after the specified effective date, become an Employer under this Plan. However, the sole and absolute right to amend the Plan is reserved to the Company. It shall not be necessary for the adopting corporation or entity to sign or execute the original or the amended Plan documents. The administrative powers and control of the Company as provided in the Plan, including the sole right of amendment and of appointment and removal of the Committee, shall not be diminished by reason of the participation of any such adopting entity in this Plan.
Section 10.05. Minors and Incompetents. If any person to whom a benefit is payable under this Plan is legally incompetent, either by reason of age or by reason of mental or physical disability, the Committee is authorized to cause the payments becoming due to such person to be made to another for his or her benefit without responsibility of the Company, the Employer, the Committee or the Board of Directors to see to the application of such payments. Payments made pursuant to this authority shall constitute a complete discharge of all obligations hereunder.
Section 10.06. Erroneous Payments. If any person receives any amount of benefits that the Committee in its Sole Discretion later determines that such person was not entitled to receive under the terms of the Plan, such person shall be required to immediately make reimbursement to the Employer. In addition, the Committee shall have the right to offset any future claims for benefits under the Plan against amounts that person was not otherwise entitled to receive.
Section 10.07. Headings. The headings used in this Plan are inserted for reference purposes only and shall not be deemed to limit or affect in any way the meaning or interpretation of any of the terms or provisions herein.
Section 10.08. Notices. Any notices or communications permitted or required to be given herein by any Participant, the Company, the Committee, the Employer, or any other person shall be deemed given either (i) when delivered, or (ii) three days after being placed in the United States mail in an envelope addressed to the last communicated address of the person to whom the notice is being given, with adequate postage thereon prepaid.
Section 10.09. Severability. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions thereof, and the Plan shall be construed and enforced as if such provisions had not been included.
Section 10.10. No Contract of Employment. Nothing contained herein shall be construed to constitute a contract of employment between any employee and any employer. Nothing herein contained shall be deemed to give any employee the right to be retained in the employ of an employer or to interfere with the right of the employer to discharge any employee at any time without regard to the effect such discharge might have on the employee as a Participant under this Plan.
Section 10.11. Certain Limitations. In the event the Employer is subject to legal limitations on the payment of benefits, then benefit payments hereunder shall be reduced or eliminated, as the case may be, to comply with such legal limitations.
Section 10.12. State Law. This Plan and all agreements entered into under the Plan shall be governed, construed, administered, and regulated in all respects under the laws of the State of Delaware, without regard to the principles of conflicts of law, to the extent such laws are not preempted by the laws of the United States of America. Any action concerning the Plan or any agreement entered into under the Plan shall be maintained exclusively in the state or federal courts in Delaware.
Section 10.13. Government and Other Regulations. The obligation of the Company to grant or sell and deliver Shares under the Plan shall be subject to all applicable laws, rules, and regulations and such approvals by any governmental agencies as may be required, including, but not limited to, the effectiveness of a registration statement under the Securities Act of 1933, as amended, as deemed necessary or appropriate by legal counsel for the Company.
Section 10.14. Nonexclusivity of the Plan. The adoption of the Plan by the Board of Directors shall not be construed as creating any limitations on the power of the Board of Directors to adopt such other incentive arrangements as it may deem desirable.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a duly authorized officer as of the date first set forth above.
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS,
INC.
By: /s/ Nigel Wright ------------------------------------ Its: Vice President ----------------------------------- |
Exhibit 10.10
SPIRIT
AEROSYSTEMS
HOLDINGS, INC.
LONG-TERM
INCENTIVE PLAN
January 1, 2006
SPIRIT AEROSYSTEMS HOLDINGS, INC.
LONG-TERM INCENTIVE PLAN
Table of Contents
ARTICLE I -- PURPOSE.................................................... 1 Section 1.01. Purpose................................................ 1 ARTICLE II -- DEFINITIONS............................................... 1 Section 2.01. Board of Directors..................................... 1 Section 2.02. Code................................................... 1 Section 2.03. Committee.............................................. 1 Section 2.04. Company................................................ 1 Section 2.05. Employee............................................... 1 Section 2.06. Employer............................................... 2 Section 2.07. Participant............................................ 2 Section 2.08. Plan................................................... 2 Section 2.09. Separation from Service................................ 2 Section 2.10. Sole Discretion........................................ 2 ARTICLE III -- ELIGIBILITY.............................................. 2 Section 3.01. Eligibility............................................ 2 ARTICLE IV -- GRANTS OF SHARES.......................................... 2 Section 4.01. Grants................................................. 2 Section 4.02. Interest in Shares..................................... 3 Section 4.03. Conditions............................................. 3 Section 4.04. Restriction on Transfer of Shares...................... 3 Section 4.05. Dividends.............................................. 4 Section 4.06. No Rights of Stockholder............................... 4 ARTICLE V -- ADMINISTRATION............................................. 4 Section 5.01. Committee.............................................. 4 Section 5.02. Reliance on Certificates, etc.......................... 5 ARTICLE VI -- AMENDMENT AND TERMINATION................................. 5 Section 6.01. Amendment.............................................. 5 Section 6.02. Termination............................................ 5 |
ARTICLE VII -- MISCELLANEOUS............................................ 6 Section 7.01. Effective Date......................................... 6 Section 7.02. Payments Net of Withholding............................ 6 Section 7.03. Binding on Successors.................................. 6 Section 7.04. Adoption by Other Employers............................ 6 Section 7.05. Headings............................................... 6 Section 7.06. Notices................................................ 6 Section 7.07. Severability........................................... 6 Section 7.08. No Contract of Employment.............................. 6 Section 7.09. Certain Limitations.................................... 7 Section 7.10. State Law.............................................. 7 Section 7.11. Government and Other Regulations....................... 7 Section 7.12. Nonexclusivity of the Plan............................. 7 |
SPIRIT AEROSYSTEMS HOLDINGS, INC.
LONG-TERM INCENTIVE PLAN
WITNESSETH: THAT;
WHEREAS, the Company desires to provide specified incentive benefits to Participants in the form of shares of the Company's Class B Common Stock, par value $0.01 per share ("Shares") on the terms and conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has reviewed the terms and provisions hereof and found them satisfactory.
NOW, THEREFORE, the Company hereby adopts the Plan on the terms and conditions set forth herein, which Plan shall be known as the "Spirit AeroSystems Holdings, Inc. Long-Term Incentive Plan."
ARTICLE I -- PURPOSE
Section 1.01. Purpose. The purpose of the Plan is to provide specified benefits in the form of Shares to Employees who are eligible to participate in the Plan, subject to certain conditions and restrictions, as set forth in the Plan. The maximum aggregate number of Shares that may be granted to Participants under the Plan shall be _________ Shares.
ARTICLE II -- DEFINITIONS
For purposes of the Plan, the following terms shall have the following meanings, unless the context clearly indicates otherwise.
Section 2.01. Board of Directors means the Board of Directors of the Company.
Section 2.02. Code means the Internal Revenue Code of 1986, as amended.
Section 2.03. Committee means the Board of Directors or a committee appointed by, and serving at the pleasure of, the Board of Directors for purposes of administering the Plan, which committee shall operate under rules and procedures established by the Board of Directors from time to time for such purpose.
Section 2.04. Company means Spirit AeroSystems Holdings, Inc., a Delaware corporation, or its successor.
Section 2.05. Employee means a consultant or independent contractor of the Employer or any individual who is employed and compensated (by a payroll check issued
directly from the Employer or Employer agent to the Employee or direct payroll deposit made to the Employee's account) by the Employer or Employer agent.
Section 2.06. Employer means the Company, Spirit AeroSystems, Inc. (or its successor), and any other entity that adopts this Plan with the consent and approval of the Committee.
Section 2.07. Participant means an Employee who has been designated by the Committee as eligible to participate in this Plan pursuant to Section 3.01. Where the context requires, the term "Participant" also shall include a former Participant.
Section 2.08. Plan means this Spirit AeroSystems Holdings, Inc. Long-Term Incentive Plan, as amended.
Section 2.09. Separation from Service means the termination of employment
(including termination of a consulting or independent contractor arrangement)
with the Employer. The term includes, but is not limited to, a termination which
arises from a Participant's death, disability, discharge (with or without
cause), or voluntary termination. In the case of an employee, the term shall not
include any temporary absences due to vacation, sickness, or other leaves of
absence granted to a Participant by the Employer. A Separation from Service
shall not be deemed to occur, however, upon a transfer involving any combination
of any entity comprising the Employer.
Section 2.10. Sole Discretion means the right and power to decide a matter, which right may be exercised arbitrarily at any time and from time to time.
ARTICLE III -- ELIGIBILITY
Section 3.01. Eligibility. The Committee shall have the unrestricted right and power, which may be exercised in its Sole Discretion at any time and from time to time, to designate Employees who are eligible to participate in this Plan. The Committee also shall have the right, in its Sole Discretion, to terminate an individual's future participation in this Plan.
ARTICLE IV - GRANT OF SHARES
Section 4.01. Grants. The Committee may, in its Sole Discretion, establish an individual schedule or schedules for each Participant setting forth certain performance targets or goals for such Participant and a corresponding grant of Shares to a Participant under the Plan, which schedule may be revised by the Committee at any time and from time to time, in its Sole Discretion. In addition, the Committee may, in its Sole Discretion, make such other grants of Shares to Participants as it deems desirable from time to time.
In the event Shares are granted to a Participant under the Plan (which Shares shall be subject to the restrictions contained in this Plan, "Restricted Shares"), the Committee shall have the unrestricted right and power, in its Sole Discretion, to establish such terms, conditions, restrictions, or procedures related to a grant of such Restricted Shares as the Committee deems necessary or appropriate, including, but not limited to, requiring, as a condition precedent to a grant of such Restricted Shares under the Plan, that a Participant execute the Investor Stockholders Agreement, dated as of June 16, 2005, between the Company and its shareholders (the "Stockholders Agreement"), and such other agreements with the Company and/or other shareholders in the Company as the Committee deems necessary or appropriate, in such form and substance as may be satisfactory to the Committee in its Sole Discretion. Participation by a Participant in any grant of Restricted Shares under the Plan shall neither limit nor require participation by the Participant in any other benefits under the Plan, it being within the Sole Discretion of the Committee to determine the individuals eligible to participate in the Plan and in a grant of Shares under the Plan. The Restricted Shares may be either previously issued Shares that have been reacquired by the Company or authorized but unissued Shares, as the Board of Directors shall from time to time determine. If any Participant's interest in Restricted Shares granted under the Plan terminates, any Shares in which the Participant has no further interest shall again become available to be granted under the Plan.
Section 4.02. Interest in Shares. A Participant granted Restricted Shares shall have no interest in those Shares upon grant and shall only acquire an interest in those Shares upon the Participant being credited with one year of service after the date such Shares are granted to the Participant. A Participant shall be credited with one year of service after the date Shares are granted to the Participant if the Participant is continuously performing services (or deemed to be continuously performing services) for the Employer for the 12-month period ending on the anniversary of the date the Restricted Shares are granted to the Participant. Restricted Shares granted to a Participant shall be deemed to have been granted as of the date designated and prescribed by the Committee. If a Separation from Service occurs during the 12-month period following the grant of a Restricted Share, the Participant's interest in such Share shall automatically terminate and be of no further force or effect.
Notwithstanding the foregoing, the Committee may at any time, in its Sole Discretion, credit a Participant with a year of service after the date Restricted Shares are granted to the Participant or otherwise increase the number of, or any Participant's interest in, Restricted Shares granted under the Plan if the Committee determines, in its Sole Discretion, it is in the best interests of the Company to do so.
Section 4.03. Conditions. Shares acquired under the Plan shall be subject to any and all terms, conditions, and restrictions set forth in the Company's certificate of incorporation and bylaws, as well as the Stockholders Agreement and any other agreement entered into with respect to such Shares.
Section 4.04. Restriction on Transfer of Shares. Shares acquired under this Plan shall be subject to such conditions and restrictions on transfer as are set forth in the Company's certificate of incorporation and bylaws, as well as the Stockholders Agreement,
and any other agreement entered into with respect to such Shares. Any voluntary or involuntary sale, assignment, transfer, or exchange of Shares acquired under the Plan that fails to satisfy or comply with any applicable condition or restriction on such sale, assignment, transfer, or exchange shall be void and of no effect and shall not bind or be recognized by the Company. No Shares may be transferred unless the transferee first executes, acknowledges, and delivers to the Company such instruments as the Company may deem necessary or advisable to effect the transfer.
Section 4.05. Dividends. Dividends declared by the Board of Directors with respect to Shares shall, with respect to any Restricted Shares, be cumulated and paid to the Participant only if and at the time, and to the extent that, the Participant acquires an interest in any such Restricted Shares in accordance with this Article IV.
Section 4.06. No Rights of Stockholder. Restricted Shares shall not be subject to transfer or assignment, and a Participant shall not have the rights of a stockholder in the Company with respect to Restricted Shares unless and until the Participant acquires an interest in such Restricted Shares in accordance with this Article IV.
ARTICLE V -- ADMINISTRATION
Section 5.01. Committee. The Committee shall have full power to administer this Plan in all of its details, which powers shall include, but are not limited to, the authority, in addition to all other powers provided by this Plan, to:
A. Determine in its Sole Discretion the eligibility of any individual to participate in the Plan;
B. Make discretionary interpretations regarding the terms of the Plan and make factual findings with respect to any issue arising under the Plan, including, but not limited to, the power to determine whether an individual is eligible to participate in the Plan or receive benefits under the Plan and whether an individual has incurred a Separation from Service, with its interpretation to be final and conclusive;
C. Compute the amounts payable for any Participant or other person in accordance with the provisions of the Plan, determine the manner and time for making such payments in accordance with the provisions of the Plan, and determine and authorize the person or persons to whom such payments will be paid;
D. Receive and review claims for benefits and render decisions respecting such claims under the Plan;
E. Make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of this Plan;
F. Appoint such agents, specialists, legal counsel, accountants, consultants, or other persons as the Committee deems advisable to assist in administering the Plan; and
G. Maintain all records of the Plan.
Section 5.02. Reliance on Certificates, etc. The members of the Committee, the Board of Directors, and the officers and employees of the Company shall be entitled to rely on all certificates and reports made by any duly appointed accountants and on all opinions given by any duly appointed legal counsel. Such legal counsel may be counsel for the Employer.
ARTICLE VI -- AMENDMENT AND TERMINATION
Section 6.01. Amendment. The Board of Directors reserves the right, at will, at any time and from time to time, to modify, alter, or amend this Plan (including without limitation a retroactive modification, alteration, or amendment), in whole or in part, and any such modification, alteration, or amendment shall be binding upon the Company, the Committee, each Participant, any adopting Employer, and all other persons; provided, however, that no amendment shall, without the Participant's (or present interest Beneficiary's) written consent, reduce the amount of Shares that a Participant (or present interest Beneficiary) is then entitled to receive (the same as if the Participant had incurred a Separation from Service as of such date), including, but not limited to, any interest in Shares the Participant may have acquired under the Plan, subject to the terms and conditions of the Company's certificate of incorporation and bylaws, the Stockholders Agreement, and any other agreement entered into with respect to such Shares. Notwithstanding the foregoing, no consent shall be required and the Board of Directors shall have the right to modify, alter, or amend this Plan (including a retroactive modification, alteration or amendment), at will and at any time, if it determines, in its Sole Discretion, that such amendment is necessary to comply with applicable law, which shall include, but shall not be limited to, the right to retroactively apply any amendments necessary to comply with any provision of the Code or any judicial or administrative guidance interpreting such provision.
Section 6.02. Termination. The Company will have no obligation whatsoever to maintain this Plan for any given length of time and may, at will and at any time, discontinue or terminate this Plan in whole or in part. In addition, an adopting Employer shall have the right to discontinue or terminate its participation in this Plan as to its Employees. Further, upon termination of the Plan, the rights of each Participant to acquire an interest in the Shares granted to such Participant under the Plan shall terminate.
ARTICLE VII -- MISCELLANEOUS
Section 7.01. Effective Date. The Plan shall be effective from and after the date of its adoption and approval by the Board of Directors and the stockholders of the Company.
Section 7.02. Payments Net of Withholding. Notwithstanding any other provision of the Plan, all transfers shall be net of any amount sufficient to satisfy all federal, state, and local withholding tax requirements, and shall also be net of all amounts owed by Participant to the Employer.
Section 7.03. Binding on Successors. This Plan shall be binding upon all Participants, their respective heirs, and personal representatives, and upon the Employer, its successors, and assigns.
Section 7.04. Adoption by Other Employers. Any employer, corporation or other entity with employees now in existence or hereafter formed or acquired, which is not already an Employer under this Plan, and which is otherwise legally eligible, may in the future, with the consent and approval of the Company, adopt this Plan, and thereby, from and after the specified effective date, become an Employer under this Plan. However, the sole and absolute right to amend the Plan is reserved to the Company. It shall not be necessary for the adopting corporation or entity to sign or execute the original or the amended Plan documents. The administrative powers and control of the Company as provided in the Plan, including the sole right of amendment and of appointment and removal of the Committee, shall not be diminished by reason of the participation of any such adopting entity in this Plan.
Section 7.05. Headings. The headings used in this Plan are inserted for reference purposes only and shall not be deemed to limit or affect in any way the meaning or interpretation of any of the terms or provisions herein.
Section 7.06. Notices. Any notices or communications permitted or required to be given herein by any Participant, the Company, the Committee, the Employer, or any other person shall be deemed given either (i) when delivered, or (ii) three days after being placed in the United States mail in an envelope addressed to the last communicated address of the person to whom the notice is being given, with adequate postage thereon prepaid.
Section 7.07. Severability. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions thereof, and the Plan shall be construed and enforced as if such provisions had not been included.
Section 7.08. No Contract of Employment. Nothing contained herein shall be construed to constitute a contract of employment between any employee and any employer. Nothing herein contained shall be deemed to give any employee the right to be retained in the employ of an employer or to interfere with the right of the employer to discharge any
employee at any time without regard to the effect such discharge might have on the employee as a Participant under this Plan.
Section 7.09. Certain Limitations. In the event the Employer is subject to legal limitations on the payment of benefits, then benefit payments hereunder shall be reduced or eliminated, as the case may be, to comply with such legal limitations.
Section 7.10. State Law. This Plan and all agreements entered into under the Plan shall be governed, construed, administered, and regulated in all respects under the laws of the State of Delaware, without regard to the principles of conflicts of law, to the extent such laws are not preempted by the laws of the United States of America. Any action concerning the Plan or any agreement entered into under the Plan shall be maintained exclusively in the state or federal courts in Delaware.
Section 7.11. Government and Other Regulations. The obligation of the Company to grant or sell and deliver Shares under the Plan shall be subject to all applicable laws, rules, and regulations and such approvals by any governmental agencies as may be required, including, but not limited to, the effectiveness of a registration statement under the Securities Act of 1933, as amended, as deemed necessary or appropriate by legal counsel for the Company.
Section 7.12. Nonexclusivity of the Plan. The adoption of the Plan by the Board of Directors shall not be construed as creating any limitations on the power of the Board of Directors to adopt such other incentive arrangements as it may deem desirable.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a duly authorized officer as of the 7th day of February, 2006.
SPIRIT AEROSYSTEMS HOLDINGS, INC.
By: /s/ Nigel Wright ------------------------------------ Its: CFO |
Exhibit 10.11
SPIRIT
AEROSYSTEMS
HOLDINGS, INC.
CASH INCENTIVE
PLAN
January 1, 2006
SPIRIT AEROSYSTEMS HOLDINGS, INC.
CASH INCENTIVE PLAN
Table of Contents
ARTICLE I -- PURPOSE........................................................ 1 Section 1.01. Purpose................................................... 1 ARTICLE II -- DEFINITIONS................................................... 1 Section 2.01. Beneficiary or Beneficiaries.............................. 1 Section 2.02. Board of Directors........................................ 1 Section 2.03. Code...................................................... 1 Section 2.04. Committee................................................. 1 Section 2.05. Company................................................... 1 Section 2.06. Employee.................................................. 2 Section 2.07. Employer.................................................. 2 Section 2.08. Participant............................................... 2 Section 2.09. Plan...................................................... 2 Section 2.10. Plan Year................................................. 2 Section 2.11. Separation from Service................................... 2 Section 2.12. Sole Discretion........................................... 2 ARTICLE III -- ELIGIBILITY.................................................. 2 Section 3.01. Eligibility............................................... 2 ARTICLE IV -- BENEFITS...................................................... 2 Section 4.01. Cash Benefits............................................. 2 ARTICLE V -- PAYMENT OF BENEFITS............................................ 3 Section 5.01. Payment of Cash Benefits.................................. 3 Section 5.02. Payments in the Event of Death............................ 3 ARTICLE VI -- SOURCE OF BENEFITS............................................ 3 Section 6.01. Source of Benefits........................................ 3 Section 6.02. Multiple Employers........................................ 4 |
ARTICLE VII -- ADMINISTRATION............................................... 4 Section 7.01. Committee................................................. 4 Section 7.02. Reliance on Certificates, etc............................. 5 ARTICLE VIII -- AMENDMENT AND TERMINATION................................... 5 Section 8.01. Amendment................................................. 5 Section 8.02. Termination............................................... 5 ARTICLE IX -- RESTRICTIONS ON ALIENATION.................................... 5 Section 9.01. Restrictions on Alienation................................ 5 ARTICLE X -- MISCELLANEOUS.................................................. 6 Section 10.01. Effective Date............................................ 6 Section 10.02. Payments Net of Withholding............................... 6 Section 10.03. Binding on Successors..................................... 6 Section 10.04. Adoption by Other Employers............................... 6 Section 10.05. Minors and Incompetents................................... 6 Section 10.06. Erroneous Payments........................................ 6 Section 10.07. Headings.................................................. 7 Section 10.08. Notices................................................... 7 Section 10.09. Severability.............................................. 7 Section 10.10. No Contract of Employment................................. 7 Section 10.11. Certain Limitations....................................... 7 Section 10.12. State Law................................................. 7 Section 10.13. Nonexclusivity of the Plan................................ 7 |
SPIRIT AEROSYSTEMS HOLDINGS, INC.
CASH INCENTIVE PLAN
WITNESSETH: THAT;
WHEREAS, the Company desires to provide specified incentive benefits to Participants in the form of cash on the terms and conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has reviewed the terms and provisions hereof and found them satisfactory.
NOW, THEREFORE, the Company hereby adopts the Plan on the terms and conditions set forth herein, which Plan shall be known as the "Spirit AeroSystems Holdings, Inc. Cash Incentive Plan."
ARTICLE I -- PURPOSE
Section 1.01. Purpose. The purpose of the Plan is to provide specified incentive benefits, in the form of cash to Employees who are eligible to participate in the Plan, subject to certain conditions and restrictions, as set forth in the Plan.
ARTICLE II -- DEFINITIONS
For purposes of the Plan, the following terms shall have the following meanings, unless the context clearly indicates otherwise.
Section 2.01. Beneficiary or Beneficiaries means the person, persons, entity, or entities entitled to receive any benefits under this Plan pursuant to the designation of the Participant (or in default of such designation) as provided in Section 5.02 hereof.
Section 2.02. Board of Directors means the Board of Directors of the Company.
Section 2.03. Code means the Internal Revenue Code of 1986, as amended.
Section 2.04. Committee means the Board of Directors or a committee appointed by, and serving at the pleasure of, the Board of Directors for purposes of administering the Plan, which committee shall operate under rules and procedures established by the Board of Directors from time to time for such purpose.
Section 2.05. Company means Spirit AeroSystems Holdings, Inc., a Delaware corporation, or its successor.
Section 2.06. Employee means a consultant or independent contractor of the Employer or any individual who is employed and compensated (by a payroll check issued directly from the Employer or Employer agent to the Employee or direct payroll deposit made to the Employee's account) by the Employer or Employer agent.
Section 2.07. Employer means the Company, Spirit AeroSystems, Inc. (or its successor), and any other entity that adopts this Plan with the consent and approval of the Committee.
Section 2.08. Participant means an Employee who has been designated by the Committee as eligible to participate in this Plan pursuant to Section 3.01. Where the context requires, the term "Participant" also shall include a former Participant.
Section 2.09. Plan means this Spirit AeroSystems Holdings, Inc. Cash Incentive Plan, as amended.
Section 2.10. Plan Year means the 12-month period commencing January 1.
Section 2.11. Separation from Service means the termination of employment
(including termination of a consulting or independent contractor arrangement)
with the Employer. The term includes, but is not limited to, a termination which
arises from a Participant's death, disability, discharge (with or without
cause), or voluntary termination. In the case of an employee, the term shall not
include any temporary absences due to vacation, sickness, or other leaves of
absence granted to a Participant by the Employer. A Separation from Service
shall not be deemed to occur, however, upon a transfer involving any combination
of any entity comprising the Employer.
Section 2.12. Sole Discretion means the right and power to decide a matter, which right may be exercised arbitrarily at any time and from time to time.
ARTICLE III -- ELIGIBILITY
Section 3.01. Eligibility. The Committee shall have the unrestricted right and power, which may be exercised in its Sole Discretion at any time and from time to time, to designate Employees who are eligible to participate in this Plan. The Committee also shall have the right, in its Sole Discretion, to terminate an individual's future participation in this Plan.
ARTICLE IV -- BENEFITS
Section 4.01. Cash Benefits. For each Plan Year, the Committee may, in its Sole Discretion, establish an individual schedule or schedules for each Participant setting forth certain performance targets or goals for such Participant and corresponding cash incentive benefits available to such Participant under the Plan, which schedule may be revised by the
Committee at any time and from time to time, in its Sole Discretion. In addition, the Committee may, in its Sole Discretion, make such other cash incentive benefits available to Participants as it deems desirable from time to time.
ARTICLE V -- PAYMENT OF BENEFITS
Section 5.01. Payment of Cash Benefits. To the extent a Participant is entitled to receive a cash benefit under Section 4.01 hereof with respect to services performed during a Plan Year, such benefit shall be payable in a lump sum as soon as administratively practicable after the end of such Plan Year, but in no event later than 2 1/2 months after the end of such Plan Year, subject to any timely election to defer payment of all or part of such benefit in accordance with the terms and provisions of the Spirit AeroSystems Holdings, Inc. Deferred Compensation Plan.
Section 5.02. Payments in the Event of Death. In the event a Participant dies before receiving all benefits payable to Participant under the Plan, payment of the remaining amounts shall be made to the Participant's Beneficiary. The Beneficiary of a Participant shall be the person, persons, entity, or entities designated by the Participant on a beneficiary designation form provided by the Committee. A Participant shall have the right to change the Participant's Beneficiary designation at any time; provided, however, that no change of a beneficiary shall be effective until received and accepted by the Committee. In the event a Participant dies without having a Beneficiary designation in force, or in the event no designated Beneficiary is alive or in being at the time of the Participant's death, the Participant's Beneficiary shall be deemed to be the Participant's surviving spouse or, if the Participant leaves no surviving spouse, the Participant's estate.
If the Committee has any doubt as to the proper person(s) or entity(ies) to receive payments hereunder, it shall have the right to withhold payment until the matter is finally adjudicated. Any payment made in good faith and in accordance with the provisions of the Plan and a Participant's Beneficiary designation form shall fully discharge the Employer from all further obligations with respect to such payment.
ARTICLE VI -- SOURCE OF BENEFITS
Section 6.01. Source of Benefits. Amounts payable hereunder shall be paid exclusively from the general assets of the Employer. The Employer's obligation under this Plan shall constitute a mere promise to pay benefits in the future, and no person entitled to payment hereunder shall have any claim, right, security interest, or other interest in any fund, trust, account, insurance contract, or other asset of Employer. The Employer is not obligated to invest in any specific assets or fund, but it may invest in any asset or assets it deems advisable in order to provide a means for the payment of any liabilities under this Plan and may contribute amounts to a trust conforming to the requirements of Revenue Procedure 92-64, as amended. Each Participant shall be an unsecured general creditor of the Employer and
shall have no interest whatsoever in any such assets or fund. The Employer's liability for the payment of benefits hereunder shall be evidenced only by this Plan.
Section 6.02. Multiple Employers. In the event a Participant is or has been employed by two or more Employers and is entitled to a benefit from more than one Employer under this Plan, the liability for the payment of such Participant's benefits under this Plan shall be apportioned among the Employers based upon a determination made by the Committee in its Sole Discretion. A Participant may only secure payment of benefits from the Employer to whom the Committee has apportioned liability for the benefits.
ARTICLE VII -- ADMINISTRATION
Section 7.01. Committee. The Committee shall have full power to administer this Plan in all of its details, which powers shall include, but are not limited to, the authority, in addition to all other powers provided by this Plan, to:
A. Determine in its Sole Discretion the eligibility of any individual to participate in the Plan;
B. Make discretionary interpretations regarding the terms of the Plan and make factual findings with respect to any issue arising under the Plan, including, but not limited to, the power to determine whether an individual is eligible to participate in the Plan or receive benefits under the Plan and whether an individual has incurred a Separation from Service, with its interpretation to be final and conclusive;
C. Compute the amounts payable for any Participant or other person in accordance with the provisions of the Plan, determine the manner and time for making such payments in accordance with the provisions of the Plan, and determine and authorize the person or persons to whom such payments will be paid;
D. Receive and review claims for benefits and render decisions respecting such claims under the Plan;
E. Make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of this Plan;
F. Appoint such agents, specialists, legal counsel, accountants, consultants, or other persons as the Committee deems advisable to assist in administering the Plan; and
G. Maintain all records of the Plan.
Section 7.02. Reliance on Certificates, etc. The members of the Committee, the Board of Directors, and the officers and employees of the Company shall be entitled to rely on all certificates and reports made by any duly appointed accountants and on all opinions given by any duly appointed legal counsel. Such legal counsel may be counsel for the Employer.
ARTICLE VIII -- AMENDMENT AND TERMINATION
Section 8.01. Amendment. The Board of Directors reserves the right, at will, at any time and from time to time, to modify, alter, or amend this Plan (including without limitation a retroactive modification, alteration, or amendment), in whole or in part, and any such modification, alteration, or amendment shall be binding upon the Company, the Committee, each Participant, any adopting Employer, and all other persons; provided, however, that no amendment shall, without the Participant's (or present interest Beneficiary's) written consent, reduce the amount of the cash benefit that a Participant (or present interest Beneficiary) is then entitled to receive (the same as if the Participant had incurred a Separation from Service as of such date). Notwithstanding the foregoing, no consent shall be required and the Board of Directors shall have the right to modify, alter, or amend this Plan (including a retroactive modification, alteration or amendment), at will and at any time, if it determines, in its Sole Discretion, that such amendment is necessary to comply with applicable law, which shall include, but shall not be limited to, the right to retroactively apply any amendments necessary to comply with any provision of the Code or any judicial or administrative guidance interpreting such provision.
Section 8.02. Termination. The Company will have no obligation whatsoever to maintain this Plan for any given length of time and may, at will and at any time, discontinue or terminate this Plan in whole or in part. In addition, an adopting Employer shall have the right to discontinue or terminate its participation in this Plan as to its Employees. Upon a complete or partial termination of the Plan, each affected Participant (and present interest Beneficiary) shall be entitled to receive benefits in accordance with Article V.
ARTICLE IX -- RESTRICTIONS ON ALIENATION
Section 9.01. Restrictions on Alienation. Until the actual receipt of any benefit under this Plan by a Participant or Beneficiary, no right or benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, assignment, transfer, pledge, encumbrance, garnishment, execution, levy, or charge of any kind, whether voluntary or involuntary, including assignment or transfer to satisfy any liability for alimony or other payments for property settlement or support of a spouse or former spouse or other relative of a Participant or Beneficiary, whether upon divorce, legal separation, or otherwise. Any attempt to anticipate, alienate, sell, assign, transfer, pledge, encumber, garnish, execute upon, levy upon, or charge any right or benefit under the Plan shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of the person entitled to such benefit, and no right or benefit hereunder
shall be considered an asset of such person in the event of his or her divorce, insolvency, or bankruptcy. The rights of a Participant or a Beneficiary hereunder shall not be subject in any manner to attachment or other legal process for the debts of the Participant or such Beneficiary.
ARTICLE X -- MISCELLANEOUS
Section 10.01. Effective Date. The Plan shall be effective from and after the date of its adoption and approval by the Board of Directors and the stockholders of the Company.
Section 10.02. Payments Net of Withholding. Notwithstanding any other provision of the Plan, all payments shall be net of any amount sufficient to satisfy all federal, state, and local withholding tax requirements, and shall also be net of all amounts owed by Participant to the Employer.
Section 10.03. Binding on Successors. This Plan shall be binding upon all Participants, their respective heirs, and personal representatives, and upon the Employer, its successors, and assigns.
Section 10.04. Adoption by Other Employers. Any employer, corporation or other entity with employees now in existence or hereafter formed or acquired, which is not already an Employer under this Plan, and which is otherwise legally eligible, may in the future, with the consent and approval of the Company, adopt this Plan, and thereby, from and after the specified effective date, become an Employer under this Plan. However, the sole and absolute right to amend the Plan is reserved to the Company. It shall not be necessary for the adopting corporation or entity to sign or execute the original or the amended Plan documents. The administrative powers and control of the Company as provided in the Plan, including the sole right of amendment and of appointment and removal of the Committee, shall not be diminished by reason of the participation of any such adopting entity in this Plan.
Section 10.05. Minors and Incompetents. If any person to whom a benefit is payable under this Plan is legally incompetent, either by reason of age or by reason of mental or physical disability, the Committee is authorized to cause the payments becoming due to such person to be made to another for his or her benefit without responsibility of the Company, the Employer, the Committee or the Board of Directors to see to the application of such payments. Payments made pursuant to this authority shall constitute a complete discharge of all obligations hereunder.
Section 10.06. Erroneous Payments. If any person receives any amount of benefits that the Committee in its Sole Discretion later determines that such person was not entitled to receive under the terms of the Plan, such person shall be required to immediately make reimbursement to the Employer. In addition, the Committee shall have the right to offset any future claims for benefits under the Plan against amounts that person was not otherwise entitled to receive.
Section 10.07. Headings. The headings used in this Plan are inserted for reference purposes only and shall not be deemed to limit or affect in any way the meaning or interpretation of any of the terms or provisions herein.
Section 10.08. Notices. Any notices or communications permitted or required to be given herein by any Participant, the Company, the Committee, the Employer, or any other person shall be deemed given either (i) when delivered, or (ii) three days after being placed in the United States mail in an envelope addressed to the last communicated address of the person to whom the notice is being given, with adequate postage thereon prepaid.
Section 10.09. Severability. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions thereof, and the Plan shall be construed and enforced as if such provisions had not been included.
Section 10.10. No Contract of Employment. Nothing contained herein shall be construed to constitute a contract of employment between any employee and any employer. Nothing herein contained shall be deemed to give any employee the right to be retained in the employ of an employer or to interfere with the right of the employer to discharge any employee at any time without regard to the effect such discharge might have on the employee as a Participant under this Plan.
Section 10.11. Certain Limitations. In the event the Employer is subject to legal limitations on the payment of benefits, then benefit payments hereunder shall be reduced or eliminated, as the case may be, to comply with such legal limitations.
Section 10.12. State Law. This Plan and all agreements entered into under the Plan shall be governed, construed, administered, and regulated in all respects under the laws of the State of Delaware, without regard to the principles of conflicts of law, to the extent such laws are not preempted by the laws of the United States of America. Any action concerning the Plan or any agreement entered into under the Plan shall be maintained exclusively in the state or federal courts in Delaware.
Section 10.13. Nonexclusivity of the Plan. The adoption of the Plan by the Board of Directors shall not be construed as creating any limitations on the power of the Board of Directors to adopt such other incentive arrangements as it may deem desirable.
[SIGNATURE ON NEXT PAGE.]
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a duly authorized officer as of this 7th day of February, 2006.
SPIRIT AEROSYSTEMS HOLDINGS, INC.
By: /s/ Nigel Wright ------------------------------------ Its: CFO |
EXHIBIT 10.13
SPIRIT
AEROSYSTEMS
HOLDINGS, INC.
DIRECTOR
STOCK PLAN
________ __, 2005
SPIRIT AEROSYSTEMS HOLDINGS, INC.
EXECUTIVE INCENTIVE PLAN
Table of Contents
ARTICLE I -- PURPOSE..................................................... 1 Section 1.01. Purpose................................................. 1 ARTICLE II -- DEFINITIONS................................................ 1 Section 2.01. Affiliate............................................... 1 Section 2.02. Applicable Percentage................................... 2 Section 2.03. Board of Directors...................................... 2 Section 2.04. Call Price.............................................. 2 Section 2.05. Closing Date............................................ 2 Section 2.06. Committee............................................... 2 Section 2.07. Company................................................. 2 Section 2.08. Companies............................................... 2 Section 2.09. Director................................................ 2 Section 2.10. Liquidity Event......................................... 2 Section 2.11. Market Value............................................ 3 Section 2.12. Measurement Date........................................ 3 Section 2.13. Onex.................................................... 3 Section 2.14. Participant............................................. 4 Section 2.15. Person.................................................. 4 Section 2.16. Plan.................................................... 4 Section 2.17. Positive Return Condition............................... 4 Section 2.18. Public Offering......................................... 4 Section 2.19. QPO Positive Return Condition........................... 4 Section 2.20. Qualified Public Offering............................... 4 Section 2.21. Spirit.................................................. 4 Section 2.22. Stockholders Agreement.................................. 4 Section 2.23. Sole Discretion......................................... 5 ARTICLE III -- ELIGIBILITY............................................... 5 Section 3.01. Eligibility............................................. 5 ARTICLE IV -- GRANTS OF SHARES........................................... 5 Section 4.01. Grants of Shares........................................ 5 Section 4.02. One Year Service Requirement............................ 5 Section 4.03. Interest in Restricted Shares........................... 5 |
Section 4.04. Dividends............................................... 6 Section 4.05. No Rights of Stockholder................................ 7 Section 4.06. Call Rights on Former Directors' Shares................. 7 ARTICLE V -- CONDITIONS AND RESTRICTIONS................................. 9 Section 5.01. General Conditions and Restrictions..................... 9 Section 5.02. Restriction on Transfer of Shares....................... 9 Section 5.03. Legends................................................. 9 ARTICLE VI -- ADMINISTRATION............................................. 10 Section 6.01. Committee............................................... 10 Section 6.02. Reliance on Certificates, etc........................... 10 ARTICLE VII -- AMENDMENT AND TERMINATION................................. 10 Section 7.01. Amendment and Termination............................... 10 ARTICLE VIII -- MISCELLANEOUS............................................ 11 Section 8.01. Effective Date.......................................... 11 Section 8.02. Payments Net of Withholding............................. 11 Section 8.03. Binding on Successors................................... 11 Section 8.04. State Law............................................... 11 Section 8.05. Headings................................................ 11 Section 8.06. Notices................................................. 11 Section 8.07 Severability............................................ 11 Section 8.08. No Right to Serve as a Director......................... 11 Section 8.09. Government and Other Regulations........................ 12 Section 8.10. Nonexclusivity of the Plan.............................. 12 |
SPIRIT AEROSYSTEMS HOLDINGS, INC.
DIRECTOR STOCK PLAN
WITNESSETH: THAT;
WHEREAS, the Company desires to provide Participants with the opportunity to acquire an equity interest in the Company through the granting of shares of Class B Common Stock, par value $0.01 per share (the "Common Stock"), in the Company on the terms and conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has reviewed the terms and provisions hereof and found them satisfactory.
NOW, THEREFORE, the Company hereby adopts the Plan on the terms and conditions set forth herein, which Plan shall be known as the "Spirit AeroSystems Holdings, Inc. Director Stock Plan."
ARTICLE I -- PURPOSE
Section 1.01. Purpose. The purpose of the Plan is to provide Participants with the opportunity to acquire an equity interest in the Company through the grant of shares of Common Stock ("Shares") by the Company to Participants, subject to certain conditions and restrictions, as set forth in the Plan. The maximum aggregate number of Shares that may be granted to Participants under the Plan shall be 1,000,000 Shares.
ARTICLE II -- DEFINITIONS
For purposes of the Plan, the following terms shall have the following meanings, unless the context clearly indicates otherwise.
Section 2.01. Affiliate means, with respect to any Person, (a) any director or executive officer of such Person, (b) any spouse, parent, sibling, descendant or trust for the exclusive benefit of such Person or his or her spouse, parent, sibling or descendant (or the spouse, parent, sibling or descendant of any director or executive officer of such Person), and (c) any other Person that, directly or indirectly, controls or is controlled by or is under common control with such Person. For the purpose of this definition, (i) "control" (including with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, status as a general partner, or by contract or otherwise and (ii) Onex shall be deemed to control any Person controlled by Gerald W. Schwartz so long as Mr. Schwartz controls Onex Corporation.
Section 2.02. Applicable Percentage means (i) in connection with any Liquidity Event, the aggregate percentage of Onex's total equity investment in the Company that has been liquidated, taking into account such Liquidity Event and all prior Liquidity Events (if any); provided, however, that the Committee may, in its Sole Discretion, increase such percentage with respect to a Participant, if the Committee determines it is in the best interests of the Company to do so, and (ii) in connection with a deemed Liquidity Event in accordance with Section 4.03.B.3, 100%.
Section 2.03. Board of Directors means the board of directors of the Company.
Section 2.04. Call Price means the most recent value per Share as determined by the Board of Directors prior to the date of the applicable Call Event for purposes of the Company's short-term incentive plan; provided that, if the Company has not adopted a short-term incentive plan, the "Call Price" shall be the fair market value per Share as determined by the Board of Directors in good faith without regard to minority discounts.
Section 2.05. Closing Date means June 16, 2005, being the closing date of the sale of assets from The Boeing Company to Spirit, pursuant to that certain Asset Purchase Agreement by and between The Boeing Company and Spirit, dated as of February 22, 2005 (the "Asset Purchase Agreement").
Section 2.06. Committee means the Board of Directors or a committee appointed by, and serving at the pleasure of, the Board of Directors for purposes of administering the Plan, which committee shall operate under rules and procedures established by the Board of Directors from time to time for such purpose.
Section 2.07. Company means Spirit AeroSystems Holdings, Inc., a Delaware corporation, or its successor.
Section 2.08. Companies means the Company, Spirit (or its successor), and any other entity that adopts the Plan with the consent and approval of the Committee.
Section 2.09. Director means a member of the board of directors of any of the Companies.
Section 2.10. Liquidity Event means any of the following events:
A. A sale of Shares or other equity securities of the Company by Onex (whether by merger, consolidation, recapitalization, reorganization or sale or transfer of the Company's equity interests) other than a sale of Shares (i) to a Person included in the definition of "Onex" contained in the Plan, or (ii) within 180 days following the Closing Date, to one or more of Onex's institutional co-investors; or
B. A sale of all or substantially all of the assets of the Company or Spirit, provided that all or substantially all of the proceeds from such transaction are distributed to the stockholders of the Company.
Section 2.11. Market Value means, with respect to a Share as of a Measurement Date, an amount equal to A divided by B where:
A. "A" equals (i) the unencumbered value of the Company, determined in accordance with recommendations from management of the Company or Spirit, which recommendations shall be based upon appropriate valuation factors, including earnings and multiples of earnings of comparable companies, less (ii) total outstanding debts, capitalized leases, and other obligations of the Company, whether secured or unsecured, and the preference amount of any outstanding preferred stock; and
B. "B" equals the total number of outstanding shares of common stock of the Company plus the total number of shares of common stock of the Company issued or issuable upon exercise, exchange, or conversion of any outstanding options, warrants, or other rights or convertible securities exercisable or exchangeable for, or convertible into, common stock of the Company, less any shares or other equity interests in which the holder thereof has not acquired an unrestricted interest on or before such Measurement Date, determined, if necessary, on an iterated basis (e.g., in the case of Restricted Shares granted hereunder or under the Company's Executive Incentive Plan, which, in the case of Restricted Shares granted under the Company's Executive Incentive Plan, shall be iterated to the nearest one-hundredth of a percent of Return on Invested Capital, as defined in such plan).
The determination of Market Value shall be made by the Board of Directors, in its Sole Discretion; provided, however, that (i) prior to an initial public offering, if the Board of Directors has made a concurrent determination of market or fair value for purposes of any other stock ownership or stock incentive plan of the Company, then Market Value shall equal the market or fair value as determined for purposes of such other stock plan, (ii) on the date of an initial public offering, the Market Value shall equal the sale price in such initial public offering, net of underwriting commissions and discounts and (iii) following an initial public offering, if the stock of the Company becomes listed or quoted on a nationally recognized market or exchange, from and after that date, Market Value shall mean the closing price per share of common stock of the Company.
Section 2.12. Measurement Date means (i) for purposes of determining whether the Positive Return Condition is satisfied, the date of a Liquidity Event (or deemed Liquidity Event, in accordance with Section 4.03.B.3) and (ii) for purposes of determining whether the QPO Positive Return Condition is satisfied, each business day from and after the date of consummation of a Qualified Public Offering on which the Shares held by a Participant are not subject to any restrictions on transfer pursuant to a written agreement with the Company or the underwriter(s) of such a Public Offering.
Section 2.13. Onex means Onex Partners LP, Onex Corporation or any Affiliate of Onex Partners or Onex Corporation, including, for purposes of the Plan, (a) any Person which has granted to Onex Partners, Onex Corporation or any of their respective Affiliates
the right to vote or dispose of such Person's Shares (other than pursuant to the Stockholders Agreement) and (b) any employee, officer or director of Onex Corporation.
Section 2.14. Participant means a Director who is not an employee of any of the Companies and who has been designated by the Committee as eligible to participate in the Plan pursuant to Section 3.01.
Section 2.15. Person means an individual, trust, estate, partnership, limited liability company, association, corporation, or other entity.
Section 2.16. Plan means this Spirit AeroSystems Holdings, Inc. Director Stock Plan, as amended.
Section 2.17. Positive Return Condition means that, and is satisified if, as of a Measurement Date (a) the sum of (1) each amount actually received by Onex in respect of Shares as a result of all Liquidity Events (or which hypothetically would be received by Onex as a result of a deemed Liquidity Event in accordance with Section 4.03.B.3) occurring on or prior to such Measurement Date and (2) the Applicable Percentage of each dividend actually paid by the Company to Onex on or prior to such Measurement Date exceeds (b) the Applicable Percentage of the amount of each equity investment made by Onex in the Company.
The determination of whether the Positive Return Condition is satisfied shall be made by the Committee, in its Sole Discretion.
Section 2.18. Public Offering shall have the meaning set forth in the Stockholders Agreement.
Section 2.19. QPO Positive Return Condition means that, and is satisfied if, as of any Measurement Date, (a) the sum of (1) all amounts actually received by Onex in respect of Shares (including, without limitation, sale proceeds and dividends) on or prior to such Measurement Date and (2) the Market Value of all Shares then held by Onex exceeds (b) the total amount of all equity investments made by Onex in the Company.
The determination of whether the QPO Positive Return Condition is satisfied shall be made by the Committee, in its Sole Discretion.
Section 2.20. Qualified Public Offering shall have the meaning set forth in the Stockholders Agreement.
Section 2.21. Spirit means Spirit AeroSystems, Inc., a Delaware corporation, and a wholly-owned subsidiary of the Company.
Section 2.22. Stockholders Agreement means the Investor Stockholders Agreement, dated as of June 16, 2005, between the Company and its stockholders.
Section 2.23. Sole Discretion means the right and power to decide a matter, which right may be exercised arbitrarily at any time and from time to time.
ARTICLE III -- ELIGIBILITY
Section 3.01. Eligibility. The Committee shall have the unrestricted right and power, which may be exercised in its Sole Discretion at any time and from time to time, to designate non-employee Directors who are eligible to participate in the Plan.
ARTICLE IV -- GRANTS OF SHARES
Section 4.01. Grants of Shares.The Committee shall have the right from time to time to grant Shares to Participants (it being understood that neither the Board of Directors nor the Committee shall be obligated to grant all of the Shares allocated by the Company for issuance under the Plan). Each grant of Shares shall be made pursuant to a Stock Grant Agreement. Unless provided otherwise in the Stock Grant Agreement, the Shares granted thereunder will be subject to the vesting requirements described in Section 4.02 and Section 4.03 (shares granted subject to vesting requirements are referred to herein as "Restricted Shares"). Participation by a Participant in any grant of Shares under the Plan shall neither limit nor require participation by the Participant in any other grant of Shares under the Plan, it being within the Sole Discretion of the Committee to determine the Participants eligible to participate in the Plan and in a grant of Shares under the Plan. The Shares may be either previously issued Shares that have been reacquired by the Company or authorized but unissued Shares, as the Board of Directors shall from time to time determine, in its Sole Discretion. If any Participant's interest in Shares granted under the Plan terminates, any Shares in which the Participant has no further interest shall again become available to be granted under the Plan.
Section 4.02. One Year Service Requirement. If a Participant ceases to serve as a Director prior to the first anniversary of the date of grant of any Restricted Shares, any such Restricted Shares in which such Participant has not theretofore acquired an unrestricted interest pursuant to Section 4.03 shall, on the date such Participant ceases to be a Director, be forfeited to the Company without any payment therefor.
Section 4.03. Interest in Restricted Shares.
A. A Participant granted Restricted Shares by the Company shall acquire an unrestricted interest in those Restricted Shares only as follows:
1. Upon a Liquidity Event (or deemed Liquidity Event, in accordance with Section 4.03.B.3), if the Positive Return Condition is satisfied, each Participant holding Restricted Shares shall acquire an unrestricted interest in the number of Restricted Shares held by such Participant, subject to Section 4.03.B., equal to (1) the Applicable Percentage of the total number of Restricted Shares granted to such Participant under the Plan, less (2) the total
number of Restricted Shares, if any, in which such Participant has previously acquired an unrestricted interest under the Plan.
2. Following a Qualified Public Offering, if the QPO Positive Return Condition is satisfied on any Measurement Date, each Participant shall, subject to Section 4.03.B., acquire an unrestricted interest in all Restricted Shares then held by such Participant.
B. Operating Rules. The following rules also shall apply.
1. Future Liquidity Events. Following the occurrence of a Liquidity Event, the provisions of this Section 4.03 may again be applied to such Participant upon a later Liquidity Event to determine whether the Participant may acquire an interest in any remaining Restricted Shares granted to the Participant under the Plan.
2. Forfeiture Following Termination. If, on the fifth anniversary of the date on which a Participant ceases to serve as a Director, such Participant continues to hold Restricted Shares in which he or she has not acquired an unrestricted interest, any interest in such Restricted Shares shall terminate and such Restricted Shares shall be forfeited to the Company without any payment therefor.
3. Ten-Year Limit. On the 10th anniversary of the Closing Date, if any Participant(s) continue to hold Restricted Shares in which they have not acquired an unrestricted interest (i.e., such Restricted Shares have not been forfeited to the Company), the provisions of this Section 4.03 shall be applied as if Onex sold the remainder of its equity investment in the Company on such date for consideration equal to Market Value, and a final determination shall be made at that time whether the Participant(s) will acquire an interest in such Restricted Shares.
4. Termination of Interest in Restricted Shares. Upon disposition by Onex of all of its equity interest or remaining equity interest in the Company or upon the occurrence of a deemed disposition in accordance with Section 4.03.B.3 above, any Participant 's interest in Restricted Shares in which he or she has not acquired an unrestricted interest on or prior to the date of such disposition or deemed disposition shall terminate and shall be forfeited to the Company without any payment therefor.
Section 4.04. Dividends. Dividends declared by the Board of Directors with respect to Shares shall, with respect to any Restricted Shares, be cumulated and paid to the Participant only at the time, and to the extent that, the Participant acquires an unrestricted interest in any such Restricted Shares in accordance with this Article IV.
Section 4.05. No Rights of Stockholder. Restricted Shares shall not be subject to transfer or assignment, and a Participant shall not have the rights of a stockholder in the Company with respect to any Restricted Shares unless and until the Participant acquires an interest in such Restricted Shares in accordance with this Article IV, provided that Participants shall, subject to the Stockholders Agreement, be entitled to voting rights of a holder of the Shares granted hereunder unless and until such Shares are required to be forfeited to the Company.
Section 4.06. Call Rights on Former Directors' Shares.
A. If a Participant ceases to serve as a Director (following such
cessation, a "Former Director") prior to a Qualified Public Offering,
(such cessation, the "Call Event"), then the Company shall have the
right to require such Former Director (or, in the case of death or
permanent disability, such Former Director's executor, personal
representative or legal representative) to sell, by delivery of a
written notice (the "Call Notice") to such Former Director (or, in the
case of death or permanent disability, such Former Director's
executor, personal representative or legal representative) within 180
days after the date of the Call Event (the "Initial Call Period"), and
such Former Director (or, in the case of death or permanent
disability, such Former Director's executor, personal representative
or legal representative) shall be required to sell, all of the Shares
then held by such Former Director in which such Former Director has
acquired an unrestricted interest (including any Shares then held by
an Affiliate of such Former Director pursuant to a Transfer under
Section 4.2(a)(i) of the Stockholders Agreement) at a price per Share
equal to the Call Price.
B. If at any time, a Former Director acquires an unrestricted interest in additional Shares after the expiration of the Initial Call Period and prior to a Qualified Public Offering, then the Company shall have the right to require such Former Director (or, in the case of death or permanent disability, such Former Director's executor, personal representative or legal representative) to sell, by delivery of a Call Notice to such Former Director (or, in the case of death or permanent disability, such Former Director's executor, personal representative or legal representative) within 90 days after the date of such acquisition (a "Subsequent Call Period"), and such Former Director (or, in the case of death or permanent disability, such Former Director's executor, personal representative or legal representative) shall be required to sell, all of the Shares then held by such Former Director in which such Former Director has acquired an unrestricted interest (including any Shares then held by an Affiliate of such Former Director pursuant to a Transfer under Section 4.2(a)(i) of the Stockholders Agreement) at a price per Share equal to the Call Price.
C. The closing of any purchase of Shares by the Company pursuant to this
Section 4.06 shall take place at the principal office of the Company
within 15
days after the expiration of the Call Period or Subsequent Call Period, as applicable, as the Company shall specify to such Former Director (or, in the case of death or permanent disability, such Former Director's executor, personal representative or legal representative) in writing. At such closing, such Former Director (or, in the case of death or permanent disability, such Former Director's executor, personal representative or legal representative) shall deliver to the Company certificates and/or other instruments representing, together with stock or other appropriate powers duly endorsed with respect to, the Shares, free and clear of all liens, encumbrances or other restrictions (other than pursuant to securities laws or the Stockholders Agreement), against payment by the Company of the purchase price for the Shares in cash by delivery of a certified check payable to such Former Director (or, in the case of death, such Former Director's estate). Notwithstanding the foregoing, if the payment of all or any portion of the purchase price is not permitted to be made at the closing by the terms any credit agreement(s) relating to the Company's senior debt (collectively, the "Credit Agreement"), or the payment would cause a Default or an Event of Default (as such terms are defined in any Credit Agreement), then that portion of the purchase price shall instead become a subordinated obligation of the Company (a "Subordinate Obligation"); the Subordinate Obligation shall not be payable during the continuance of a Default or an Event of Default (as defined in any Credit Agreement) or if such payment would not otherwise be permitted by any Credit Agreement or would result in a Default or an Event of Default (as defined under any Credit Agreement). The Subordinate Obligation shall be payable on the earlier to occur of (i) one day after the closing date of a complete refinancing of the Company's senior debt and (ii) receipt by the Company of the written approval of its senior lenders to pay the principal and interest on the obligation in full. The Subordinate Obligation shall accrue interest at the weighted average rate applicable from time to time on the Company's senior debt. The Company shall pre-pay the amount of any Subordinate Obligation, together with accrued and unpaid interest, as and when it is permitted to do so without Default (as defined in any Credit Agreement) or creating an Event of Default (as defined in any Credit Agreement) under any Credit Agreement, provided, that if there is more than one Subordinate Obligation outstanding, the Company shall make pre-payments on each Subordinate Obligation in the proportion that the outstanding amount thereof (including accrued and unpaid interest) bears to the aggregate outstanding Subordinate Obligations (including accrued and unpaid interest).
D. If and to the extent the Company does not deliver a Call Notice within the Call Period or Subsequent Call Period, as applicable, or if the purchase of all Shares subject to the Call Notice does not occur at the scheduled closing date through the fault of the Company, then the Company's right to purchase such Shares pursuant to this Section 4.06 shall terminate.
ARTICLE V -- CONDITIONS AND RESTRICTIONS
Section 5.01. General Conditions and Restrictions. The Committee shall have the unrestricted right and power, in its Sole Discretion, to determine the number of Shares to be granted to a Participant under the Plan and to establish such other terms, conditions, restrictions, or procedures related to a grant of Shares as the Committee deems necessary or appropriate, including, but not limited to, requiring, as a condition precedent to the grant of Shares under the Plan, that a Participant execute the Stockholders Agreement and such other agreements with the Company and/or other stockholders in the Company as the Committee deems necessary or appropriate, in such form and substance as may be satisfactory to the Committee. Shares of stock in the Company acquired under the Plan shall be subject to any and all terms, conditions, and restrictions set forth in the Company's certificate of incorporation and bylaws, as well as the Stockholders Agreement and any other agreement entered into with respect to such Shares.
Section 5.02. Restriction on Transfer of Shares. Shares acquired under the Plan shall be subject to such conditions and restrictions on transfer as are set forth in the Company's certificate of incorporation and bylaws, as well as the Stockholders Agreement and any other agreement entered into with respect to such Shares.
Section 5.03. Legends. All certificates representing Shares (including Restricted Shares) issued under the Plan shall bear (until, in the opinion of counsel, which opinion must be reasonably satisfactory in form and substance to counsel for the Company, it is no longer necessary or required) the following legends:
The securities represented by this document have not been registered under the Securities Act of 1933, as amended (the "Act"), and may not be sold, transferred, offered for sale, pledged, or hypothecated in the absence of an effective registration statement as to the securities under the Act or an opinion of counsel satisfactory to Spirit AeroSystems Holdings, Inc. and its counsel that such registration is not required.
The securities represented by this document are subject to the terms and conditions, including restrictions on transfer, of a Stockholders Agreement among Spirit AeroSystems Holdings, Inc. and its stockholders, as amended from time to time, a copy of which is on file at the principal office of Spirit AeroSystems Holdings, Inc.
In addition, certificates representing Restricted Shares shall bear (until, in the opinion of counsel, which opinion must be reasonably satisfactory in form and substance to counsel for the Company, it is no longer necessary or required) the following legend:
The securities represented by this document are subject to the terms, conditions, restrictions, and contingencies, including restrictions on transfer and risk of forfeiture, contained in the
Spirit AeroSystems Holdings, Inc. Director Stock Plan, as amended from time to time, a copy of which is on file at the principal office of Spirit AeroSystems Holdings, Inc.
ARTICLE VI -- ADMINISTRATION
Section 6.01. Committee. The Committee shall have full power to administer the Plan in all of its details, which powers shall include, but are not limited to, the authority, in addition to all other powers provided by the Plan, to:
A. Determine in its Sole Discretion the eligibility of any Director to participate in the Plan;
B. Make discretionary interpretations regarding the terms of the Plan and make factual findings with respect to any issue arising under the Plan, including, but not limited to, the power to determine whether a Director shall be eligible to participate in the Plan or receive benefits under the Plan, with its interpretation to be final and conclusive;
C. Make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;
D. Appoint such agents, specialists, legal counsel, accountants, consultants, or other persons as the Committee deems advisable to assist in administering the Plan; and
E. Maintain all records of the Plan.
Section 6.02. Reliance on Certificates, etc. The members of the Committee, the Board of Directors, and the Directors, officers and employees of the Companies shall be entitled to rely on all certificates and reports made by any duly appointed accountants and on all opinions given by any duly appointed legal counsel. Such legal counsel may be counsel for any of the Companies.
ARTICLE VII -- AMENDMENT AND TERMINATION
Section 7.01. Amendment and Termination. The Board of Directors may, at any time, suspend or terminate the Plan and shall have the right to alter or amend the Plan or any part thereof at any time and from time to time as it may, in its Sole Discretion, deem proper and in the best interests of the Company; provided, however, that no such termination, suspension, alteration, or amendment shall, without the consent of the Participant, deprive a Participant of any interest in Shares previously acquired by the Participant under the Plan, subject to the terms and conditions of the Company's certificate of incorporation and bylaws, the Stockholders Agreement, and any other agreement entered into with respect to such Shares. Any termination, suspension, alteration, or amendment of the Plan may be made by
the Board of Directors without action on the part of the stockholders of the Company. Upon termination of the Plan, the rights of each Participant in any Shares the Participant is not entitled to receive shall terminate.
ARTICLE VIII -- MISCELLANEOUS
Section 8.01. Effective Date. The Plan shall be effective from and after the date of its adoption and approval by the Board of Directors and the stockholders of the Company, and Shares may be granted immediately after such adoption.
Section 8.02. Payments Net of Withholding. Notwithstanding any other provision of the Plan, all transfers or payments shall be net of any amount sufficient to satisfy all federal, state, and local withholding tax requirements, and shall also be net of all amounts owed by Participant to the Companies.
Section 8.03. Binding on Successors. The Plan shall be binding upon all Participants, their respective heirs, and personal representatives, and upon the Companies, their successors and assigns.
Section 8.04. Governing Law. The Plan and all agreements entered into under the Plan shall be governed, construed, administered, and regulated in all respects under the laws of the State of Delaware, without regard to the principles of conflicts of law, to the extent such laws are not preempted by the laws of the United States of America. Any action concerning the Plan or any agreement entered into under the Plan shall be maintained exclusively in the state or federal courts in Delaware.
Section 8.05. Headings. The headings used in the Plan are inserted for reference purposes only and shall not be deemed to limit or affect in any way the meaning or interpretation of any of the terms or provisions herein.
Section 8.06. Notices. Any notices or communications permitted or required to be given herein by any Participant, the Company, the Committee, the Companies, or any other person shall be deemed given either (i) when delivered, or (ii) three days after being placed in the United States mail in an envelope addressed to the last communicated address of the person to whom the notice is being given, with adequate postage thereon prepaid.
Section 8.07 Severability. If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions thereof, and the Plan shall be construed and enforced as if such provisions had not been included.
Section 8.08. No Right to Serve as a Director. Nothing herein contained shall be deemed to give any Participant the right to continue to serve as a Director or to be nominated by any of the Companies to serve as a Director.
Section 8.09. Government and Other Regulations. The obligation of the Company to sell and deliver Shares under the Plan shall be subject to all applicable laws, rules, and regulations and such approvals by any governmental agencies as may be required, including, but not limited to, the effectiveness of a registration statement under the Securities Act of 1933, as amended, as deemed necessary or appropriate by legal counsel for the Company.
Section 8.10. Nonexclusivity of the Plan. The adoption of the Plan by the Board of Directors shall not be construed as creating any limitations on the power of the Board of Directors to adopt such other incentive arrangements as it may deem desirable.
IN WITNESS WHEREOF, the Company has caused the Plan to be executed by a duly authorized officer as of the date first set forth above.
SPIRIT AEROSYSTEMS HOLDINGS, INC.
By: /s/ Nigel Wright -------------------------------------- Its: Vice President, Secretary & Treasurer |
Exhibit 10.15
AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of this 30th day of June 2005, by and between ONEX PARTNERS MANAGER, L.P. a Delaware limited partnership ("Onex") and Spirit AeroSystems, Inc., a Delaware corporation (the "Company").
- PRELIMINARY STATEMENT -
Onex Partners, LP, a Delaware limited partnership ("Onex Partners") and an affiliate of Onex, along with various other affiliates, own a majority interest in the common stock of the Company as a result of providing equity funding for the Company's acquisition of its business from The Boeing Company pursuant to an asset purchase agreement dated February 22, 2005;
The Company desires to avail itself of certain resources, advice and assistance of, and available to, Onex as set forth herein; and
Onex is willing to provide such services to the Company and the Company is willing to engage Onex on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
- AGREEMENT -
ARTICLE 1
SERVICES
SECTION 1.1 ENGAGEMENT OF ONEX. The Company hereby engages Onex to provide the services delineated in Section 1.2 below (the "Services") and Onex agrees to provide such Services as and when requested, in accordance with the terms and conditions set forth herein.
SECTION 1.2 SECTION 1.2 SERVICES. Subject to the requirements of the Company's Special Security Agreement dated August 10, 2005 ("SSA"), and subject to the oversight of the Company's Government Security Committee ("GSC"), during the Term (as defined herein) Onex shall provide the Company with non-binding guidance and advice with such matters as may be reasonably requested from time to time by the Company or its affiliates. Without limiting the generality of the foregoing, Onex may provide the Company, at the Company's request, with such resources, advice and assistance as is necessary or desirable in order for the Company to determine, at its sole discretion, its overall strategic and financial planning, commercial initiatives, and debt and equity financings (the "Services"). From time to time thereafter, subject to the requirements of the SSA, including but not limited to the approval of the
GSC, the Board of Directors of the Company may request Onex and/or its affiliates to provide additional services in addition to those contemplated herein. However, the Company and Onex both acknowledge and agree that the services referred to above do not include investment banking or financial advice in connection with business acquisitions.
SECTION 1.3 SOURCING OF SERVICES. For purposes of this Agreement, Onex may at its discretion seek the services of independent third parties, with such services being paid for by the Company, so long as the Company approves of such services in advance.
ARTICLE 2
TERM
SECTION 2.1 TERM. Subject to the terms herein, the term of this Agreement shall commence on June 30, 2005 (the "Effective Date") and shall continue for an initial eight-year term (the "Term"). Thereafter, subject to the approval of the GSC, the Agreement may be renewed automatically for successive one-year periods.
SECTION 2.2 TERMINATION OF THIS AGREEMENT. This Agreement shall terminate by mutual agreement of the parties, signed and in writing, or at such time as Onex Partners, or any of its affiliates, individually or in the aggregate, no longer hold more than 5% of the outstanding shares of Common Stock.
SECTION 2.3 CONSEQUENCES OF TERMINATION. Within 30 days after any termination of this Agreement, the Company shall remit to Onex any accrued but unpaid Service Fee (as defined herein) and reimbursable expenses.
ARTICLE 3
COMPENSATION
SECTION 3.1 COMPENSATION.
(a) COMPENSATION. For and in consideration of the Services, the Company shall pay Onex a fixed annual fee of $3,000,000 per year (the "Service Fee").
(b) PAYMENT. The Company shall pay to Onex the Service Fee, in arrears, on a quarterly basis, on the last day of March, June, September and December of each year commencing September, 2005. All payments to be made by the Company to Onex shall be immediately available funds, unless the parties agree otherwise. In the event the Company is unable to pay the Service Fee (or any portion thereof) due to restrictions contained in any revolving credit or term loan agreement to which it is a party (as a borrower or otherwise), the Service Fee (or such portion) shall not be paid, but shall accrue until such payment is no longer restricted, at which time the accrued but unpaid Service Fee (or such portion) shall be paid to Onex. In the event the Company fails to pay the Service Fee (or any portion thereof) to Onex as and when due in accordance with the first two sentences of this paragraph (including by virtue of any deferral required by the foregoing sentence), it shall be required to pay Onex interest on all such unpaid amounts at an annual interest rate from time to time announced by Citibank as its
"Prime Rate" of interest used by it as a reference rate for commercial loans in United States dollars adjusted on a daily basis for changes in that rate. The Service Fee (including any portion deferred pursuant to the third sentence of this paragraph) and any interest due thereon shall accrue on a daily basis from and after July 1, 2005, and each quarterly payment shall be in respect of the three-month period ended on the day payment is due or for such shorter period within such three months during which the Agreement was in effect. Any amounts due to Onex under this Agreement may, at Onex's sole discretion and direction, be payable to one or more affiliates of Onex.
SECTION 3.2 EXPENSES. All reasonable, ordinary and necessary expenses, including but not limited to travel, fees for external consultant, advisors and professionals and other direct out-of-pocket expenses incurred by Onex or its affiliates in the performance of the Services shall be paid or reimbursed by the Company. The Company shall, within 30 days after the receipt of an invoice from Onex, reimburse Onex in full.
ARTICLE 4
MISCELLANEOUS
SECTION 4.1 RELATIONSHIP OF PARTIES. The parties acknowledge and agree that each is a separate business entity, that each has its own management, and separate policies and procedures, and that nothing contained herein shall constitute the delegation of authority and power to Onex to manage and/or control the Company's business. The parties further acknowledge and agree that the relationship established between the two is that of independent contractors and is not a joint venture or partnership and that the Services to be performed are intended to be merely auxiliary to and supportive of the Company's business. Neither Onex nor its employees shall be considered employees of the Company. Onex shall have no right to enter into any contract or undertaking in the name of or for the account of the Company, nor to assume or create any obligation of any kind, express or implied, on behalf of the Company, without the prior written consent of the Company.
SECTION 4.2 INDEMNIFICATION. The Company agrees to indemnify, defend and hold harmless, Onex, its affiliates, directors, officers and/or employees from and against any and all loss, liability, suits, claims, costs, damages and expenses (including reasonable attorney fees) arising from their performance hereunder, except where Onex's actions or omissions rise to the level of gross negligence or willful misconduct. Onex assumes no responsibility to the Company hereunder other than as expressly set forth herein.
SECTION 4.3 NOTICE. Any notice, request, consent or communication (collectively "Notice") sent under this Agreement shall be effective only if it is in writing and (a) personally delivered, (b) sent by certified or registered mail, return receipt requested, postage prepaid, (c) sent by a nationally recognized overnight delivery service, with delivery confirmed, or (d) telexed or telecopied with receipt confirmed, addressed as follows:
If to Onex:
Onex Partners Manager, L.P.
712 5th Avenue, 40th Floor
New York, New York 10019
Attention: General Counsel
Fax: (212) 582-0909
If to the Company:
Spirit AeroSystems, Inc.
3801 S. Oliver Rd.
Wichita, Kansas 67210
Attention: General Counsel
Fax: (206) 544-0812
or such other persons or addresses as shall be furnished in writing by any party
to the other party. A Notice shall be deemed to have been given as of the date
(i) when personally delivered, (ii) five (5) days after the date when deposited
with the United States mail properly addressed, (iii) when receipt of a Notice
sent by an overnight delivery service is confirmed by such overnight delivery
service, or (iv) when receipt of the telex or telecopy is confirmed, as the case
may be, unless the sending party has actual knowledge that a Notice was not
received by the intended recipient.
SECTION 4.4 WAIVER. The failure of either of the parties to insist, in any one or more instances, upon performance of any of the terms or conditions of this Agreement, shall not be construed as a waiver or relinquishment of any rights granted hereunder or the future performance of any such term, covenant or condition.
SECTION 4.5 COMPLETE UNDERSTANDING. This Agreement constitutes the complete understanding among the parties with respect to the matters set forth herein. No alteration or modification of any of this Agreement's provisions shall be valid unless made in writing, is signed by all the parties to this Agreement, and is determined by the GSC to be consistent with the requirements of the SSA.
SECTION 4.6 APPLICABLE LAW. The laws of the State of New York shall govern all aspects of this Agreement, irrespective of the fact that one or more of the parties now is or may become a resident of a different state, or that the one or more of the parties now or hereafter locates its principal office outside the State of New York. THE PARTIES ACKNOWLEDGE THAT THE COURTS OF THE STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION OVER THIS AGREEMENT AND SPECIFICALLY WAIVE ANY CLAIMS WHICH THEY MAY HAVE THAT INVOLVE JURISDICTION OR VENUE, INCLUDING BUT NOT LIMITED TO FORUM NON CONVENIENS. Service of process for any claim that arises under this Agreement shall be valid if made in accordance with the notice provisions set forth in Section 4.3 of this Agreement. If service of process is made as aforesaid, the party served agrees that such service shall constitute valid service, and specifically waives any objections the party served may have under any state or Federal law or rule concerning service of process. Service of process in accordance with this Section 4.6 shall be in addition to and not to the exclusion of any other service of process method legally available.
SECTION 4.7 DESCRIPTIVE HEADINGS AND INTERPRETATION. All section headings, titles and subtitles are inserted in this Agreement for the convenience of reference only, and are to be ignored in any construction of this Agreement's provisions. Time is of the essence of this Agreement. All monetary amounts referred to herein are expressed in the lawful currency of the United States of America.
SECTION 4.8 SEVERABILITY. If a court of competent jurisdiction rules that any one or more of this Agreement's provisions are invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any of this Agreement's other provisions, and this Agreement shall be construed as if it had never contained such invalid, illegal or unenforceable provision.
SECTION 4.9 SUCCESSORS AND ASSIGNS AND THIRD PARTY BENEFICIARIES. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
SECTION 4.10 COUNTERPARTS. This Agreement may be executed in any number of counterparts and each of such counterparts for all purposes shall constitute an original.
SECTION 4.11 ASSIGNMENT. Except as otherwise set forth herein, neither the Company nor Onex may assign its rights or obligations under this Agreement without the written consent of the other party. The Company acknowledges and agrees that Onex may assign this Agreement to any of its affiliates where at least 50% of the voting securities are owned directly or indirectly by Onex Partners and any such affiliate may assign the same to Onex or any other such affiliate of Onex, without the consent of the Company.
[SIGNATURE PAGES TO FOLLOW]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the Effective Date.
ONEX PARTNERS MANAGER, L.P.
a Delaware limited partnership,
by Onex Partners Manager GP Inc.,
its General Partner
By: /s/ Robert Le Blanc ------------------------------------ Name: ---------------------------------- Its: ----------------------------------- |
SPIRIT AEROSYSTEMS, INC.
a Delaware corporation
By: /s/ Jeffrey L. Turner ------------------------------------ Name: Jeffrey L. Turner Its: President & Chief Executive Officer |
Exhibit 10.16
CONSULTING AGREEMENT
THIS AGREEMENT is made between GEPHARDT AND ASSOCIATES LLC (the "Consultant"), a limited liability company existing under the laws of the state of Delaware, and MID-WESTERN AIRCRAFT SYSTEMS, INC. (the "Company"), a corporation existing under the laws of the State of Delaware, on February 25, 2005.
WHEREAS the Company intends to purchase the Boeing commercial aero-structure manufacturing operations that are located in Wichita, Kansas, Tulsa, Oklahoma and McAlester, Oklahoma (the "Business") pursuant to an agreement of purchase and sale made between the Company and The Boeing Company and dated February 22, 2005 (such agreement, the "Purchase Agreement" and the purchase and sale of the Business as contemplated thereby, the "Transaction");
AND WHEREAS the Company wishes to engage the Consultant to provide: (a) certain consulting services in respect of the negotiations to be conducted between the Company and the principal unions representing the employees of the Business prior to and as a condition of the closing of the Transaction, including (i) providing strategic advice to the Company in the development of its proposals to, and the conduct of negotiations with, such unions, (ii) assisting the Company in identifying and establishing a dialogue with key union representatives, (iii) participating in such negotiations as reasonably requested by the Company consistent with the strategic role contemplated for the Consultant and (iv) assisting the Company in its dealings with relevant governmental and regulatory agencies and bodies (the services described in this paragraph (a), the "Transaction Services"); and (b) in the circumstances contemplated by paragraph 2(d) below, providing such consulting services to affiliates of the Company (including Onex Corporation, Onex Partners GP LP and their respective subsidiaries) in respect of their respective businesses and affairs as may reasonably be requested having regard to the nature of those businesses and the skills, experience and expertise of the Consultant and, specifically, of Mr. Richard A. Gephardt ("Gephardt"), being a director, officer, employee, owner or independent contractor thereof (the services described in this paragraph (b), the "Other Services" and together with the Transaction Services, the "Services");
AND WHEREAS the Consultant wishes to provide the Services on the terms contemplated hereby;
NOW THEREFORE for the consideration provided for herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledges, the Company and the Consultant covenant and agree as follows:
1. TERM. The term of this Agreement (the "Term") shall be the period commencing on the date hereof and, subject to paragraph 2(c) below, ending on the date that is:
(a) if the Transaction has closed within six months following the date hereof, the date of such closing; and
(b) in any other circumstances, twelve months after the date hereof.
2. PROVISION OF SERVICES. During the Term, the Consultant will provide the Services in accordance with the reasonable requests of the Company (or, in the circumstances contemplated by paragraph (d) below, of Onex Corporation or Onex Partners GP LP) and without limiting the generality of the foregoing, it is hereby acknowledged and agreed that:
(a) the Consultant shall use its reasonable efforts to cause Gephardt to be available to the Company by telephone and e-mail during normal business hours and as otherwise reasonably requested by the Company in connection with the provision of the Services;
(b) the Consultant may be asked to make Gephardt available to travel to Wichita, Kansas or elsewhere as reasonably requested by the Company in connection with the provision of the Transaction Services, and shall cause Gephardt to use his reasonable efforts to accommodate such requests;
(c) the Consultant may be requested, but shall not be obliged, to provide Transaction Services following the date that is six months after the date hereof. In those circumstances, the Term shall be extended for the period during which the Consultant, in its sole discretion, may agree to continue to provide such Transaction Services and the additional compensation, if any, payable to the Consultant in connection therewith shall be as negotiated by the Consultant and the Company in good faith; and
(d) if the Transaction is not completed for any reason within six months following the date hereof (as such period may be extended as contemplated by paragraph (c) above), the Consultant shall only be obliged to provide the Other Services, which Other Services shall be provided in accordance with the reasonable requests of Onex Corporation or Onex Partners GP LP.
The Consultant: (i) acknowledges that the Company has agreed to engage the Consultant hereunder based exclusively upon, and solely as a result of, the skills, experience and expertise of Gephardt and (ii) agrees that the Services shall be rendered by Gephardt, acting in his capacity as a director, officer, employee, owner or independent contractor of the Consultant, and that the Consultant shall not be entitled to substitute the services of an individual other than Gephardt to provide the Services without the prior written consent of the Company, which the Company may withhold in its sole and absolute discretion.
3. FEE FOR SERVICES. The Company shall pay to the Consultant for the provision of the Services a consulting fee (the "Fee") as follows:
(a) not later than the second business day following the date hereof, the Company shall pay to the Consultant the sum of US$550,000 by check or wire transfer to an account designated by the Consultant in writing on or before the date hereof;
(b) not later than the second business day following the date, if any, during the Term that the Transaction is completed, the Company shall pay to the Consultant the sum of US$600,000 by check or wire transfer to an account designated by the Consultant in writing not later than two business days prior to such date of payment;
(c) not later than the tenth day following the day during the Term on
which the Transaction closes, the Company shall issue to the
Consultant, for no additional consideration, options (the "Options")
to acquire such number of shares of the Company (the "Shares") as have
a value based upon the price at which the Company actually acquires
the Business, including all transaction expenses, equal to US$550,000.
Notwithstanding the foregoing, it is acknowledged and agreed that the
Options shall not be issuable to the Consultant and he shall have no
right or entitlement in respect thereof if the Transaction is
completed during the Term, Gephardt is invited to become a member of
the board of directors of the Company upon or following such closing
and he fails to accept such appointment. Each Option issued pursuant
hereto: (i) shall be exercisable at any time prior to expiry to
acquire one Share; (ii) shall be exercisable by payment of a cash
exercise price equal to US$550,000 divided by the aggregate number of
Options so issued; (iii) shall vest immediately upon issuance; and
(iv) shall expire ten years following the date of issuance.
4. EXPENSES. The Company shall reimburse the Consultant for its reasonable out-of-pocket expenses actually incurred in the provision of the Services, including all travel costs of Gephardt.
5. DIRECTORS' COMPENSATION. The Company acknowledges and agrees that in addition and without regard to the compensation and entitlements of the Consultant hereunder, Gephardt shall be entitled to all such cash and non-cash compensation and benefits as are made available to other outside directors of the Company in the event that Gephardt is elected or appointed as a member of the Company's board.
6. POWER OF ATTORNEY, STOCKHOLDERS' AGREEMENT, ETC. The Consultant hereby:
(a) agrees that its right to receive the Options as described in paragraph 3(c) above is subject to the timely execution and delivery by the Consultant of all such documents, certificates and other instruments as the Company may reasonably request in order to ensure that the issuance of the Options and
of the Shares issuable on the exercise thereof is made is full compliance with all applicable laws;
(b) acknowledges that not later than the time at which the Options and/or the Shares are issued, it may be required to enter into a securityholders agreement, voting trust and/or other similar agreement (in any such case, the "Securityholders' Agreement") with the other securityholders of the Company dealing with, among other things:
(i) the transfer of securities of the Company or any interest therein;
(ii) drag-along rights, tag-along rights, rights of first offer and/or rights of first refusal relating to the securities of the Company and other liquidity events;
(iii) governance, including the composition of the board of directors of the Company; and/or
(iv) board approval and/or securityholder approval requirements,
and pursuant to which the Consultant will irrevocably appoint the Company and/or one or more of its affiliates and/or one or more of its or their respective directors, officers or employees as its attorney and agent, with full power of substitution, to, among other things:
(A) vote as proxy all of the securities of the Company standing in the name of the Consultant at any meeting of securityholders or members of the Company or to provide written consent on behalf of the securityholders of the Company, with discretionary authority with respect to such matters as may properly come before any such meeting, any adjournment thereof or any request for written consent; and
(B) to execute and deliver on behalf of the Consultant any and all agreements, certificates, receipts, instruments or other documentation, to do any and all acts, and to give and receive any and all notices, requests or other communications, in its capacity as a securityholder of the Company (other than a notice of exercise of Options); and
(c) provided that all other holders of securities of the Company also enter into the Securityholders' Agreement (or an agreement with the Company and/or the other securityholders thereof having substantially identical terms and conditions) prior to or contemporaneously with the entering into of the Securityholders' Agreement by the Consultant (whether personally or through its attorney appointed hereunder), the Consultant hereby irrevocably appoints each of Onex Partners Advisor GP Inc., Onex Partners Manager GP Inc., Seth M. Mersky and Nigel S. Wright as its
attorney and agent, with full power of substitution, to execute and deliver on behalf of the Consultant the Securityholders' Agreement and all agreements, certificates, receipts, instruments or other documentation arising thereunder or relating thereto.
7. CONFIDENTIALITY. The Consultant hereby:
(a) acknowledges that both at the date hereof and subsequently, it and Gephardt may have access to and be entrusted with confidential or non-public data or information of or concerning the Business, the Company and/or one or more of its affiliates, including, without limitation, Onex Corporation and Onex Partners LP (collectively, the "Onex Group"), including information relating to their respective businesses, operations, affairs, assets, liabilities, condition (financial or otherwise), business plans and prospects (including, without limitation, in respect of human resources matters), the disclosure of which would be highly detrimental to the interests of the Onex Group or one or more of the members thereof;
(b) acknowledges that applicable securities laws may prohibit the disclosure of confidential or non-public information of or concerning any member of the Onex Group that is a reporting issuer or public company, including Onex Corporation; and
(c) accordingly, agrees that neither it nor Gephardt shall at any time, whether during the Term or thereafter, (i) disclose any confidential or non-public information of or concerning any member of the Onex Group to any person or entity except with the prior written consent or at the written direction of the Company or as required by law or (ii) use any such information for its or his own benefit or for any purpose detrimental to the interests of the Onex Group or of any member thereof.
8. NATURE OF RELATIONSHIP. The Consultant will at all times be deemed to be performing as an independent contractor and neither it nor Gephardt shall be deemed to be an agent, representative or employee of the Company or any of its affiliates. This Agreement shall not be deemed to create any partnership, joint venture, co-venture, agency or employer-employee relationship between the Company or any of its affiliates and the Consultant or Gephardt. Neither the Company nor any of its affiliates will have any liability to withhold, collect, remit or pay any income taxes, other taxes, levies, premiums, deductions, payments, charges or withholding relating in any way to the performance of the Services by the Consultant or Gephardt and/or the payment of the Fee.
9. NOTICES. Any notice or other communication required or permitted to be delivered to any party shall be in writing and shall be deemed properly delivered, given and received upon receipt when delivered by hand (including commercial courier), by fax or by e-mail, provided that in each case the notice or other communication is sent to the particulars set forth beneath the name of such party below (or to such
other address or facsimile telephone number as such party shall have specified in a written notice given to the other parties hereto):
(a) if to the Company or any of its affiliates, to:
c/o Onex Partners Advisor GP Inc.
161 Bay Street, 49th Floor
Toronto, ON M5J 2S1
Canada
Attention: Seth M. Mersky and Nigel S. Wright
Fax No: 416-362-5765
E-Mail: smersky@onex.com and nwright@onex.com
(b) if to the Consultant to:
Richard A. Gephardt
822 Capita Square Place SW
Washington, DC 20024
Fax No: 202-554-5454
E-Mail: dEMLDR@AOL.COM
10. PUBLIC ANNOUNCEMENT. The Company shall be permitted to publicly announce, by press release or otherwise, the fact that Gephardt has been engaged to provide the Services and, in the event that Gephardt is appointed to the board of directors of the Company as contemplated by paragraph 3(c) hereof, the fact of such appointment; provided, however, that the Company shall use its reasonable best efforts to provide Gephardt with the reasonable opportunity to review and comment upon the text of any such public announcement prior to its release.
11. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
MID-WESTERN AIRCRAFT SYSTEMS, INC.
by: /s/ Nigel Wright ------------------------------------ by: /s/ Seth Mersky ------------------------------------ |
GEPHARDT AND ASSOCIATES LLC
by: /s/ Richard A. Gephardt ------------------------------------ by: /s/ Gephardt and Associates, LLC ------------------------------------ |
Exhibit 10.17
$875,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of July 20, 2005
Amending and Restating the
CREDIT AGREEMENT
Dated as of June 16, 2005
among
SPIRIT AEROSYSTEMS, INC.
(f/k/a MID-WESTERN AIRCRAFT SYSTEMS, INC.),
as U.S. Borrower,
ONEX WIND FINANCE LP,
as Additional Borrower,
SPIRIT AEROSYSTEMS HOLDINGS, INC.
(f/k/a MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.),
as Parent Guarantor,
THE LENDERS REFERRED TO HEREIN,
CITICORP NORTH AMERICA, INC.,
as Administrative Agent and Collateral Agent,
CITIGROUP GLOBAL MARKETS INC.,
as Sole Lead Arranger and Bookrunner,
THE BANK OF NOVA SCOTIA and ROYAL BANK OF CANADA,
as Co-Arrangers and Co-Syndication Agents,
THE BANK OF NOVA SCOTIA,
as Issuing Bank,
and
EXPORT DEVELOPMENT CANADA
and
CAISSE DE DEPOT ET PLACEMENT DU QUEBEC,
as Co-Documentation Agents
Cahill Gordon & Reundel LLP
80 Pine Street
New York, New York 10005
TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS.................................................... 2 SECTION 1.01. Defined Terms.......................................... 2 SECTION 1.02. Classification of Loans and Borrowings................. 47 SECTION 1.03. Terms Generally........................................ 47 ARTICLE II THE CREDITS................................................... 48 SECTION 2.01. Credit Commitments..................................... 48 SECTION 2.02. Procedure for Borrowing................................ 48 SECTION 2.03. Conversion and Continuation Options for Loans.......... 50 SECTION 2.04. Swingline Loans........................................ 50 SECTION 2.05. Optional and Mandatory Prepayments of Loans; Repayments of Loans................................. 52 SECTION 2.05A. Asset Sales and Casualty Events........................ 55 SECTION 2.06. Letters of Credit...................................... 57 SECTION 2.07. Repayment of Loans; Evidence of Debt................... 61 SECTION 2.08. Interest Rates and Payment Dates....................... 62 SECTION 2.09. Computation of Interest................................ 63 SECTION 2.10. Fees................................................... 63 SECTION 2.11. Termination, Reduction or Adjustment of Commitments.... 64 SECTION 2.12. Inability to Determine Interest Rate; Unavailability of Deposits; Inadequacy of Interest Rate............... 65 SECTION 2.13. Pro Rata Treatment and Payments........................ 65 SECTION 2.14. Illegality............................................. 67 SECTION 2.15. Requirements of Law.................................... 67 SECTION 2.16. Taxes.................................................. 68 SECTION 2.17. Indemnity.............................................. 72 SECTION 2.18. Change of Lending Office............................... 73 SECTION 2.19. Sharing of Setoffs..................................... 73 SECTION 2.20. Assignment of Commitments Under Certain Circumstances.. 73 ARTICLE III REPRESENTATIONS AND WARRANTIES............................... 74 SECTION 3.01. Organization, etc...................................... 74 SECTION 3.02. Due Authorization, Non-Contravention, etc.............. 75 SECTION 3.03. Government Approval, Regulation, etc................... 75 SECTION 3.04. Validity, etc.......................................... 75 SECTION 3.05. Representations and Warranties in the Acquisition Agreement; Boeing Agreements; IRB Agreements........ 76 SECTION 3.06. Financial Information.................................. 76 SECTION 3.07. No Material Adverse Effect............................. 76 SECTION 3.08. Litigation............................................. 76 SECTION 3.09. Compliance with Laws and Agreements.................... 77 SECTION 3.10. Subsidiaries........................................... 77 SECTION 3.11. Ownership of Properties................................ 77 |
Page ---- SECTION 3.12. Taxes.................................................. 78 SECTION 3.13. Pension and Welfare Plans.............................. 78 SECTION 3.14. Environmental Warranties............................... 79 SECTION 3.15. Regulations T, U and X................................. 81 SECTION 3.16. Disclosure; Accuracy of Information; Pro Forma Balance Sheets and Projected Financial Statements........... 81 SECTION 3.17. Insurance.............................................. 81 SECTION 3.18. Labor Matters.......................................... 82 SECTION 3.19. Solvency............................................... 82 SECTION 3.20. Securities............................................. 82 SECTION 3.21. Indebtedness Outstanding............................... 82 SECTION 3.22. Security Documents..................................... 83 SECTION 3.23. Anti-Terrorism Laws.................................... 84 SECTION 3.24. Subordination of Seller Loan Agreement................. 85 SECTION 3.25. IRB Agreements......................................... 85 ARTICLE IV CONDITIONS.................................................... 86 SECTION 4.01. Effective Date......................................... 86 SECTION 4.02. Conditions to Each Credit Event........................ 93 SECTION 4.03. Conditions to Effectiveness of the Amended and Restated Credit Agreement.................................... 94 ARTICLE V AFFIRMATIVE COVENANTS OF THE U.S. LOAN PARTIES................. 95 SECTION 5.01. Financial Information. Reports, Notices, etc........... 95 SECTION 5.02. Compliance with Laws, etc.............................. 98 SECTION 5.03. Maintenance of Properties.............................. 98 SECTION 5.04. Insurance.............................................. 99 SECTION 5.05. Books and Records: Visitation Rights: Maintenance of Ratings............................................. 99 SECTION 5.06. Environmental Covenant................................. 100 SECTION 5.07. Information Regarding Collateral....................... 101 SECTION 5.08. Existence; Conduct of Business......................... 102 SECTION 5.09. Performance of Obligations............................. 102 SECTION 5.10. Casualty and Condemnation.............................. 102 SECTION 5.11. Pledge of Additional Collateral........................ 102 SECTION 5.12. Further Assurances..................................... 103 SECTION 5.13. Use of Proceeds........................................ 103 SECTION 5.14. Payment of Taxes....................................... 103 SECTION 5.15. Interest Rate Protection............................... 103 SECTION 5.16. Guarantees............................................. 104 SECTION 5.17. Seller Loan Agreement.................................. 104 SECTION 5.18. 787 Program............................................ 104 SECTION 5.19. Phase II Environmental Studies......................... 104 SECTION 5.20. IRB Agreements......................................... 104 SECTION 5.21. Repayment of Original WLLC Loan........................ 105 SECTION 5.22. Tax Indemnity Agreements............................... 105 |
Page ---- SECTION 5.23. Post-Closing Collateral Matters........................ 105 ARTICLE V-A AFFIRMATIVE COVENANTS OF THE ADDITIONAL BORROWER PARTIES.... 106 SECTION 5.01A. Reports, Notices, etc.................................. 106 SECTION 5.02A. Compliance with Laws, etc.............................. 107 SECTION 5.03A. Books and Records; Visitation Rights................... 107 SECTION 5.04A. Information Regarding Collateral....................... 107 SECTION 5.05A. Existence: Conduct of Business......................... 107 SECTION 5.06A. Pledge of Additional Collateral........................ 108 SECTION 5.07A. Further Assurances..................................... 108 SECTION 5.08A. Use of Proceeds........................................ 108 SECTION 5.09A. Payment of Taxes....................................... 108 SECTION 5.10A. Seller Loan Agreement.................................. 109 SECTION 5.11A. Triggering Events...................................... 109 SECTION 5.12A. Tax Status............................................. 109 SECTION 5.13A. Tax Indemnity Agreements............................... 109 ARTICLE VI NEGATIVE COVENANTS OF THE U.S. LOAN PARTIES................... 109 SECTION 6.01. Indebtedness; Certain Equity Securities................ 109 SECTION 6.02. Liens.................................................. 112 SECTION 6.03. Fundamental Changes: Line of Business.................. 114 SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions........................................ 116 SECTION 6.05. Asset Sales............................................ 117 SECTION 6.06. Sale and Leaseback Transactions........................ 119 SECTION 6.07. Restricted Payments.................................... 119 SECTION 6.08. Transactions with Affiliates........................... 120 SECTION 6.09. Restrictive Agreements................................. 121 SECTION 6.10. Amendments or Waivers of Certain Documents: Prepayments of Certain Indebtedness............................. 122 SECTION 6.11. No Other "Senior Debt"................................. 123 SECTION 6.12. Interest Expense Coverage Ratio........................ 123 SECTION 6.13. Total Leverage Ratio................................... 124 SECTION 6.14. Capital Expenditures................................... 124 SECTION 6.15. Limitation on Activities of Parent Guarantor........... 125 SECTION 6.16. IRB Agreements......................................... 126 SECTION 6.17. Fiscal Year............................................ 126 SECTION 6.18. Anti-Terrorism Law..................................... 126 SECTION 6.19. Embargoed Person....................................... 126 SECTION 6.20. Anti-Money Laundering.................................. 127 ARTICLE VI-A NEGATIVE COVENANTS OF THE ADDITIONAL BORROWER PARTIES...... 127 SECTION 6.01A. Limitations on Activities.............................. 127 SECTION 6.02A. Anti-Terrorism Law..................................... 128 SECTION 6.03A. Embargoed Person....................................... 129 |
Page ---- SECTION 6.04A. Anti-Money Laundering.................................. 129 ARTICLE VII EVENTS OF DEFAULT............................................ 129 SECTION 7.01. Listing of the U.S. Borrower Events of Default......... 129 SECTION 7.02. Listing of Additional Borrower Events of Default....... 133 SECTION 7.03. Action if Bankruptcy................................... 136 SECTION 7.04. Action if Other Event of Default....................... 136 SECTION 7.05. Action if Event of Termination......................... 136 SECTION 7.06. Application of Proceeds................................ 136 SECTION 7.07. Certain Cure Rights.................................... 137 ARTICLE VIII THE AGENTS.................................................. 138 SECTION 8.01. The Agents............................................. 138 ARTICLE IX [RESERVED].................................................... 141 ARTICLE X MISCELLANEOUS.................................................. 141 SECTION 10.01. Notices................................................ 141 SECTION 10.02. Survival of Agreement.................................. 142 SECTION 10.03. Binding Effect......................................... 143 SECTION 10.04. Successors and Assigns................................. 143 SECTION 10.05. Expenses; Indemnity.................................... 146 SECTION 10.06. Right of Setoff........................................ 148 SECTION 10.07. Applicable Law......................................... 148 SECTION 10.08. Waivers: Amendment.................................... 148 SECTION 10.09. Interest Rate Limitation............................... 151 SECTION 10.10. Entire Agreement....................................... 152 SECTION 10.11. WAIVER OF JURY TRIAL................................... 152 SECTION 10.12. Severability........................................... 153 SECTION 10.13. Counterparts........................................... 153 SECTION 10.14. Headings............................................... 153 SECTION 10.15. Jurisdiction: Consent to Service of Process........... 153 SECTION 10.16. Confidentiality........................................ 154 SECTION 10.17. Fixed Income Direct Website Communications............. 154 SECTION 10.18. USA PATRIOT Act Notice................................. 156 SECTION 10.19. Assignment and Release of Additional Borrower Parties' Obligations......................................... 156 SECTION 10.20. No Recourse Against Limited Partners................... 156 |
EXHIBIT A Form of Administrative Questionnaire EXHIBIT B Form of Borrowing Request EXHIBIT C Form of Assignment and Acceptance EXHIBIT D Form of Subordination and Intercreditor Agreement EXHIBIT E Form of Compliance Certificate EXHIBIT F Form of Onex Corporation Tax Certificate EXHIBIT G-1 Form of Term B Note EXHIBIT G-2 Form of Revolving Note EXHIBIT H Form of Closing Certificate EXHIBIT I Form of Guarantee Agreement EXHIBIT J Form of Pledge Agreement EXHIBIT K Form of Security Agreement EXHIBIT L-1 Form of Opinion of Kaye Scholer LLP EXHIBIT L-2 Form of Opinion of Davies Ward Phillips & Vineberg LLP EXHIBIT L-3 Form of Opinion of Local Counsel EXHIBIT M Form of Solvency Certificate EXHIBIT N Form of Mortgage EXHIBIT P Form of Section 2.16 Certificate EXHIBIT R Form of WLLC Subordination Agreement EXHIBIT S-1 Form of Offer to Repay Notice EXHIBIT S-2 Form of Response to Offer to Repay EXHIBIT S-3 Notice of Preselection EXHIBIT T-1 Form of Withholding Tax Guarantee Agreement EXHIBIT T-2 Form of NSULC Tax Indemnity Agreement EXHIBIT T-3 Form of Onex Pledge Agreement EXHIBIT T-4 Form of Canadian Pledge Agreement EXHIBIT U Form of Restatement Closing Certificate EXHIBIT V Form of Affirmation and Consent SCHEDULE 1.01(a) Boeing Agreements SCHEDULE 1.01(b) Kansas Bonds Term Sheet SCHEDULE 1.01(d) Permitted Holders SCHEDULE 2.01 Lenders and Commitments SCHEDULE 3.08 Litigation SCHEDULE 3.10 Subsidiaries SCHEDULE 3.11(b) Leased and Owned Real Property SCHEDULE 3.11(f) Mortgaged Property Disposals SCHEDULE 3.13 ERISA Events SCHEDULE 3.14(a) Facilities/Properties Not in Compliance with Environmental Laws SCHEDULE 3.14(b) Environmental Claims SCHEDULE 3.14(c) Hazardous Materials SCHEDULE 3.17 Insurance SCHEDULE 3.21 Indebtedness to Remain Outstanding SCHEDULE 3.22(d) Mortgage Filing Offices SCHEDULE 4.01(e) Local Counsel SCHEDULE 4.01(u)(A) Mortgaged Properties |
SCHEDULE 4.01(u)(C) Title Insurance Amounts SCHEDULE 6.02(v) Existing Liens SCHEDULE 6.05(xii) Real Property Interest Sales SCHEDULE 6.04 Existing Investments SCHEDULE 6.09 Existing Restrictions |
AMENDED AND RESTATED CREDIT AGREEMENT (this "Amended and Restated
Credit Agreement") dated as of July 20, 2005, among SPIRIT AEROSYSTEMS, INC.
(f/k/a MID-WESTERN AIRCRAFT SYSTEMS, INC.), a Delaware corporation (the "U.S.
Borrower"); SPIRIT AEROSYSTEMS HOLDINGS, INC. (f/k/a MID-WESTERN AIRCRAFT
SYSTEMS HOLDINGS, INC.), a Delaware corporation (the "Parent Guarantor"); ONEX
WIND FINANCE LP, a Delaware limited partnership (the "Additional Borrower"); the
financial institutions listed on Schedule 2.01, as such Schedule may from time
to time be supplemented and amended (the "Lenders"); CITICORP NORTH AMERICA,
INC. ("CNAI"), as administrative agent (in such capacity, the "Administrative
Agent") for the Lenders and as collateral agent (in such capacity, the
"Collateral Agent); CITIGROUP GLOBAL MARKETS INC. ("CGMI"), as sole lead
arranger and bookrunner (in such capacity, the "Lead Arranger"); THE BANK OF
NOVA SCOTIA and ROYAL BANK OF CANADA, as co-arrangers (in such capacity, the
"Co-Arrangers") and as co-syndication agents (in such capacity, the
"Co-Syndication Agents"); THE BANK OF NOVA SCOTIA, as Issuing Bank; and EXPORT
DEVELOPMENT CANADA and CAISSE DE DEPOT ET PLACEMENT DU QUEBEC, as
co-documentation agents (in such capacity, the "Co-Documentation Agents").
WHEREAS, the U.S. Borrower, the Parent Guarantor, the Additional Borrower, the Lenders, the Administrative Agent, the Collateral Agent, the Lead Arranger, the Co-Arrangers, the Co-Syndication Agents and the Issuing Bank originally entered into that certain Credit Agreement dated as of June 16, 2005 (the "Original Credit Agreement") and are entering into this Amended and Restated Credit Agreement in order to amend and restate the Original Credit Agreement in its entirety.
WHEREAS, U.S. Borrower, the Parent Guarantor, the Additional Borrower, the Lenders, the Administrative Agent, the Collateral Agent, the Co-Documentation Agents, the Lead Arranger, the Co-Arrangers, the Co-Syndication Agents and the Issuing Bank intend that (a) all obligations of the parties under the Original Credit Agreement shall continue to exist under and be evidenced by this Amended and Restated Credit Agreement and the other Loan Documents; and (b) except as expressly stated herein or amended hereby, the Original Credit Agreement and the other Loan Documents are ratified and confirmed as remaining unmodified and in full force and effect with respect to all Obligations; it being understood that it is the intent of the parties hereto that this Amended and Restated Credit Agreement does not constitute a novation of rights, obligations and liabilities of the respective parties (including the Obligations) existing under the Original Credit Agreement or evidence payment of all or any of such obligations and liabilities and such rights, obligation and liabilities shall continue and remain outstanding, and that this Amended and Restated Credit Agreement amends and restates in its entirety the Original Credit Agreement.
In consideration of the promises and the agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below:
"ABR Borrowing" means a Borrowing comprised of ABR Loans.
"ABR Loan" means any Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.
"Acquired Business" means the assets of the Wichita Division of Boeing Commercial Airplanes being acquired under the Acquisition Agreement.
"Acquisition" means the acquisition of the Acquired Business as contemplated by the Acquisition Agreement and the other Acquisition Documents.
"Acquisition Agreement" means the asset purchase agreement dated as of February 22, 2005 by and among the Seller and Mid-Western Aircraft Systems, Inc.
"Acquisition Consideration" means the purchase consideration for any Permitted Acquisition and all other payments by the Parent Guarantor or any of its Subsidiaries in exchange for, or as part of, or in connection with any Permitted Acquisition, whether paid in cash or by exchange of Equity Interests or of assets or otherwise and whether payable at or prior to the consummation of such Permitted Acquisition or deferred for payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and includes the U.S. Borrower's reasonable estimate of any and all payments representing the purchase price and any assumptions of Indebtedness, "earn-outs" and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any person or business; provided that any such future payment that is subject to a contingency shall be considered Acquisition Consideration only to the extent of the reserve, if any, required under GAAP at the time of such sale to be established in respect thereof by the Parent Guarantor or any of its Subsidiaries.
"Acquisition Documents" means the Acquisition Agreement, each document attached as an exhibit to the Acquisition Agreement and each document attached as an exhibit to each document attached as an exhibit to the Acquisition Agreement.
"Acquisition Indemnity Payment" means any payment received by the Parent Guarantor or any Subsidiary under any escrow arrangement under any Acquisition Document or as a direct or indirect result of any breach of any term or provision of the Acquisition Documents or otherwise in respect of any claim by the Parent Guarantor or any Subsidiary arising out of the Acquisition (other than to the extent relating to indemnification or reimbursement of amounts either paid by the Parent Guarantor or any of its Subsidiaries to Persons other than the Parent Guarantor or any of its Subsidiaries or that are out-of-pocket expenses paid by the Parent Guarantor or any of its Subsidiaries in connection with such breach).
"Acquisition Transactions" means the Acquisition, the entering into of the Boeing Agreements on or before the Effective Date, the entering into of the Seller Loan Agreement, each other transaction contemplated by the Acquisition Documents, the payment of Indebtedness to be repaid on the Effective Date and the payment of fees and expenses in connection with the Transactions.
"Act" has the meaning assigned to such term in Section 10.18.
"Additional Borrower" has the meaning assigned to such term in the preamble to this Agreement.
"Additional Borrower Assignment" has the meaning assigned to such term in Section 10.19.
"Additional Borrower Default" means any Additional Borrower Event of Default, any Additional Borrower Event of Termination and any event or condition which upon notice, lapse of time or both would constitute an Additional Borrower Event of Default or Additional Borrower Event of Termination.
"Additional Borrower Event of Default" has the meaning assigned to such term in Section 7.02.
"Additional Borrower Event of Termination" has the meaning assigned to such term in Section 7.02.
"Additional Borrower Parties" means the Additional Borrower and the Additional Borrower Subsidiaries.
"Additional Borrower Subsidiaries" means each of (i) NSULC and (ii)
WLLC.
"Additional Collateral" has the meaning assigned to such term in
Section 5.11.
"Adjusted Capital Expenditures" means Capital Expenditures, less Boeing Funded Capital Expenditures.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" has the meaning assigned to such term in the preamble hereto.
"Administrative Questionnaire" means an Administrative Questionnaire in the form of Exhibit A.
"Affiliate" of any Person means any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person (excluding any trustee
under, or any committee with responsibility for administering, any Plan). A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power to:
(a) vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners of such Person; or
(b) direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
"Affirmation and Consent" has the meaning assigned to such term in
Section 4.03.
"Agent Fees" has the meaning assigned to such term in Section 2.10(c).
"Agents" means the Administrative Agent and the Collateral Agent.
"Aggregate Revolving Credit Exposure" means the aggregate amount of the Revolving Lenders' Revolving Credit Exposures.
"Agreement" means the Original Credit Agreement as amended and restated in its entirety by this Amended and Restated Credit Agreement.
"Alternate Base Rate" means for any day, a rate per annum equal to the highest of (a) the Administrative Agent's Base Rate in effect on such day, (b) 0.5% per annum above the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average being determined weekly on each Monday (or, if any such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the next previous Friday by the Administrative Agent on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by the Administrative Agent from three New York certificate of deposit dealers of recognized standing selected by the Administrative Agent, in either case adjusted to the nearest 0.25% or, if there is no nearest 0.25%, to the next higher 0.25% (the "Certificate of Deposit Rate"), and (c) the Federal Funds Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Base Rate, the Certificate of Deposit Rate or the Federal Funds Rate shall be effective as of the opening of business on the effective day of such change in the Base Rate, the Certificate of Deposit Rate or the Federal Funds Rate, respectively.
"Amended and Restated Credit Agreement" has the meaning assigned to such term in the preamble hereto.
"Anti-Terrorism Laws" shall have the meaning assigned thereto in
Section 3.23.
"Applicable Rate" means, for any day, with respect to any Revolving Loan or Term B Loan, as the case may be, the applicable percentage set forth in the table below under the appropriate caption:
EURODOLLAR ABR SPREAD SPREAD ---------- ------ REVOLVING LOANS... 2.75% 1.75% TERM B LOANS...... 2.25% 1.25% |
; provided, however, that, with respect to Revolving Loans only, after the Trigger Date, the Applicable Rate shall mean the applicable percentage set forth in the table below under the appropriate caption:
Total Revolving Loans Leverage ------------------------------ Ratio Eurodollar Spread ABR Spread -------- ----------------- ---------- Level I >2.5:1 2.75% 1.75% Level II <2.5:1 but >1.75 2.50% 1.50% Level III <1.75 2.25% 1.25% |
For purposes of such calculation of the Applicable Rate with respect
to Revolving Loans on and after the Trigger Date, the Total Leverage Ratio shall
be determined as of the end of each fiscal quarter of the U.S. Borrower's fiscal
year based upon the U.S. Borrower's consolidated financial statements delivered
pursuant to Section 5.01(a) or (b). If at any time the U.S. Borrower has not
submitted to the Administrative Agent the applicable information as and when
required under Section 5.01(a) or (b), the Applicable Rate shall be the highest
rate set forth in the table above until such time as the U.S. Borrower has
provided the information required under Section 5.01(a) or (b). Within one (1)
Business Day of receipt of the applicable information as and when required under
Section 5.01(a) or (b), the Administrative Agent shall give each Lender
telefacsimile or telephonic notice (confirmed in writing) of the Applicable Rate
in effect from such date.
"Approved Fund" means any Fund that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.
"Asset Sale" means any direct or indirect sale, transfer, lease, conveyance or other disposition by the Parent Guarantor or any of its Subsidiaries of any of its property or assets, including any sale or issuance of any Equity Interests of any Subsidiary, except (a) transactions
permitted by Section 6.05 (other than Section 6.05(xii) or (xiii)), and (b) any such transaction or series of transactions which, if an Asset Sale, would not generate Net Proceeds in excess of $5.0 million (or, when taken together with all other such transactions, in excess of $10.0 million in any twelve-month period).
"Assignment Agreement" means the Assignment Agreement, dated as of the Effective Date, between the Seller and the Boeing Trust.
"Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.04(b)), and accepted by the Administrative Agent, in the form of Exhibit C or such other form as shall be approved by the Administrative Agent.
"Authorized Office" means, with respect to any Borrower, those of its officers whose signature and incumbency has been certified to the Administrative Agent and the Lenders by the Secretary of such Borrower in a certificate dated the Effective Date or any successor thereto.
"Available Revolving Credit Commitment" means as to any Revolving Lender, at any time of determination, an amount equal to such Revolving Lender's Revolving Credit Commitment at such time minus such Revolving Lender's Revolving Credit Exposure at such time.
"Base Amount" has the meaning assigned to such term in Section 6.14.
"Base Rate" means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its base rate in effect at its principal office in New York City (the Base Rate not being intended to be the lowest rate of interest charged by the Administrative Agent in connection with extensions of credit to debtors) (any change in such rate announced by the Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change).
"Blocked Repayment" has the meaning assigned to such term in Section
2.05(g). "Board" means the Board of Governors of the Federal Reserve System of
the United States.
"Board of Directors" means, with respect to any Person, (i) in the case of any corporation, the board of directors of such Person, (ii) in the case of any limited liability company, the board of managers of such Person, (iii) in the case of any partnership, the Board of Directors of the general partner of such Person and (iv) in any other case, the functional equivalent of the foregoing.
"Boeing Agreements" means the Acquisition Agreement and the other documents and agreements identified on Schedule 1.01(a) hereto.
"Boeing Funded Capital Expenditures" means Capital Expenditures made by the U.S. Borrower or any of its Subsidiaries which are required to be reimbursed by Seller through the sale of the acquired assets to Seller pursuant to Section 5.2.1 of the SBP.
"Boeing Funded Capital Expenditures Shortfall Event" means the occurrence of Seller having failed to reimburse the Loan Parties for the full amount of Boeing Funded Capital Expenditures made during a given Fiscal Quarter required to have been made by Seller pursuant to Section 5.2.1 of the SBP and such failure shall have remained unremedied by the 30th day after the end of such Fiscal Quarter. The aggregate amount of such Boeing Funded Capital Expenditures expensed but not reimbursed as required by the SBP shall be referred to as the "Boeing Shortfall Amount." A Boeing Funded Capital Expenditures Shortfall Event shall be deemed to continue until the Boeing Shortfall Amount has been reimbursed in full in accordance with the SBP.
"Boeing IRB Documents" means collectively the Indentures governing the Bonds identified on Schedule I of the Buyer Sublease and the Lease Agreements and Guaranty Agreements identified on Schedule II of the Buyer Sublease.
"Boeing Shortfall Amount" shall have the meaning assigned to such term in the definition of "Boeing Funded Capital Expenditures Shortfall Event."
"Boeing Trust" has the meaning set forth in Section 3.25.
"Boeing Trust Agreement" means the Amended and Restated Boeing IRB Asset Trust Agreement, dated as of the Effective Date, among Seller, as Administrative Agent, Wilmington Trust, as Delaware Trustee, Wilmington Trust SP Services, Inc., as Independent Agent, and TBC Trust, as Special Agent.
"Borrower" or "Borrowers" means collectively the U.S. Borrower and the Additional Borrower.
"Borrowing" means a Loan or group of Loans to a particular Borrower of the same Class and Type made (including through a conversion or continuation) by the applicable Lenders on a single date and as to which a single Interest Period is in effect.
"Borrowing Date" means any Business Day specified in a notice pursuant to Section 2.02 as a date on which any Borrower requests Loans to be made hereunder.
"Borrowing Request" has the meaning assigned to such term in Section 2.02(a).
"Business Day" means (a) for all purposes other than as covered by
clause (b) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close and
(b) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (a) and which is also a day for trading by and
between banks in Dollar deposits in the interbank eurodollar market.
"Buyer Sublease" means the Sublease Agreement, dated as of the Effective Date, between the Boeing Trust, the Seller and the U.S. Borrower.
"Canadian Pledge Agreement" means the Canadian Pledge Agreement, substantially in the form of Exhibit T-4, between the General Partner and the Collateral Agent for the benefit of the Lenders (as the same may be amended, supplemented or amended and restated from time to time).
"Capital Expenditures" means, for any period, (a) any and all expenditures made by the U.S. Borrower or any of its Subsidiaries in such period for assets added to or reflected in its property, plant and equipment accounts or other similar capital asset accounts or comparable items or any other capital expenditures that are, or should be, set forth as "additions to plant, property and equipment" on the financial statement prepared in accordance with GAAP, whether such asset is purchased for cash or financed as an account payable or by the incurrence of Indebtedness, accrued as a liability or otherwise and (b) all Capital Lease Obligations of the U.S. Borrower and its Subsidiaries; provided that Capital Expenditures shall not include (v) capitalized interest to the extent included in Consolidated Interest Expense for such period, (w) expenditures under clause (a) to the extent financed with (i) the proceeds of an Excluded Equity Issuance and (ii) the proceeds of an Asset Sale, Destruction or Taking or insurance or condemnation recoveries related thereto to the extent permitted to be reinvested pursuant to Section 2.05A(a) or 2.05A(b), (x) 787 Expenditures which have been capitalized and are identified as "Excluded 787 Capital Expenditures" in a certificate of the chief financial officer of the U.S. Borrower delivered to the Administrative Agent together with the delivery of financial statements under Section 5.01(a) or 5.01(b), which certificate sets out such 787 Expenditures in reasonable detail (including a break-out of the amount of 787 Expenditures which are treated as Excluded 787 Capital Expenditures) and certifies that such costs and expenses qualify as 787 Expenditures pursuant to the definition thereof (it being understood that such Excluded 787 Capital Expenditures shall not be added to Consolidated EBITDA pursuant to clause (j) of the definition of "Consolidated EBITDA"), (y) expenditures for Permitted Acquisitions or (z) other capital expenditures (other than Boeing Funded Capital Expenditures) made by the U.S. Borrower or any of its Subsidiaries which are reimbursed by Seller or any other Person or in which the assets acquired pursuant to such capital expenditures are sold to Seller or any other Person, to the extent the terms of such capital expenditures and the reimbursement provisions or sale provisions, as applicable, with respect thereto are approved by the Requisite Lenders after the Effective Date.
"Capital Lease Obligations" means all monetary or financial obligations of the U.S. Borrower and its Subsidiaries under any leasing or similar arrangement conveying the right to use real or personal property, or a combination thereof, which, in accordance with GAAP, would or should be classified and accounted for as capital leases, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date on which such lease may be terminated by the lessee without payment of a penalty.
"Cash Interest Expense" means, for any period, Consolidated Interest Expense for such period, including imputed interest expense for Capital Lease Obligations and excluding any
interest expense not payable in cash (such as, for example, amortization of discount, amortization of debt issuance costs and interest payable-in-kind).
Notwithstanding the foregoing, for the purposes of calculating Cash Interest Expense:
(i) for the four fiscal quarters ended December 31, 2005, Cash Interest Expense shall be deemed to equal the product of (a) the sum of Cash Interest Expense for the two quarters ended December 31, 2005, as determined in accordance with the preceding paragraph of this definition of "Cash Interest Expense," multiplied by (b) 2; and
(ii) for the four fiscal quarters ended March 31, 2006, Cash Interest Expense shall be deemed to equal the product of (a) the sum of Cash Interest Expense for the three quarters ended March 31, 2006, as determined in accordance with the preceding paragraph of this definition of "Cash Interest Expense," multiplied by (b) 4/3.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System List.
"CGMI" has the meaning assigned to such term in the preamble hereto.
"Change in Control" means
(a) prior to such time as there shall have been consummated an Initial Public Offering of the Parent Guarantor, the occurrence of any of the following: (i) the Permitted Holders (collectively) cease to own, or to have the power to vote or direct the voting of, Voting Stock of the Parent Guarantor representing a majority of the voting power of the total outstanding Voting Stock of the Parent Guarantor or (ii) the Permitted Holders cease to own Equity Interests representing a majority of the total economic interests of the Equity Interests of the Parent Guarantor;
(b) from and after the time that there shall have been consummated an Initial Public Offering of the Parent Guarantor, the occurrence of any of the following: (i) the Permitted Holders (collectively) shall fail to own, or to have the power to vote or direct the voting of, Voting Stock of the Parent Guarantor representing at least 35% of the voting power of the total outstanding Voting Stock of the Parent Guarantor, (ii) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause such person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stock of the Parent Guarantor representing voting power that is greater than the voting power represented by the Voting Stock of the Parent Guarantor beneficially owned, directly or indirectly, by the Permitted Holders (collectively) or (iii) during any
period of two consecutive years, individuals who at the beginning of such period constituted the board of directors of the Parent Guarantor (together with any new directors who were nominated for election by a Permitted Holder or whose election to such board of directors or whose nomination for election was approved by a vote of a majority of the directors of the Parent Guarantor then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the board of directors of the Parent Guarantor; provided that a Change in Control under this clause (b)(iii) shall not be deemed to have occurred if and for so long as the Permitted Holders have the power to elect a majority of the board of directors of the Parent Guarantor,
(c) at any time, the Parent Guarantor ceases to own 100% of the Equity Interests of the U.S. Borrower;
(d) at any time prior to an Additional Borrower Assignment permitted by Section 10.19, (x) the Sponsors shall cease to own, directly or indirectly, 100% of the Equity Interests of the Additional Borrower or (y) the Additional Borrower shall cease to own, directly or indirectly, 100% of the Equity Interests of any of the Additional Borrower Subsidiaries; or
(e) at any time, a "Change of Control" (or equivalent term) has occurred under the Seller Loan Agreement.
"Charges" has the meaning assigned to such term in Section 10.09.
"Class" when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term B Loans or Swingline Loans, and when used in reference to any Commitment, refers to whether such Commitment is a Revolving Credit Commitment or Term B Commitment, and when used in reference to any Lender, refers to whether such Lender is a Revolving Lender or a Term B Lender.
"Closing Certificate" means a certificate substantially in the form of Exhibit H.
"CNAI" has the meaning assigned to such term in the preamble hereto.
"Co-Arrangers" has the meaning assigned to such term in the preamble hereto.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Collateral" means any and all "Collateral," "Mortgaged Property" or "Trust Property," as defined in any applicable Security Document, and all other property of whatever kind and nature pledged as collateral under any Security Document.
"Collateral Account" means the collateral account or sub-account established and maintained by the Collateral Agent in its name as Collateral Agent for the benefit of the Secured Parties, in accordance with the provisions of the Security Agreement.
"Collateral Agent" has the meaning assigned to such term in the preamble hereto.
"Commitment" means, with respect to any Lender, such Lender's Revolving Credit Commitment or Term B Commitment or any combination thereof (as the context requires).
"Commitment Fee" has the meaning assigned to such term in Section 2.10(a).
"Commitment Fee Average Daily Amount" has the meaning assigned to such term in Section 2.10(a).
"Commitment Fee Percentage" means, for any day 0.50% per annum.
"Commitment Fee Termination Date" has the meaning assigned to such term in Section 2.10(a).
"Commitment Letter" means the Amended and Restated Commitment Letter dated April 26, 2005 among the Administrative Agent, the Lead Arranger, the Co-Arrangers and the Parent Guarantor.
"Commitment Percentage" means the percentage of the Total Revolving Credit Commitment represented by such Lender's Revolving Credit Commitment. If the Revolving Credit Commitments have terminated or expired, the Commitment Percentage shall be determined based upon the Revolving Credit Commitments most recently in effect, giving effect to any assignments.
"Communications" has the meaning assigned to such term in Section 10.17(a).
"Compliance Certificate" has the meaning assigned to such term in
Section 5.01(b) and shall be substantially in the form of Exhibit E.
"Consolidated Amortization Expense" means, for any period, the amortization expense of the U.S. Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, plus, to the extent not already included in such amortization expense, (i) non-cash expense recorded as contra-revenue as a result of the right to use by the U.S. Borrower and its Subsidiaries of tooling owned by Seller and (ii) the amortization of certain intangibles that are recorded as contra-revenues, in each case determined on a consolidated basis in accordance with GAAP.
"Consolidated Depreciation Expense" means, for any period, the depreciation expense of the U.S. Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" means, for any period, Consolidated Net Income for such period, adjusted by (x) adding thereto, in each case only to the extent (and in the same proportion) deducted in determining such Consolidated Net Income and without duplication (and with respect to the portion of Consolidated Net Income attributable to any Subsidiary of the U.S. Borrower only if a corresponding amount would not be prohibited at the date of determination to
be distributed to the U.S. Borrower by such Subsidiary), pursuant to the terms of its Organizational Documents and all agreements, instruments and Requirements of Law applicable to such Subsidiary or its equityholders):
(a) Consolidated Interest Expense for such period,
(b) Consolidated Amortization Expense for such period,
(c) Consolidated Depreciation Expense for such period,
(d) Consolidated Tax Expense for such period,
(e) costs and expenses incurred in connection with the Transactions paid or invoiced in the Fiscal Quarter ending December 31, 2005 (not to exceed $10.0 million),
(f) non-recurring expenses during the fourth Fiscal Quarter of Fiscal Year 2005 related to the Transactions not to exceed $9.0 million,
(g) the aggregate amount of all other non-cash charges reducing
Consolidated Net Income (excluding any non-cash charge that results in an
accrual of a reserve for cash charges in any future period unless such
non-cash charge results from Hedging Agreements of the type described in
Section 6.01(a)(viii) or such non-cash charge results from non-cash
employee compensation expenses and/or management payments) for such period,
(h) Acquisition related transition expenses, to the extent incurred on or before December 31, 2007, in an aggregate amount to not exceed $50.0 million (of which $30.0 million is funded by Seller),
(i) fees paid to Onex Partners, the Sponsors and their respective
Affiliates under the Management Agreement to the extent permitted under
Section 6.08(iv),
(j) 787 Expenditures which are expensed (which for the avoidance of doubt, does not include Excluded 787 Capital Expenditures) (provided that, together with the delivery of financial statements under Section 5.01(a) or 5.01(b), the U.S. Borrower provides the Administrative Agent with a certificate of the chief financial officer of the U.S. Borrower setting out such 787 Expenditures in reasonable detail (including a breakout of the amount of 787 Expenditures which have been added to Consolidated EBITDA) and certifying that such costs and expenses qualify as 787 Expenditures pursuant to the definition thereof), and
(k) for purposes of determining compliance with the Financial Covenants in Sections 6.12 and 6.13 only, the Cure Amount, if any, received by the U.S. Borrower for such period and permitted to be included in Consolidated EBITDA pursuant to Section 7.07 and applied to repay Loans in accordance with Section 2.05(a) within two Business Days of the issuance of the Permitted Cure Securities with respect thereto; and
(y) subtracting therefrom the aggregate amount of all non-cash items increasing Consolidated Net Income (other than (A) the accrual of revenue, reversal of deferred revenues or advance payments or recording of receivables in the ordinary course of business and (B) the reversal of an accrual of a reserve referred to in the parenthetical to clause (g) of this definition) for such period.
Other than for purposes of calculating Excess Cash Flow, Consolidated EBITDA shall be calculated on a Pro Forma Basis to give effect to any Permitted Acquisition and asset dispositions (other than any asset dispositions in the ordinary course of business) consummated at any time on or after the first day of the Test Period thereof as if each such Permitted Acquisition had been effected on the first day of such period and as if each such asset sale or disposition had been consummated on the day prior to the first day of such period.
Notwithstanding the foregoing, for the purposes of calculating Consolidated EBITDA:
(i) for the four fiscal quarters ended December 31, 2005, Consolidated EBITDA shall be deemed to equal the product of (a) the Consolidated EBITDA for the quarter ended December 31, 2005, as determined in accordance with the preceding paragraphs of this definition of "Consolidated EBITDA," multiplied by (b) 4;
(ii) for the four fiscal quarters ended March 31, 2006, Consolidated EBITDA shall be deemed to equal the product of (a) the sum of Consolidated EBITDA for the two quarters ended March 31, 2006, as determined in accordance with the preceding paragraphs of this definition of "Consolidated EBITDA," multiplied by (b) 2; and
(iii) for the four fiscal quarters ended June 30, 2006, Consolidated EBITDA shall be deemed to equal the product of (a) the sum of Consolidated EBITDA for the three quarters ended June 30, 2006, as determined in accordance with the preceding paragraphs of this definition of "Consolidated EBITDA," multiplied by (b) 4/3.
"Consolidated Indebtedness" means, at a particular date, the aggregate amount of all indebtedness of the U.S. Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP at such date; provided, however, that (x) for purposes of the Financial Covenants only, upon the occurrence and during the continuation of a 787 Discontinuance, Consolidated Indebtedness shall be increased by an amount equal to the aggregate amount of advance payments made by Seller for shipsets no longer to be delivered by the U.S. Borrower as a result of the 787 Discontinuance (but only if such amount is not otherwise included in the calculation of Consolidated Indebtedness), less the amount of advance payments repaid to Seller after the occurrence of such 787 Discontinuance when due and paid in accordance with the terms of the 787 Agreement, and (y) the amount of Indebtedness of the U.S. Borrower in respect of the WLLC Loans shall not be deemed to be less than the aggregate amount of Indebtedness of the Additional Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. Notwithstanding the foregoing, in no event will obligations or liabilities in respect of any Equity Interests constitute Consolidated Indebtedness.
"Consolidated Interest Expense" means, with respect to the U.S. Borrower and its Subsidiaries on a consolidated basis for any period, the sum of
(a) gross interest expense for such period, including (i) the amortization of debt discounts, (ii) the amortization of all fees (including fees with respect to Hedging Agreements) payable in connection with the incurrence of Indebtedness to the extent included in interest expense (but excluding the amortization of debt issuance costs in connection with the Transactions) and (iii) the portion of any payments or accruals with respect to Capital Lease Obligations allocable to interest expense, and
(b) capitalized interest,
provided that the aggregate amount of interest expense of the U.S. Borrower in respect of the WLLC Loans for such period shall not be deemed to be less than the aggregate amount of interest expense of the Additional Borrower and its Subsidiaries on a consolidated basis for such period (determined as set forth in this definition).
Consolidated Interest Expense shall be calculated on a Pro Forma Basis to give effect to any Indebtedness incurred, assumed or permanently repaid or extinguished during the relevant Test Period in connection with any Permitted Acquisitions and asset dispositions (other than any asset dispositions in the ordinary course of business) as if such incurrence, assumption, repayment or extinguishing had been effected on the first day of such period.
"Consolidated Net Income" means, for any period, the net income or loss of the U.S. Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded therefrom without duplication.
(i) the income or loss of any Person (other than consolidated Subsidiaries of the U.S. Borrower) in which any other Person (other than the U.S. Borrower or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to the U.S. Borrower or any of its Subsidiaries by such Person during such period,
(ii) the cumulative effect of a change in accounting principles during such period,
(iii) any net after-tax income (loss) from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations,
(iv) the income or loss of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the U.S. Borrower or any of its Subsidiaries or that Person's assets are acquired by the U.S. Borrower or any of its Subsidiaries,
(v) the income of any consolidated Subsidiary to the extent that declaration of payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary; and
(vi) any (x) extraordinary gain (or extraordinary loss) realized during such period by the U.S. Borrower or any of its Subsidiaries or (y) gain (or loss) realized during such period by the U.S. Borrower or any of its Subsidiaries upon an asset disposition (other than asset dispositions in the ordinary course of business), in each case, together with any related provision for taxes on any such gain (or the tax effect of any such loss), recorded or recognized by the U.S. Borrower or any of its Subsidiaries during such period.
"Consolidated Tax Expense" means, for any period, the tax expense of the U.S. Borrower and its Subsidiaries, for such period, determined on a consolidated basis in accordance with GAAP.
"control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and "controlling" and "controlled" have meanings correlative thereto.
"Co-Documentation Agents" has the meaning assigned to such term in the preamble of this Agreement.
"Co-Syndication Agents" has the meaning assigned to such term in the preamble of this Agreement.
"Credit Event" has the meaning assigned to such term in Section 4.02.
"Cure Amount" has the meaning assigned to such term in Section 7.07.
"Cure Right" has the meaning assigned to such term in Section 7.07.
"Debt Incurrence" has the meaning assigned to such term in Section 2.05(c)(ii).
"Default" means any Event of Default, any Event of Termination and any event or condition which upon notice, lapse of time or both would constitute an Event of Default or Event of Termination.
"Designated Lock-Box Account" has the meaning assigned to such term in
Section 2.05(g).
"Destruction" means any and all damage to, or loss or destruction of, all or any portion of the Property of the Parent Guarantor, the U.S. Borrower or any of its Subsidiaries.
"Discharge of Obligations" means the occurrence of all of the following: (i) termination of all commitments to extend credit that would constitute Obligations, (ii) payment in full in cash of all Obligations (other than contingent indemnification obligations not then claimed or due) and (iii) termination, cancellation or cash collateralization of all outstanding Letters of Credit hereunder constituting Obligations.
"Disqualified Capital Stock" means any Equity Interest which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is six months following the Final Maturity Date, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interests referred to in (a) above, in each case at any time on or prior to the date that is six months following the Final Maturity Date, or (c) contains any repurchase obligation (other than repurchase obligations with respect to the Parent Guarantor's common Equity Interests issued to employees, officers and directors of the Parent Guarantor and its Subsidiaries upon death, disability, retirement, severance or termination of employment or service) which may come into effect prior to payment in full of all Obligations (other than contingent indemnification obligations under the Loan Documents that are not then due or claimed); provided, however, that any Equity Interests that would not constitute Disqualified Capital Stock but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests is convertible, exchangeable or exercisable) the right to require the issuer thereof to redeem such Equity Interests upon the occurrence of change in control or an asset sale occurring prior to the date that is six months following the Final Maturity Date shall not constitute Disqualified Capital Stock if such Equity Interests provide that the issuer thereof will not redeem any such Equity Interests pursuant to such provisions prior to the repayment in full of the Obligations (other than contingent indemnification obligations under the Loan Documents that are not then due or claimed).
"Dollars" or "$" means lawful money of the United States of America.
"Effective Date" means June 16, 2005.
"Eligible Assignee" shall mean (a) if the assignment does not include assignment of a Revolving Credit Commitment, (i) any Lender, (ii) an Affiliate of any Lender, (iii) an Approved Fund and (iv) any other person approved by the Administrative Agent and the U.S. Borrower (each such approval not to be unreasonably withheld or delayed) and (b) if the assignment includes assignment of a Revolving Credit Commitment, (i) any Revolving Lender, (ii) an Affiliate of any Revolving Lender, (iii) an Approved Fund of a Revolving Lender and (iv) any other Person approved by the Administrative Agent, the Issuing Bank, the Swingline Lender and the U.S. Borrower (each such approval not to be unreasonably withheld or delayed); provided that (x) no approval of the U.S. Borrower shall be required during the continuance of an Event of Default or during the initial syndication of the Commitments and Loans (as determined by the Administrative Agent) and (y) "Eligible Assignee" shall not include any Borrower or any of its Affiliates or Subsidiaries or any natural person.
"Embargoed Person" has the meaning assigned to such term in Section 6.19.
"Environment" means ambient air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources such as flora and fauna, or as otherwise defined in any applicable Environmental Law.
"Environmental Claim" means any notice of violation, claim, demand,
order, directive, cost recovery action or other cause of action by, or on behalf
of, any Governmental Authority or any other Person for damages, injunctive or
equitable relief, personal injury (including sickness, disease or death),
Remedial Action costs, tangible or intangible property damage, natural resource
damages, nuisance, pollution, any adverse effect on the Environment caused by
any Hazardous Material, or for fines, penalties or restrictions, resulting from
or based upon: (a) the existence, or the continuation of the existence, of a
Release (including sudden or non-sudden, accidental or non-accidental Releases);
(b) exposure to any Hazardous Material; (c) the presence, use, handling,
transportation, storage, treatment or disposal of any Hazardous Material; or (d)
the violation or alleged violation of any Environmental Law or Environmental
Permit.
"Environmental Laws" means all federal, state, local or foreign Requirements of Law, statutes, ordinances, regulations, rules, including common law rules, judgments, orders, notice requirements, court decisions, agency guidelines, restrictions and licenses, which (a) regulate or relate to pollution or the protection, including without limitation any Remedial Action, of the environment or human health (to the extent relating to exposure to Hazardous Materials), (b) the use, generation, distribution, treatment, storage, transportation, handling, disposal or release of Hazardous Materials, (c) the preservation or protection of waterways, groundwater, drinking water, air, wildlife, plants or other natural resources or (d) impose liability or provide for damages with respect to any of the foregoing, including 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, local or foreign Requirement of Law of similar effect, each as amended.
"Environmental Liability" means any liability, contingent or otherwise (including, but not limited to, any liability for damages, natural resource damage, costs of Remedial Action, administrative oversight costs, fines, penalties or indemnities), of the Parent Guarantor or any of its Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials or (d) the Release or threatened Release of any Hazardous Materials.
"Environmental Permit" means any permit, approval, authorization, certificate, license, variance, filing or permission required by or from any Governmental Authority pursuant to any Environmental Law.
"Equity Interests" means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person.
"Equity Investments" has the meaning assigned thereto in Section 4.01(n).
"Equity Investors" means collectively, the Permitted Holders and officers, employees and directors of the Parent Guarantor or any of its Subsidiaries that own Equity Interests of the Parent Guarantor.
"Equity Issuance" has the meaning assigned thereto in Section 2.05(c)(i).
"Equity Rights" means all securities convertible or exchangeable for Equity Interests and all warrants, options or other rights to purchase or subscribe for any Equity Interests, whether or not presently convertible, exchangeable or exercisable, but excluding debt securities convertible or exchangeable into any such equity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with any Loan Party, is treated as a single
employer under Sections 414(b) or (c) of the Code, and for the purpose of
Section 302 of ERISA and/or Section 412, 4971, 4977, 4980D, 4980E and/or each
"applicable section" under Section 414(t)(2) of the Code, within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
"ERISA Event" means (a) any "reportable event," as defined in Section
4043(c) of ERISA or the regulations issued thereunder, with respect to a Pension
Plan (other than an event for which the 30-day notice period is waived by
regulation); (b) the existence with respect to any Pension Plan of an
"accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived, the failure to make by its due
date a required installment under Section 412(m) of the Code with respect to any
Pension Plan or the failure to make any required contribution to a Multiemployer
Plan; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Pension Plan; (d) the incurrence by any Loan Party or ERISA
Affiliate of any liability under Title IV of ERISA with respect to any Pension
Plan; (e) the receipt by any Loan Party or ERISA Affiliate from the PBGC or a
plan administrator of any notice relating to an intention to terminate any
Pension Plan, to appoint a trustee to administer any Pension Plan, or to take
any other action with respect to a Pension Plan that could result in material
liability to a Loan Party or a Subsidiary, or the occurrence of any event or
condition which could reasonably be expected to constitute grounds under ERISA
for the termination of or the appointment of a trustee to administer, any
Pension Plan; (f) the incurrence by any Loan Party or ERISA Affiliate of any
liability with respect to the withdrawal or partial withdrawal from any Pension
Plan or Multiemployer Plan; (g) the receipt by a Loan Party or ERISA Affiliate
of any notice concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA; (h) the "substantial
cessation of operations" within the meaning of Section 4062(e) of ERISA with
respect to a Pension Plan; (i) the making of any amendment to any Pension Plan
which could result in the imposition of a lien or the posting of a bond or other
security; or (j) the occurrence of a nonexempt prohibited transaction (within
the meaning of Section 4975 of the Code or Section 406 of ERISA) which could
result in liability to a Loan Party or any of the Subsidiaries.
"Eurodollar Borrowing" means a Borrowing comprised of Eurodollar Loans.
"Eurodollar Loan" means any Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.
"Event of Default" means a U.S. Borrower Event of Default or an Additional Borrower Event of Default.
"Event of Termination" has the meaning assigned to such term in
Section 7.01.
"Excess Cash Flow" means, for any Excess Cash Flow Period, (i) Consolidated Net Income for such Excess Cash Flow Period, plus (ii) (a) the amount of Consolidated Amortization Expense and Consolidated Depreciation Expense for such Excess Cash Flow Period, plus (b) the difference between Consolidated Interest Expense for such Excess Cash Flow Period over Cash Interest Expense for such Excess Cash Flow Period, plus (c) the difference between Consolidated Tax Expense for such Excess Cash Flow Period over all cash payments in respect of income taxes made during such Excess Cash Flow Period (net of any cash refund in respect of income taxes actually received during such Excess Cash Flow Period), minus
(iii) without duplication:
(a) scheduled principal amortization of all Indebtedness for such Excess Cash Flow Period;
(b) any voluntary prepayments of Indebtedness that does not have a revolving commitment and any permanent voluntary reductions to the Revolving Credit Commitments to the extent that an equal amount of the Revolving Loans simultaneously is repaid and any payments required to be made to a Designated Lockbox Account, in each case so long as such amounts are not already reflected in clause (a) above, during such Excess Cash Flow Period;
(c) Adjusted Capital Expenditures and Excluded 787 Capital Expenditures during such Excess Cash Flow Period (excluding Adjusted Capital Expenditures and Excluded 787 Capital Expenditures made in such Excess Cash Flow Period where a certificate in the form contemplated by the following clause (d) was previously delivered) that are paid in cash;
(d) Adjusted Capital Expenditures and Excluded 787 Capital Expenditures that the U.S. Borrower or any of its Subsidiaries shall, during such Excess Cash Flow Period, become obligated to make but that are not made during such Excess Cash Flow Period; provided that the U.S. Borrower shall deliver a certificate to the Administrative Agent not later than 90 days after the end of such Excess Cash Flow Period, signed by a Responsible Officer of the U.S. Borrower and certifying that such Adjusted Capital Expenditures and Excluded 787 Capital Expenditures will be made in the following Excess Cash Flow Period;
(e) the aggregate amount of investments made in cash during such period pursuant to Section 6.04(vii), (xi), or (xv) (other than investments made with Excluded Equity Issuances or the proceeds of Indebtedness);
(f) the product of (x) the number of shipsets under the 787 Program delivered to Seller during such Excess Cash Flow Period, multiplied by (y) $1.4 million; provided that this clause (f) shall no longer be effective after a total of 500 shipsets under the 787 Program have been delivered to Seller;
(g) losses excluded from the calculation of Consolidated Net Income by operation of clause (vi) of the definition thereof that are paid in cash during such Excess Cash Flow Period;
(h) the aggregate amount of other non-cash items of income included in Consolidated Net Income for such Excess Cash Flow Period; and
(i) any cash payments that are made during such Excess Cash Flow Period that have the effect of reducing an accrued liability;
provided that any amount deducted pursuant of any of the foregoing clauses that will be paid after the close of such Excess Cash Flow Period shall not be deducted again in a subsequent Excess Cash Flow Period; plus, without duplication:
(i) all proceeds received during such Excess Cash Flow Period of any Indebtedness to the extent used to finance any Adjusted Capital Expenditure (other than Indebtedness under this Agreement to the extent there is no corresponding deduction to Excess Cash Flow above in respect of the use of such borrowings);
(ii) to the extent any permitted Adjusted Capital Expenditures referred to in clause (d) above do not occur in the Excess Cash Flow Period specified in the certificate of the U.S. Borrower provided pursuant to clause (d) above, such amounts of Adjusted Capital Expenditures that were not so made in the Excess Cash Flow Period specified in such certificates;
(iii) any return of capital in respect of investments received in cash during such period, which investments were made pursuant to Section 6.04(vii), (xi), (xii) or (xv) (other than investments made from Excluded Equity Issuances or the proceeds of Indebtedness), to the extent such investments were deducted from Excess Cash Flow pursuant to clause (e) above when made;
(iv) all 787 Expenditures (including Excluded 787 Capital Expenditures) made during such Excess Cash Flow Period; provided that this clause (iv) shall no longer be effective after a total of $700 million of 787 Expenditures (including Excluded 787 Capital Expenditures) have been made since the Effective Date;
(v) income or gain excluded from the calculation of Consolidated Net Income by operation of clause (vi) of the definition thereof that is realized m cash during such Excess
Cash Flow Period (except to the extent such gain is subject to a mandatory repayment under Section 2.05(A); and
(vi) the aggregate amount of all other non-cash charges reducing Consolidated Net Income during such Excess Cash Flow Period.
"Excess Cash Flow Percentage" means, with respect to any Excess Cash Flow Period, (i) 75% if the Total Leverage Ratio is greater than or equal to 2.5:1 as of the end of such Excess Cash Flow Period and (ii) 50% if the Total Leverage Ratio is less than 2.5:1 as of the end of such Excess Cash Flow Period.
"Excess Cash Flow Period" means each Fiscal Year of the U.S. Borrower beginning with the 2006 Fiscal Year.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Debt Issuance" means any issuance of Indebtedness permitted by Section 6.01(a) other than pursuant to the proviso in Section 6.01(a)(vii)(A).
"Excluded Equity Issuance" means (i) the issuance of Equity Interests or Equity Rights of the Parent Guarantor to the Equity Investors to the extent the net cash proceeds thereof are contributed to the common equity capital of the U.S. Borrower and (ii) the issuance of Equity Interests or Equity Rights of Parent Guarantor (other than Disqualified Capital Stock) as consideration in a Permitted Acquisition pursuant to Section 6.04(xii)(ii).
"Excluded 787 Capital Expenditures" means 787 Expenditures excluded from Capital Expenditures pursuant to clause (x) of the definition of "Capital Expenditures."
"Executive Order" shall have the meaning assigned thereto in Section 3.23 and Section 6.19.
"Federal Funds Rate" means, for any day, the weighted average of the rates (rounded upwards, if necessary, to the nearest 1/100th of 1%) on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York; provided that (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate for such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if such rate is not so published for any day which is a Business Day, the Federal Funds Rate for such day shall be the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.
"Fee Letter" means the Second Amended and Restated Fee Letter dated as of the Effective Date among the Administrative Agent, the Lead Arranger, the Co-Arrangers and the Parent Guarantor.
"Fees" means the Commitment Fees, the LC Fees and the Agent Fees.
"Final Maturity Date" mean the later of the Revolving Credit Maturity Date and the Term B Loan Maturity Date.
"Financial Covenants" means those covenants and agreements of the Loan Parties set forth in Sections 6.12 through 6.14, inclusive.
"Financial Officer" of any corporation, partnership or other entity means the chief financial officer, the principal accounting officer, Treasurer or Controller of such corporation, partnership or other entity.
"Financing Transactions" means, collectively, (i) the execution and delivery by each Loan Party of each of the Loan Documents and the Borrowing of the Term B Loans, and the Term Transaction, in each case on the Effective Date, and (ii) the entering into of the Seller Loan Agreement and the Seller Loan Documents on the Effective Date.
"Fiscal Quarter" means any period of 13 or 14 weeks ending on the Thursday nearest to the last day of each calendar quarter in each calendar year.
"Fiscal Year" means any period of 52 or 53 consecutive weeks ending on the Thursday nearest to December 31 of each calendar year; references to a Fiscal Year with a number corresponding to any calendar year (e.g., the "2005 Fiscal Year") refer to the Fiscal Year ending on or about December 31 occurring during such calendar year.
"Foreign Plan" means any employee benefit plan, program, policy, arrangement or agreement maintained or contributed to outside the United States by any Loan Party or any Subsidiary primarily for the benefit of employees of any Loan Party or any Subsidiary employed outside the United States.
"Foreign Subsidiary" means any direct or indirect Subsidiary of the U.S. Borrower which is organized under the laws of a Non-U.S. Jurisdiction.
"Fund" shall mean any Person that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course.
"GAAP" means generally accepted accounting principles in the United States applied on a consistent basis.
"General Partner" means 1648701 Ontario Inc., an Ontario corporation.
"Governmental Authority" means any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body, including any central bank.
"GTA" means the General Terms Agreement, BCA-65530-0016, dated as of the Effective Date, between the U.S. Borrower and Seller.
"Guarantee" of or by any Person (the "guarantor") means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the "primary obligor") in
any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation or
to purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation
of the payment thereof (including pursuant to a "synthetic lease"), (c) to
maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
amount of the obligation under any Guarantee shall be deemed to be the lower of
(a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee is made (including principal,
interest and fees) and (b) the maximum amount for which such guarantor may be
liable pursuant to the terms of the instrument embodying such Guarantee, unless
such primary obligation and the maximum amount for which such guarantor may be
liable are not stated or determinable, in which case the amount of the
obligation under such Guarantee shall be such guarantor's maximum reasonably
anticipated liability in respect thereof as determined by the guarantor in good
faith; irrespective, in any such case, of any amount thereof that would, in
accordance with GAAP, be required to be reflected on a balance sheet of such
Person.
"Guarantee Agreement" means the Guarantee Agreement, substantially in
the form of Exhibit I, made by (i) Parent Guarantor, (ii) the U.S. Borrower,
(iii) the Additional Borrower Subsidiaries, and (iv) the direct and indirect
wholly owned Subsidiaries of the U.S. Borrower (in the case of this clause (iv)
only, other than Foreign Subsidiaries) in favor of the Administrative Agent for
the benefit of the Secured Parties.
"Guarantors" means collectively (a) Parent Guarantor, (b) each Subsidiary Loan Party, (c) with respect to Term B Borrowings only, the U.S. Borrower, and (d) each Additional Borrower Subsidiary, and "Guarantor" means any one of them.
"Hazardous Materials" means all pollutants, contaminants, wastes, substances, chemicals, materials and constituents, including without limitation, crude oil, petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls ("PCBs") or PCB-containing materials or equipment, of any nature which can give rise to Environmental Liability under, or are regulated pursuant to, any Environmental Law.
"Hedging Agreement" means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement and all other similar agreements or arrangements designed to alter the risks of any Person arising from fluctuations in interest rate, currency values or commodity prices.
"IAM Pension Fund Contributions" means contributions made by the U.S. Borrower and its Subsidiaries to a Multiemployer Plan available to members of the IAM Union, which contributions shall be in the form of (i) direct contributions to such Multiemployer Plan and (ii) deposits to an escrow account, in an aggregate amount not to exceed $17 million, the
proceeds of which, subject to the satisfaction of certain conditions, will be contributed to such Multiemployer Plan.
"Impermissible Qualification" means, relative to the opinion or certification of any independent public accountant as to any financial statement of the U.S. Borrower, any qualification or exception to such opinion or certification:
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in such financial statement and which, as a condition to its removal, would require an adjustment to such item the effect of which would be to cause the U.S. Borrower to be in default of any of its obligations under any of the Financial Covenants.
"Increased Cost Lender" has the meaning assigned thereto in Section 2.20.
"Indebtedness" of any Person means the sum of all indebtedness of such Person on a consolidated basis (without duplication) with respect to
(i) borrowed money or represented by bonds, debentures, notes and the like;
(ii) the aggregate amount of Capital Lease Obligations; provided that to the extent such obligations are limited in recourse to the Property subject to such capital lease, such limited recourse obligations shall be included in Indebtedness only to the extent of the fair market value of such Property;
(iii) all obligations of others secured by any Lien on any Property of such Person, but, to the extent such Lien does not extend to any other Property of such Person and is otherwise non-recourse against such Person, limited to the fair market value of such Property;
(iv) all indebtedness representing the deferred purchase price of Property or services, excluding trade payables and accrued liabilities in the ordinary course of business;
(v) obligations under Hedging Agreements;
(vi) all obligations for the reimbursement of any obligor under letters of credit, bankers' acceptances and similar credit transactions; and
(vii) Guarantees and indemnities in respect of, and to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, or to assure an obligee against failure to make payment in respect of, liabilities, obligations or indebtedness of the kind described in clauses (i) through (vi).
Notwithstanding the foregoing, (i) in no event will obligations or liabilities in respect of any Equity Interests constitute Indebtedness and (ii) except as specifically set forth in the proviso contained in the definition of "Consolidated Indebtedness," Indebtedness shall not include any obligations in respect of advances or progress payments under commercial contracts that are to be repaid from production (including without limitation under the 787 Program).
"Indebtedness to Remain Outstanding" has the meaning set forth in
Section 3.21.
"Indemnified Foreign Tax" has the meaning assigned to each term in
Section 2.16.
"Indemnified Taxes" has the meaning assigned to such term in Section 2.16.
"Indemnitee" has the meaning assigned to such term in Section 10.05.
"Information Memorandum" means the Confidential Information Memorandum dated June 2005 and posted electronically on Intralinks relating to the Borrowers and this Agreement.
"Initial Public Offering" means a primary underwritten public offering of common stock of the Parent Guarantor.
"Installment Payment Date" has the meaning assigned to such term in
Section 2.05(d).
"Interest Expense Coverage Ratio" means, for any Test Period, the ratio of (a) Consolidated EBITDA to (b) Cash Interest Expense, in each case for such Test Period.
"Interest Payment Date" means, with respect to any Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, (a) each day that would have been an Interest Payment Date had successive Interest Periods of three months' duration been applicable to such Borrowing and, in addition, (b) the date of any refinancing of such Borrowing with a Borrowing of a different Type.
"Interest Period" means (a) as to any Eurodollar Borrowing, the period commencing on the date of such Borrowing (including any date on which such Borrowing shall have been converted from a Borrowing of a different Type) or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as the case may be, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months (or if available to all Lenders, 9 or 12 months) thereafter, as the applicable Borrower may elect; provided that prior to the earlier of the (i) 61st day after the Effective Date and (ii) completion of the initial syndication of the Commitments and Loans (as determined by the Administrative Agent), the applicable Borrower shall only be permitted to request Interest Periods of seven days, or (b) as to any ABR Borrowing (other than a Swingline Borrowing), the period commencing on the date of such Borrowing (including any date on which such Borrowing shall have been converted from a Borrowing of a different Type) or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as
the case may be, and ending on the earliest of (i) the next succeeding March 31,
June 30, September 30 or December 31, (ii) the Revolving Credit Maturity Date,
in the case of Revolving Loans, and Term B Loan Maturity Date, in the case of
Term B Loans, and (iii) the date such Borrowing is prepaid in accordance with
Section 2.05 or converted to a Eurodollar Loan in accordance with Section 2.03
and (c) as to any Swingline Loan, a period commencing on the date of such Loan
and ending on the earliest of (i) the fifth Business Day thereafter, (ii) the
Revolving Credit Maturity Date and (iii) the date such Loan is prepaid in
accordance with Section 2.05; provided, however, that if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of a Eurodollar
Borrowing only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
"Investment" has the meaning assigned to such term in Section 6.04.
"IRB Actions" has the meaning assigned to such term in the definition of "IRB Transactions."
"IRB Agreements" means (i) the Boeing Trust Agreement; (ii) the TBC
Trust Agreement; (iii) the Buyer Sublease; (iv) the Assignment Agreement; and
(v) the IRB Pledge Agreement.
"IRB Assets" means Property subject to the Buyer Sublease.
"IRB Pledge Agreement" means the Pledge Agreement, dated as of the Effective Date, between TBC Trust and the U.S. Borrower.
"IRB Transactions" means the occurrence of (a) the formation of the
Trusts and the execution of the Trust Agreements and the issuance of the
Transferred Assets Ownership Class, (b) the assignment to Boeing Trust, pursuant
to the Assignment Agreement, of the leases, bonds and assets identified therein,
(c) the valid execution and delivery of the IRB Subleases and the IRB Pledge
Agreement and (d) the consummation of the other transactions contemplated by the
IRB Agreements (the actions described in clauses (b) through (d), the "IRB
Actions").
"Issuing Bank" means, as the context may require, (a) The Bank of Nova
Scotia, in its capacity as the issuer of Letters of Credit issued by it
hereunder and its successors in such capacity as provided in Section 2.06(i),
(b) any other Revolving Lender approved by the Administrative Agent and the U.S.
Borrower in its capacity as issuer of Letters of Credit issued by it hereunder
and its successors in such capacity as provided in Section 2.06(i) or (c)
collectively, all of the foregoing. The Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term "Issuing Bank" shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.
"Kansas Finance Sub." or "Kansas Finance Subsidiary" means Spirit Aerosystems Finance, Inc. (f/k/a Mid-Western Aircraft Finance, Inc.), a Delaware corporation.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the U.S. Borrower at such time. The LC Exposure of any Revolving Lender at any time shall be its Commitment Percentage of the total LC Exposure at such time.
"LC Fees" has the meaning assigned to such term in Section 2.10(b).
"Lead Arranger" has the meaning assigned to such term in the preamble hereto.
"Lenders" has the meaning assigned to such term in the preamble hereto.
"Letter of Credit" means any letter of credit issued pursuant to this Agreement.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for Dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for such Interest Period shall be the rate supplied to the Administrative Agent at its request quoted by the Reference Banks in the London interbank market as of the day two Business Days prior to the commencement of such Interest Period as the rate for Dollar deposits with a maturity comparable to such Interest Period.
"Lien" means, with respect to any asset, (a) (i) any mortgage, deed of trust, deed to secure debt, lien, pledge, encumbrance, charge, collateral assignment, hypothecation or security interest in or on such asset or (ii) any authorized filing of any financing statement under the UCC as in effect in the applicable state or jurisdiction or any other similar authorized notice or lien under any similar notice or recording statute of any Governmental Authority (other than pre-filings of such financing statements and/or notices made in favor of the secured parties under this Agreement or an amendment thereof), in each of the foregoing cases whether voluntary or imposed by law, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement relating to such asset and (c) any other agreement intended to create any of the foregoing.
"Loan Documents" means this Agreement, the Subordination and Intercreditor Agreement, the Guarantee Agreement, the Affirmation and Consent, the WLLC Term Loan Agreement and the notes issued thereunder, the WLLC Subordination Agreement, each Tax Indemnity Agreement, the Security Documents, if requested by a Lender pursuant to Section 2.07(e), each Note and, solely for purposes of Section 7.01(a), the Fee Letter.
"Loan Parties" means the U.S. Borrower, the Parent Guarantor, the Additional Borrower, the Additional Borrower Subsidiaries, the Kansas Finance Subsidiary and the Subsidiary Loan Parties.
"Loan Party Information" has the meaning assigned thereto in Section 10.16.
"Loans" means the Revolving Loans, the Swingline Loans and the Term B Loans.
"Management Agreement" means the Management Agreement, dated as of the Effective Date, between Onex Partners Manager, L.P. and the U.S. Borrower.
"Material Adverse Effect" means a materially adverse effect on (a) the business, financial condition, affairs or results of operation of the Parent Guarantor and its Subsidiaries, taken as a whole, or the Additional Borrower Parties or (b) the ability of any Loan Party to perform its respective obligations under the Loan Documents, (c) the rights of or benefits available to the Lenders under any Loan Document or (d) the validity, enforceability, perfection or priority of the Liens granted to the Collateral Agent (for its benefit and for the benefit of the other Secured Parties) on the Collateral (taken as a whole) pursuant to the Security Documents.
"Material Indebtedness" means (a) any Indebtedness (other than the Loans and Letters of Credit) or (b) obligations in respect of one or more Hedging Agreements, of any one or more of the Parent Guarantor, the U.S. Borrower and their respective Subsidiaries, individually or in an aggregate principal amount exceeding $15.0 million; provided, however, that any Indebtedness outstanding under the Seller Loan Agreement shall constitute Material Indebtedness regardless of the amount outstanding thereunder. For purposes of determining Material Indebtedness, the "principal amount" of the obligations of Parent Guarantor, the U.S. Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that Parent Guarantor, the U.S. Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.
"Maximum Rate" has the meaning assigned to such term in Section 10.09.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means a mortgage, deed of trust, assignment of leases and rents, leasehold mortgage or other security document granting a Lien on any Mortgaged Property to secure the Obligations, including any amendment thereto. Each Mortgage shall be substantially in the form of Exhibit N or otherwise reasonably satisfactory in form and substance to the Collateral Agent.
"Mortgaged Property" means, initially, each parcel of or other interest in Real Property and the improvements and appurtenances thereto owned or leased by a Loan Party and identified on Schedule 4.01(u)(A), and includes each other parcel of or interest in real property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 5.11.
"Multiemployer Plan" means a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA (i) to which any Loan Party or ERISA Affiliate is
then making or
accruing an obligation to make contributions, (ii) to which any Loan Party or ERISA Affiliate has within the preceding six plan years made contributions, including any Person which ceased to be an ERISA Affiliate during such six year period, or (iii) with respect to which Loan Party or any Subsidiary could incur liability.
"Net Proceeds" means, with respect to any Equity Issuance, Debt
Incurrence, Asset Sale, Destruction, Taking or Acquisition Indemnity Payment,
(a) the cash proceeds actually received in respect of such event, including (i)
any cash received in respect of any non-cash proceeds, but only as and when
received, (ii) in the case of a Destruction, insurance proceeds in excess of
$5.0 million (or, when taken together with all such other Destructions and
Takings, in excess of $10.0 million in any twelve-month period), and (iii) in
the case of a Taking, condemnation awards and similar payments in excess of $5.0
million (or, when taken together with all such other Destructions and Takings,
in excess of $10.0 million in any twelve-month period), net of (b) the sum of
(i) all bona fide fees, costs, commissions and out-of-pocket expenses paid by
the Parent Guarantor and its Subsidiaries to third parties in connection with
such event, (ii) the amount of all taxes paid (or reasonably estimated to be
payable) by the Parent Guarantor and its Subsidiaries, (iii) in the case of an
Asset Sale, (A) the amount of all payments required to be made by the Parent
Guarantor and its Subsidiaries as a result of such event to repay obligations
(other than Loans) secured by a Lien on such asset (so long as such Lien was
permitted to encumber such properties under the Loan Documents at the time of
such sale) and (B) the amount of any reserves established by the Parent
Guarantor and its Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, in each case during the year that such event occurred
or the next succeeding two years, and that are attributable to such event (as
determined reasonably and in good faith by the U.S. Borrower); provided that any
amount by which such reserves are reduced for reasons other than payment of any
such contingent liabilities shall be considered "Net Proceeds" upon such
reduction, and (C) cash escrows (until released from escrow to the Parent
Guarantor or any of its Subsidiaries) from the sale price for such Asset Sale
and (iv) in the case of a Taking, the reasonable cost of putting any real
property in a safe and secure position.
"Non-Consenting Lender" has the meaning assigned thereto in Section 10.08(e).
"Non-Guarantor Subsidiary" means any Subsidiary acquired or formed after the Effective Date that is not a Wholly Owned Subsidiary and is designated as a Non-Guarantor Subsidiary by the U.S. Borrower by written notice to the Administrative Agent; provided that the aggregate amount of Investments made by the U.S. Borrower and any Subsidiary in all Non-Guarantor Subsidiaries since the Effective Date shall not exceed the amount of Investments permitted to be made under Section 6.04(x).
"Non-Qualifying Assets" has the meaning set forth in the Buyer Sublease.
"Non-Recourse Debt" means Indebtedness of a Person:
(1) as to which no Loan Party (a) provides any Guarantee or credit support of any kind (including any undertaking, Guarantee, indemnity, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise); and
(2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against the debtor thereof) would permit (upon notice, lapse of time or both) any holder of any Indebtedness of any Loan Party to declare a default under such Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity.
"Non-U.S. Jurisdiction" means each jurisdiction of organization of a Subsidiary of the Parent Guarantor other than the United States (or any State thereof) or the District of Columbia.
"Note" means a note substantially in the form of Exhibit G-1 or G-2.
"Notice of Intent to Cure" has the meaning assigned to such term in
Section 5.01(n).
"NSULC" shall have the meaning set forth in the definition of "Term Transaction."
"NSULC Tax Indemnity Agreement" means the NSULC Tax Indemnity Agreement, substantially in the form of Exhibit T-2, between Onex Corporation and NSULC (as the same may be amended, supplemented or amended and restated from time to time).
"Obligations" means (a) the unpaid principal of and interest on
(including interest accruing after the maturity of the Loans made to any
Borrower or the other Loan Parties and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to any Borrower or the other Loan Parties, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans made to or LC Disbursements made pursuant to Letters of
Credit issued for the account of any Borrower or the other Loan Parties and all
other obligations and liabilities of each Borrower and the other Loan Parties to
any Secured Party or the Issuing Bank, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of or in connection with this Agreement, any other Loan
Document or any other document made, delivered or given in connection herewith,
whether on account of principal, interest, fees, indemnities, costs or expenses
(including, without limitation, all reasonable fees, charges and disbursements
of counsel), or otherwise, (b) the due and punctual performance of all
covenants, agreements, obligations and liabilities of each Borrower and the
other Loan Parties under or pursuant to this Agreement and the other Loan
Documents owing to any of the Secured Parties (in their capacity as such) and
(c) the due and punctual payment and performance of all obligations of each
Borrower and the other Loan Parties under each Hedging Agreement relating to any
Loans entered into with any Qualified Counterparty.
"Offer Settlement Date" shall have the meaning set forth in Section 2.05A(c).
"Offer to Repay" shall have the meaning set forth in Section 2.05A(c).
"Offer to Repay Notice" shall have the meaning set forth in Section 2.05A(c).
"Onex Pledge Agreement" means the Onex Pledge Agreement, substantially in the form of Exhibit T-3, between Onex Corporation and the Collateral Agent for the benefit of the Lenders (as the same may be amended, supplemented or amended and restated from time to time).
"Onex Corporation Tax Certificate" means a certificate substantially in the form of Exhibit F.
"Organizational Document" means (i) relative to each Person that is a corporation, its charter and its by-laws (or similar documents), (ii) relative to each Person that is a limited liability company, its certificate of formation and its operating agreement (or similar documents), (iii) relative to each Person that is a limited partnership, its certificate of formation and its limited partnership agreement (or similar documents), (iv) relative to each Person that is a general partnership, its partnership agreement (or similar document) and (v) relative to any Person that is any other type of entity, such documents as shall be comparable to the foregoing.
"Original Credit Agreement" shall have the meaning assigned to such term in the recitals hereto.
"Original WLLC Loan" shall have the meaning assigned thereto in the definition of "Term Transaction."
"Other List" has the meaning assigned thereto in Section 6.19.
"Other Taxes" has the meaning assigned thereto in Section 2.16.
"Parent Guarantor" has the meaning assigned to such term in the preamble to this Agreement.
"Participant" has the meaning assigned to such term in Section 10.04(f).
"Patent Assignment" means the Patent Assignment, dated as of June 16, 2005, by and between Seller and the U.S. Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA.
"Pension Plan" means a "pension plan," as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
Multiemployer Plan) and to which any Loan Party or any ERISA Affiliate may have
liability, including any liability by reason of having been a substantial
employer within the meaning of Section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing sponsor
under Section 4069 of ERISA.
"Perfection Certificate" means a certificate in the form of Annex 2 to the Security Agreement or any other form reasonably acceptable to the Collateral Agent.
"Permitted Acquisition" means any acquisition, whether by purchase,
merger, consolidation or otherwise, by the U.S. Borrower or any Subsidiary Loan
Party of all or substantially all the assets of, or all the Equity Interests in,
a Person or a division, line of business or other business unit of a Person so
long as (a) the board of directors of such Person shall not have indicated
publicly its opposition to the consummation of such acquisition (which
opposition has not been publicly withdrawn), (b) such assets are to be used in,
or such Person so acquired is engaged in, as the case may be, a business of the
type permitted under Section 6.03(c), (c) immediately after giving effect
thereto, (i) no Default has occurred and is continuing or would result
therefrom, (ii) all transactions related thereto are consummated in all material
respects in accordance with applicable laws, (iii) in the case of an acquisition
of Equity Interests, the Person acquired (if not a Foreign Subsidiary) shall
become immediately after given effect thereto a Subsidiary Loan Party or be
merged into a Subsidiary Loan Party and all actions required to be taken under
Sections 5.11, 5.12 and 5.16 shall have been taken, (iv) the U.S. Borrower and
its Subsidiaries are in compliance, on a Pro Forma Basis after giving effect to
such acquisition, with the covenants contained in Sections 6.12 and 6.13
recomputed as at the date of the last ended Test Period, as if such acquisition
(and any related incurrence or repayment of Indebtedness) had occurred on the
first day of the relevant Test Period, (v) any Indebtedness or any preferred
stock that is incurred, acquired or assumed in connection with such acquisition
shall be in compliance with Section 6.01, (vi) after giving effect to such
acquisition and any Revolving Credit Borrowings made in connection therewith,
the sum of (A) the then unfunded commitments under the Seller Loan Agreement,
plus (B) the cash on hand of Borrower and/or the Subsidiary Loan Parties, plus
(C) the Total Revolving Credit Commitment less the Revolving Credit Exposure of
all Revolving Lenders shall not be less than $125.0 million and (vii) the U.S.
Borrower has delivered to the Administrative Agent an officers' certificate to
the effect set forth in clauses (a), (b) and (c)(i) through (vi) above, together
with all relevant and available financial information for the Person or assets
to be acquired.
"Permitted Cure Securities" means equity securities (other than Disqualified Capital Stock) of Parent Guarantor designated as Permitted Cure Securities in a certificate delivered by the U.S. Borrower to the Administrative Agent that are issued to any Equity Investors in connection with Cure Rights being exercised by the U.S. Borrower under Section 7.07 (the net proceeds of which are contributed to the common equity of the U.S. Borrower).
"Permitted Holders" means Onex Partners L.P., Onex Corporation and their respective affiliates identified on Schedule 1.01(d).
"Permitted Investments" means:
(a) United States dollars (including such dollars as are held as overnight bank deposits and demand deposits with banks);
(b) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, in each case maturing within one year from the date of acquisition thereof;
(c) marketable direct obligations issued by any State of the United States of America or any political subdivision of any such State or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having a rating of at least A-2 from S&P or at least P-2 of Moody's;
(d) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-2 from S&P or at least P-2 from Moody's;
(e) time deposits, demand deposits, certificates of deposit, Eurodollar time deposits, time deposit accounts, term deposit accounts or bankers' acceptances maturing within one year from the date of acquisition thereof or overnight bank deposits, in each case, issued by any bank organized under the laws of the United States of America or any State thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $500.0 million;
(f) repurchase obligations with a term of not more than 90 days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (d) above;
(g) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (a) through
(f) above; and
(h) in the case of Foreign Subsidiaries, Investments made locally of a type comparable to those described in clauses (a) through (f) of this definition.
"Permitted IRB Lease Obligations" means Capital Lease Obligations permitted to be made under Section 6.14 of the U.S. Borrower or any Subsidiary Loan Party owed to the City of Wichita or the City of Tulsa (each a "City") in connection with the leasing of property that is purchased by such City and financed with the proceeds of an issuance of industrial revenue bonds issued by such City to the U.S. Borrower or a Subsidiary Loan Party; provided, however, that (i) all amounts paid or payable by the U.S. Borrower or such Subsidiary Loan Party under such Capital Lease Obligations shall be paid by automatic offset pursuant to an agreement in form and substance satisfactory to the Administrative Agent against amounts owed by such City to the U.S. Borrower or such Subsidiary Loan Party under such industrial revenue bonds; (ii) the U.S. Borrower or such Subsidiary Loan Party shall own such industrial revenue bonds at all times free and clear of all consensual Liens; (iii) the interests of the U.S. Borrower or such Subsidiary Loan Party in such property shall be pledged to the Collateral Agents pursuant to the Security Agreement; (iv) the documentation with respect to the industrial revenue bonds and the related leases shall be, taken as a whole, substantially similar to the documentation for the existing industrial revenue bond and leases of the Seller with the City of Wichita in connection with Seller's existing IRB arrangements and (v) on or prior to the date of incurrence of such Capital Lease Obligations, the U.S. Borrower shall have delivered a certificate of a Responsible Officer stating that the conditions set forth in clauses (i) through (iii) above have been satisfied and that the U.S. Borrower has confirmed with its independent auditors that such Capital Lease Obligation shall not be required under GAAP (as in effect at the time any such IRB lease
obligations are incurred) to appear on the face of the U.S. Borrower's consolidated balance sheet as "debt."
"Permitted Kansas Bond Financing" means bond financings entered into for the purpose of obtaining a credit against Kansas payroll taxes paid with respect to wages of employees of the U.S. Borrower or its Subsidiaries on terms and conditions consistent in all material respects with the description of such bond financings set forth in the Term Sheet attached hereto as Schedule 1.01(b); provided that (a) the obligations thereunder shall be unsecured obligations of the obligors thereof, (b) such bonds shall not require any payments of principal or mandatory redemption prior to the date that is six months after the Final Maturity Date, (c) the obligations with respect to such bonds shall be expressly subordinated to the Obligations and such subordination provisions shall be set forth in subordination or similar agreements in form and substance reasonably satisfactory to the Administrative Agent, (d) such bonds shall provide for no cash payments (after giving effect to the rights of setoff and netting provided for in such bonds), (e) on or prior to the date of issuance of such bonds, the U.S. Borrower shall have delivered to the Collateral Agent the pledge agreements and pledged securities as contemplated in the above referenced Term Sheet in form and substance reasonably satisfactory to the Collateral Agent, (f) the Kansas Development Finance Authority shall have issued a bond to Kansas Finance Sub. (which at all times shall be held by Kansas Finance Sub. and shall be non-transferable), which bond shall be substantially identical to the bonds issued by Kansas Finance Sub. to the U.S. Borrower in connection with such Permitted Kansas Bond Financing, which bonds shall be substantially identical to the bonds issued by the U.S. Borrower to the Kansas Development Finance Authority in connection with such Permitted Kansas Bond Financing, (which at all times shall be held by Kansas Development Finance Authority and shall be non-transferable) and (g) on or prior to the date of issuance of such bonds, the U.S. Borrower shall have delivered a certificate of a Responsible Officer stating that the conditions set forth in clauses (a) through (f) above have been satisfied and that the U.S. Borrower has confirmed with its independent auditors that the obligations under such bonds will not be required under GAAP (as in effect at the time any such Permitted Kansas Bond Financing is entered into) to appear on the face of the U.S. Borrower's consolidated balance sheet as "debt."
"Permitted Lien" has the meaning assigned to such term in Section 6.02.
"Permitted Refinancing" means, with respect to any Indebtedness, any refinancing thereof; provided, however, that (i) no Event of Default shall have occurred and be continuing or would arise therefrom, (ii) any such refinancing Indebtedness shall (a) not be on financial and other terms that are materially more onerous in the aggregate than the Indebtedness being refinanced and shall not have defaults, rights or remedies more burdensome in the aggregate to the obligor than the Indebtedness being refinanced, (b) not have a stated maturity or Weighted Average Life to Maturity that is shorter than the Indebtedness being refinanced, (c) be at least as subordinate to the Obligations as the Indebtedness being refinanced (and unsecured if the refinanced Indebtedness is unsecured), and (d) be in principal amount that does not exceed the principal amount so refinanced, plus all accrued and unpaid interest thereon, plus the stated amount of any premium and other payments required to be paid in connection with such refinancing pursuant to the terms of the Indebtedness being refinanced, plus in either case, the amount of reasonable expenses of the Parent Guarantor or any of its Subsidiaries incurred in connection with such refinancing, and (iii) the sole obligors and/or guarantors on such
refinancing Indebtedness shall not include any Person other than the obligors and/or guarantors on such Indebtedness being refinanced.
"Permitted Subordinated Indebtedness" means unsecured Indebtedness of the U.S. Borrower or any Subsidiary Loan Party which (a) is expressly subordinated to the Loans pursuant to written documentation on terms and conditions reasonably satisfactory to the Administrative Agent, (b) does not provide at any time for the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon prior to six months after the Final Maturity Date and (c) contains terms (including interest rate), conditions, covenants, events of default and other provisions, taken as a whole, that are not materially more restrictive or adverse to the Loan Parties than those that are then customary for similar offerings of unsecured subordinated debt securities of corporate issuers with credit ratings comparable to that of the U.S. Borrower, as reasonably determined by the U.S. Borrower, and as are in all respects reasonably satisfactory to the Administrative Agent.
"Permitted Sponsor Indebtedness" means Indebtedness of Parent Guarantor owed to any Sponsor, which (x) requires no cash payment of interest, principal or other amounts and does not mature or become mandatorily redeemable prior to the date that is six months after the Final Maturity Date and all such obligations and all the Obligations have been discharged in full, (y) is subordinated to the Obligations on terms and conditions (including assignment of voting rights in bankruptcy and remedy standstills) reasonably satisfactory to the Administrative Agent and (z) is otherwise on terms and conditions and pursuant to documentation reasonably satisfactory to the Administrative Agent.
"Permitted Tax Distributions" means payments, dividends or distributions by the U.S. Borrower to the Parent Guarantor in order to pay consolidated or combined federal, state or local taxes attributable to the income of the U.S. Borrower, not payable directly by the U.S. Borrower or any of its Subsidiaries which payments, dividends or distributions by the U.S. Borrower are not in excess of the tax liabilities that would have been payable by the U.S. Borrower and its Subsidiaries on a stand-alone basis.
"Person" means any natural person, corporation, trust, joint venture, association, company, partnership, limited liability company or government, or any agency or political subdivision thereof.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA), that is maintained or contributed to by a Loan Party or any Subsidiary or with respect to which a Loan Party or any Subsidiary could incur liability.
"Platform" has the meaning assigned to such term in Section 10.17(b).
"Pledge Agreement" means the Pledge Agreement, substantially in the form of Exhibit J, among the Loan Parties and the Collateral Agent for the benefit of the Secured Parties (as the same may be amended, supplemented or amended and restated from time to time).
"Pledged Securities" has the meaning provided in the Pledge Agreement.
"Preferred Stock" means, with respect to any Person, any and all preferred or preference Equity Interests (however designated) of such Person whether or not outstanding or issued on the Effective Date.
"Prepaid Insurance" means insurance coverage obtained by or on behalf of the U.S. Borrower or its Subsidiaries pursuant to an arrangement whereby a lender prepays (or finances the prepayment of) the applicable insurance premium for the U.S. Borrower or such Subsidiaries in full and the obligation of the U.S. Borrower or such Subsidiaries to repay such lender is secured solely by the U.S. Borrower's or Subsidiary's right under the policy of insurance to recover unearned premiums upon early termination of the policy.
"Prepayment Date" has the meaning assigned to such term in Section 2.05(f).
"Pro Forma Basis" means on a basis in accordance with Regulation S-X promulgated under the Securities Act of 1933, as amended, and such other adjustments that are reasonably acceptable to the Administrative Agent.
"Projected Financial Statements" has the meaning assigned to such term in Section 3.16(c).
"Property" means any right, title or interest m or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and including access agreements, parking agreements, rights of first refusal, purchase options, restrictive covenants and any ownership interests of any Person, whether now in existence or owned or hereafter entered into or acquired.
"Qualified Counterparty" means, with respect to any Hedging Agreement relating to any Loans, any counterparty thereto that, at the time such Hedging Agreement was entered into, was a Lender or an Affiliate of a Lender.
"Real Property" means all right, title and interest of any Loan Party or any of its respective Subsidiaries in and to any and all parcels of or interests in real property owned, leased, licensed or operated (including, without limitation, any leasehold estate) by any Loan Party or any of its respective Subsidiaries together with, in each case, all improvements and appurtenant fixtures.
"Real Property Agreements" means any and all leases, subleases, license agreements, tenancy agreements, option agreements, rights of first refusal, parking agreements, restrictive covenants, easement agreements, concession agreements, rental agreements, occupancy agreements, franchise agreements, access agreements and any other agreements (including all amendments, extensions, replacements, renewals, modifications and/or guarantees thereof), whether or not of record and whether now in existence or hereafter entered into, affecting the ownership, operation, use or occupancy of all or any portion of any Real Property.
"Reference Banks" means:
(a) in connection with the initial syndication of the Loans and Commitments, in respect of LIBO Rate, the principal London office of Citibank, N.A.; and
(b) in respect of LIBO Rate, the principal London office of Citibank, N.A. and such two other banks as may be appointed by the Administrative Agent in consultation with the Borrower.
"Register" has the meaning assigned to such term in Section 10.04(d).
"Regulation T" means Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
"Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents, advisors and trustees of such Person and such Person's Affiliates.
"Release" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Material in, into, onto or through the Environment.
"Remarketing Agreement" means the Remarketing Agreement, dated as of the Effective Date, among the Parent Guarantor, the lenders under the Seller Loan Agreement and Seller, as Agent for such lenders.
"Remedial Action" means (a) "remedial action," as such term is defined
in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any
Governmental Authority or voluntarily undertaken to: (i) clean up, remove,
treat, abate or otherwise take corrective action to address any Hazardous
Material in the Environment; (ii) prevent the Release or threat of Release, or
minimize the further Release of any Hazardous Material so it does not migrate or
endanger or threaten to endanger public health, welfare or the Environment; or
(iii) perform studies and investigations in connection with, or as a
precondition to, (i) or (ii) above.
"Requirement of Law" means, as to any Person, any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or assets or to which such Person or any of its property or assets is subject.
"Requisite Class Lenders" means, at any time of determination, (i) for the Class of Lenders having Term B Loans, Lenders holding more than 50% of the aggregate Term B Loans of all Lenders, and (ii) for the Class of Lenders having Revolving Credit Commitments, Lenders holding more than 50% of the aggregate amount of the Revolving Credit Commitments or, after the Revolving Credit Maturity Date, the Revolving Credit Exposure.
"Requisite Lenders" means, at any time, Lenders having more than fifty percent (50%) of the sum of (a) the aggregate amount of the Revolving Credit Commitments or, after the Revolving Credit Maturity Date, the Revolving Credit Exposure and (b) the aggregate outstanding amount of all Term B Loans.
"Requisite Revolving Lenders" means, collectively, Lenders having more than fifty percent (50%) of the aggregate outstanding amount of the Revolving Credit Commitments or, after the Revolving Credit Maturity Date, the Revolving Credit Exposure.
"Responsible Officer" of any person shall mean any executive officer or Financial Officer of such person and any other officer or similar official thereof with responsibility for the administration of the obligations of such person in respect of this Agreement.
"Restatement Effective Date" has the meaning assigned to such term in
Section 4.03.
"Restricted Payment" means any direct or indirect dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests or Equity Rights in the Parent Guarantor, any Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests or Equity Rights in the Parent Guarantor, any Borrower or any Subsidiary.
"Revolving Credit Borrowing" means a Borrowing comprised of Revolving Loans.
"Revolving Credit Borrowing Request" means a Borrowing Request in connection with a Revolving Credit Borrowing.
"Revolving Credit Commitment" means, with respect to each Revolving Lender, the commitment of such Revolving Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed in each case as an amount representing the maximum principal amount of such Revolving Lender's Revolving Credit Exposure hereunder, as the same may be reduced from time to time pursuant to the provisions of this Agreement. The initial amount of each Revolving Lender's Revolving Credit Commitment is set forth on Schedule 2.01 (in the case of Revolving Credit Commitments in effect on the Effective Date), or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Revolving Credit Commitment, as applicable. The aggregate amount of the Revolving Lenders' Revolving Credit Commitments as of the Effective Date is $175.0 million.
"Revolving Credit Commitment Period" means the period from and including the first Business Day after the Effective Date to but not including the Revolving Credit Maturity Date or any earlier date on which the Revolving Credit Commitments to make Revolving Loans pursuant to Section 2.01 shall terminate as provided herein.
"Revolving Credit Exposure" means with respect to any Revolving Lender at any time, the sum of (a) the aggregate principal amount at such time of all outstanding Revolving
Loans of such Revolving Lender, plus (b) such Revolving Lender's LC Exposure at such time, plus (c) such Revolving Lender's Commitment Percentage of the aggregate principal amount at such time of all outstanding Swingline Loans.
"Revolving Credit Maturity Date" means June 30, 2010.
"Revolving Lender" means a Lender with a commitment to make Revolving Loans or with any Revolving Credit Exposure, in its capacity as such.
"Revolving Loans" means the revolving loans made pursuant to clause
(ii) of Section 2.01(a).
"S&P" means Standard & Poor's, a division of The McGraw-Hill Companies.
"Sale and Leaseback Transaction" has the meaning assigned to such term in Section 6.06.
"SBP" means the Special Business Provisions, MS-65530-0016, dated as of the Effective Date, between the U.S. Borrower and Seller.
"SDN List" has the meaning assigned thereto in Section 6.19.
"SEC" means the Securities and Exchange Commission.
"Section 2.16 Certificate" has the meaning assigned to such term in
Section 2.16.
"Secured Parties" means the Agents, each Lender that holds Loans or has Commitments (in its capacity as such) and each Qualified Counterparty.
"Security Agreement" means the Security Agreement, substantially in the form of Exhibit K, among the Loan Parties and the Collateral Agent for the benefit of the Secured Parties (as the same may be amended, supplemented or amended and restated from time to time).
"Security Documents" means the Security Agreement, the Pledge Agreement, the Onex Pledge Agreement, the Canadian Pledge Agreement, the Mortgages, the Perfection Certificate, any cash management agreements (as defined in the Security Agreement) and Hedging Agreements executed by the Loan Parties and each other security agreement or other instrument or document executed and delivered pursuant to Section 5.11, 5.12 or 5.16 to secure any of the Obligations.
"Seller" means The Boeing Company.
"Seller Loan Agreement" means the Credit Agreement between the Loan Parties and the Seller, dated as of the Effective Date, as the same may be amended, supplemented or modified to the extent permitted by Section 6.10.
"Seller Loan Availability Period" means the period commencing on the Effective Date and ending on the earliest of (i) December 31, 2008 and (ii) the date on which the aggregate principal amount of the loans made under the Seller Loan Agreement equals $150,000,000.
"Seller Loan Documents" means the Seller Loan Agreement, the Subordination and Intercreditor Agreement, the Guarantee Agreement (as defined in the Seller Loan Agreement), the Pledge Agreement (as defined in the Seller Loan Agreement), the Security Agreement (as defined in the Seller Loan Agreement), the Mortgages (as defined in the Seller Loan Agreement), each Tax Indemnity Agreement and the Onex Pledge Agreement (each as defined in the Seller Loan Agreement), the Canadian Pledge Agreement (as defined in the Seller Loan Agreement), the WLLC Subordination Agreement, the WLLC Delayed-Draw Term Loan Agreement and the notes issued thereunder, and the Remarketing Agreement, as the same may be amended, supplemented or modified to the extent permitted by Section 6.10.
"Seller Loans" means "Loans" as defined in the Seller Loan Agreement.
"Senior Indebtedness" means, as of any date, all Consolidated Indebtedness as of such date other than Indebtedness outstanding under the Seller Loan Agreement; provided that for purposes of calculating Senior Indebtedness for purposes of Section 5.17 and Section 5.10A, Senior Indebtedness shall include the amount of payments received from Seller prior to September 30, 2008 with respect to receivables owing from Seller that have a stated due date of September 30, 2008 or later; provided that such stated due date for such receivables is no earlier than the due dates required by the Boeing Agreement as in effect on the Effective Date.
"787 Agreement" means the 787 GTA and the 787 SPB.
"787 Expenditures" means non-recurring engineering and other developmental costs and expenses related to the 787 Program incurred, spent or committed to be spent (including without limitation those that are capitalized) by the U.S. Borrower or any of its Subsidiaries on or prior to December 31, 2009 in an aggregate amount since the Effective Date not to exceed $802.0 million.
"787 Discontinuance" has the meaning assigned to such term in Section 7.01(m).
"787 GTA" means the General Terms Agreement, BCA-65520-0032, dated as of the Effective Date, between the U.S. Borrower and Seller, relating to the 787 Program.
"787 Program" means the 787 Program within the meaning of the 787 Agreement.
"787 SBP" means the Special Business Provisions, BCA-MS-65530-0019, dated as of the Effective Date, between the U.S. Borrower and Seller, relating to the 787 Program.
"Significant Subsidiary" means (a) any Subsidiary of the Parent
Guarantor (other than the U.S. Borrower) that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the Effective Date
(except that references to 10% in such definition shall be changed to 5%), and
(b) any Subsidiary of the Parent Guarantor (other than the U.S. Borrower) which,
when
aggregated with all other Subsidiaries of the Parent Guarantor (other than the U.S. Borrower) that are not otherwise Significant Subsidiaries and as to which any event described in Section 7.01(i) has occurred and is continuing, would constitute a Significant Subsidiary under clause (a) of this definition.
"Sponsors" means, collectively, Onex Corporation, an Ontario corporation, Onex Partners L.P. and their respective affiliates.
"Statutory Reserve Rate" means a fraction (expressed as a decimal) the numerator of which is the number one and the denominator of which is the number one minus the aggregate (expressed as a decimal) of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by any Governmental Authority of the United States or of the jurisdiction of such currency or any jurisdiction to which banks in such jurisdiction are subject for any category of deposits or liabilities customarily used to fund loans. Such reserve percentages shall include those imposed pursuant to Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
"Subordination and Intercreditor Agreement" means the Subordination and Intercreditor Agreement among the Administrative Agent, the Collateral Agent, the Seller, the Loan Parties and the General Partner, substantially in the form of Exhibit D attached hereto.
"Subordination Provisions" has the meaning assigned to such term in
Section 7.01(1).
"Subsequent WLLC Loan" has the meaning assigned to such term in the definition of "Term Transaction."
"Subsidiary" means, with respect to any Person, (i) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person; (ii) any partnership of which more than 50% of the outstanding partnership interests having the power to act as a general partner of such partnership (irrespective of whether at the time any partnership interests other than general partnership interests of such partnership shall or might have voting power upon the occurrence of any contingency) are at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person; or (iii) any limited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person have more than a 50% Equity Interest at the time. Unless otherwise indicated, when used in this Agreement, the term "Subsidiary" shall refer to a Subsidiary of the U.S. Borrower.
"Subsidiary Loan Party" means each of the U.S. Borrower's direct and indirect Subsidiaries that guarantee the Obligations pursuant to the Guarantee Agreement and Kansas Finance Sub. Each Subsidiary of the U.S. Borrower other than Foreign Subsidiaries and Non-Guarantor Subsidiaries shall be a Subsidiary Loan Party.
"Survey" means a survey of any Mortgaged Property (and all improvements thereon): (i) prepared by a surveyor or engineer licensed to perform surveys in the state where such Mortgaged Property is located, (ii) dated (or redated) not earlier than six months prior to the date of delivery thereof unless there shall have occurred within six months prior to such date of delivery any exterior construction on the site of such Mortgaged Property, in which event such survey shall be dated (or redated) after the completion of such construction or if such construction shall not have been completed as of such date of delivery, not earlier than 20 days prior to such date of delivery, (iii) certified by the surveyor (in a manner reasonably acceptable to the Collateral Agent) to the Collateral Agent and the Title Company, (iv) complying in all respects with the minimum detail requirements of the American Land Title Association as such requirements are in effect on the date of preparation of such survey and (v) sufficient for the Title Company to remove all standard survey exceptions from the title insurance policy (or commitment) and issue a survey endorsement.
"Swingline Commitment" means the commitment of the Swingline Lender to make Loans pursuant to Section 2.04.
"Swingline Lender" means Citicorp North America, Inc., in its capacity as lender of Swingline Loans.
"Swingline Loan" has the meaning assigned to such term in Section 2.04(a).
"Swingline Sublimit" has the meaning assigned to such term in Section 2.04(a).
"Taking" means any taking of any Property of the Parent Guarantor or any Subsidiary or any portion thereof, in or by condemnation or other eminent domain proceedings pursuant to any law, general or special, or by reason of the temporary requisition or use of any Property of the Parent Guarantor or any Subsidiary or any portion thereof, by any Governmental Authority.
"Tax Benefit" has the meaning assigned to such term in Section 2.16.
"Tax Indemnity Agreements" means collectively the Withholding Tax Guarantee Agreement and the NSULC Tax Indemnity Agreement.
"Taxes" has the meaning assigned to such term in Section 2.16.
"TBC Trust" has the meaning set forth in Section 3.25.
"TBC Trust Agreement" means the TBC Trust Agreement, dated as of the Effective Date, among The Boeing Company, as Administrative Agent, Wilmington Trust, as Delaware Trustee, Wilmington Trust SP Services, Inc., as Independent Agent, and the U.S. Borrower, as Special Agent.
"Term B Borrowing" means a Borrowing comprised of Term B Loans on the Effective Date.
"Term B Borrowing Request" means a Borrowing Request in connection with a Term B Borrowing on the Effective Date.
"Term B Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make a Term B Loan hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Term B Loan to be made by such Lender hereunder, as the same may be reduced from time to time pursuant to the provisions of this Agreement. The initial amount of each Lender's Term B Commitment is set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Term B Commitment, as applicable. The initial aggregate amount of the Lenders' Term B Commitments is $700.0 million.
"Term B Lender" means a Lender with a Term B Commitment or an outstanding Term B Loan, in its capacity as such.
"Term B Loan Maturity Date" means December 31, 2011.
"Term B Loans" and "Term Loans" each means the Loans made pursuant to clause (i) of Section 2.01(a).
"Term Transaction" means the Borrowings by the Additional Borrower of the Term B Loans on the Effective Date and the borrowing by the Additional Borrower from time to time under the Seller Loan Agreement (the "Seller Loan") on or after the Effective Date, all the proceeds of which have been or will be invested substantially concurrently with the applicable borrowing either (i) in the case of borrowings after the Effective Date, in Equity Interests of or loans to 3101447 Nova Scotia Company, a Nova Scotia unlimited liability company ("NSULC"), with all the proceeds of such investment having been or being invested by NSULC in Equity Interests of or lent to Onex Wind Finance LLC, a Wyoming limited liability company ("WLLC") wholly owned by NSULC, or (ii) in the case of borrowings on or after the Effective Date, in Equity Interests of or loans to WLLC that, substantially concurrently with the applicable borrowing, are contributed to NSULC for Equity Interests of or loans to NSULC. On the Effective Date, WLLC will lend to the U.S. Borrower (the "Original WLLC Loan") (for the Term B Loans borrowed by the Additional Borrower) pursuant to the WLLC Term Loan Credit Agreement dated as of the Effective Date between the U.S. Borrower and WLLC (the "WLLC Term Loan Agreement") the entire amount invested in it by NSULC or the Additional Borrower on economic terms and conditions identical to those applicable to the Term B Loans (the Term B Loans borrowed by the Additional Borrower) (except that the rate of interest payable thereon will exceed (but by no more than 0.10% per annum) the rates of interest payable on the Term B Loans (for the Term B Loans borrowed by the Additional Borrower)). The U.S. Borrower shall utilize the principal amount of the Original WLLC Loan on the Effective Date to finance, in part, the Transaction. The obligations of the U.S. Borrower in respect of the Original WLLC Loan shall be subordinated pursuant to the WLLC Subordination Agreement to the obligations of the U.S. Borrower under the Loan Documents and no payment will be made by the U.S. Borrower in respect of such loans from WLLC unless, substantially contemporaneous therewith, a payment in
an equal amount is made by the Additional Borrower in respect of the Term B Loans, provided that, so long as no Default or Event of Default exists, the payment of interest to WLLC may be at a rate of interest that exceeds (but by no more than 0.10% per annum) the rate of interest payable on the Term B Loans (for the Term B Loans borrowed by the Additional Borrower), and provided further that during the continuance of any Default or Event of Default such additional 0.10% per annum interest may continue to accrue and may be paid by the U.S. Borrower to WLLC when the condition resulting in the prohibition on payment thereof no longer exists. Upon each borrowing under the Seller Loan Agreement, WLLC will lend to the U.S. Borrower (each a "Subsequent WLLC Loan" and, together with the Original WLLC Loan, the "WLLC Loans") pursuant to the Delayed-Draw Term Loan Credit Agreement dated as of the Effective Date between the U.S. Borrower and WLLC (the "Delayed-Draw Term Loan Agreement") the entire amount invested in it by NSULC with respect to such borrowing on economic terms and conditions identical to those applicable to the Seller Loan (except that the rate of interest payable thereon will exceed (but by no more than 0.10% per annum) the rate of interest payable on the Seller Loans). The obligations of the U.S. Borrower in respect of each Subsequent WLLC Loan shall be subordinated pursuant to the WLLC Subordination Agreement to the obligations of the U.S. Borrower under the Seller Loan Agreement and no payment will be made by the U.S. Borrower in respect of such loans from WLLC unless, substantially contemporaneously therewith, a payment in an equal amount is made by the Additional Borrower in respect of the Seller Loans and such payment is permitted to be made by the Additional Borrower and the U.S. Borrower under the WLLC Subordination Agreement, provided that, so long as no Default or Event of Default exists and such payment is permitted to be made by the Additional Borrower and the U.S. Borrower under the WLLC Subordination Agreement, the payment of interest to WLLC may be at a rate of interest that exceeds (but by no more than 0.10% per annum) the rate of interest payable on the Seller Loan, and provided further that during the continuance of any Default or Event of Default such additional 0.10% per annum interest may continue to accrue and may be paid by the U.S. Borrower to WLLC when the condition resulting in the prohibition on payment thereof no longer exists and such payment is permitted to be made by the Additional Borrower and the U.S. Borrower under the WLLC Subordination Agreement. The additional 0.10% per annum interest payable on any WLLC Loan is referred to herein as the "WLLC Spread."
"Terminated Lender" has the meaning assigned thereto in Section 2.20.
"Test Period" means (i) for the covenants contained in Sections 6.12 and 6.13, the four consecutive complete Fiscal Quarters of the U.S. Borrower then last ended as of each date listed under Test Period and (ii) for all other provisions in this Agreement, the four consecutive complete Fiscal Quarters of the U.S. Borrower ended as of the time indicated. Compliance with such covenants shall be tested, as of the end of each Test Period, on the date on which the financial statements pursuant to Section 5.01(a) or (b) have been, or should have been, delivered for the applicable fiscal period.
"Title Company" means Lawyers Title Insurance Corporation or such other title insurance or abstract company as shall be approved by the Collateral Agent.
"Total Leverage Ratio" means, at any date, the ratio of (a) Consolidated Indebtedness as of such date to (b) Consolidated EBITDA for the Test Period most recently ended.
"Total Revolving Credit Commitment" means, at any time, the aggregate amount of the Revolving Credit Commitments, as in effect at such time.
"Transactions" means the Financing Transactions and the Acquisition Transactions.
"Transferee" has the meaning assigned to such term in Section 2.16.
"Transferred Asset Ownership Class" has the meaning set forth in the Boeing Trust Agreement.
"Trigger Date" means the date on which a Compliance Certificate for the first Fiscal Quarter of the U.S. Borrower ending more than six months after the Effective Date shall have been received by the Administrative Agent pursuant to Section 5.01(b).
"Triggering Event" means the occurrence of any event described in
Section 2.05A(a) or 2.05A(b) requiring an Offer to Repay pursuant to Section
2.05A(c) or 2.05A(d).
"Triggering Event Repayment Offer Covenant" means the requirements set forth in Section 5.11A.
"Trust Agreements" means collectively the Boeing Trust Agreement and the TBC Trust Agreement.
"Trusts" has the meaning set forth in Section 3.25.
"Type," when used in respect of any Loan or Borrowing, refers to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, "Rate" shall include the Adjusted LIBO Rate and the Alternate Base Rate.
"UCC" means the Uniform Commercial Code as in effect in the applicable state or jurisdiction.
"Unrefunded Swingline Loans" has the meaning assigned thereto in
Section 2.04(c).
"U.S. Borrower" has the meaning ascribed to such term in the preamble to this Agreement.
"U.S. Borrower Event of Default" has the meaning assigned thereto in
Section 7.01.
"U.S. Borrower Event of Termination" has the meaning assigned thereto in Section 7.01.
"U.S. Loan Parties" means the Parent Guarantor, the U.S. Borrower, the Subsidiary Loan Parties and the Kansas Finance Subsidiary.
"U.S. Taxpayer Lender" has the meaning assigned to such term in
Section 2.16.
"Voting Stock" means, with respect to any Person, any class or classes of Equity Interests pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount of each scheduled installment, sinking fund, serial maturity or other required payment of principal including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.
"Welfare Plan" means a "welfare plan," as such term is defined in
Section 3(1) of ERISA, that is maintained or contributed to by a Loan Party or
any Subsidiary or with respect to which a Loan Party or any Subsidiary could
incur liability.
"Wholly Owned Subsidiary" means, as to any Person, (a) any corporation 100% of whose Voting Stock (other than directors' qualifying shares) is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person and (b) any partnership, association, joint venture, limited liability company or other entity in which such Person and/or one or more Wholly Owned Subsidiaries of such Person own 100% of the Voting Stock of such Person at such time.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of Title IV of ERISA.
"Withholding Tax Guarantee Agreement" means the Guarantee Agreement, substantially in the form of Exhibit T-1, between Onex Corporation and the Administrative Agent for the benefit of the Lenders (as the same may be amended, supplemented or amended and restated from time to time).
"WLLC" has the meaning assigned to such term in the definition of "Term Transaction."
"WLLC Delayed-Draw Term Loan Agreement" has the meaning assigned to such term in the definition of "Term Transaction."
"WLLC Loans" has the meaning assigned to such term in the definition of "Term Transaction."
"WLLC Spread" has the meaning assigned to such term in the definition of "Term Transaction."
"WLLC Subordination Agreement" means the WLLC Subordination Agreement, to be entered into among the Additional Borrower and each Additional Borrower Subsidiary, the U.S. Borrower, the Administrative Agent and Seller, as agent under the Seller Loan Agreement, substantially in the form of Exhibit R.
"WLLC Term Loan Agreement" has the meaning assigned to such term in the definition of "Term Transaction."
SECTION 1.02. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and referred to by Class (e.g., a "Revolving Credit Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Credit Borrowing").
SECTION 1.03. Terms Generally. (a) The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (i) any reference in this Agreement to any Loan
Document means such document as amended, restated, supplemented or otherwise
modified from time to time and (ii) all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided, however, that for purposes of determining compliance with the
covenants contained in Article VI, all accounting terms herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP as in effect on the Effective Date and applied on a basis
consistent with the application used in the financial statements referred to in
Section 3.06; provided that the U.S. Borrower shall provide the Lenders a
reasonably detailed reconciliation along with any financial statements delivered
pursuant to Section 5.01(a) or (b) reconciling such financial statements to GAAP
used in the financial statements referred to in Section 3.06.
(b) If any payment under this Agreement or any other Loan Document shall be due on any day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and in the case of any payment accruing interest, interest thereon shall be paid for the period of such extension.
ARTICLE II
THE CREDITS
SECTION 2.01. Credit Commitments. (a) Subject to the terms and conditions hereof, (i) each Term B Lender severally agrees to make a Term B Loan in Dollars to the Additional Borrower on the Effective Date in a principal amount not exceeding its Term B Commitment and (ii) each Revolving Lender severally agrees to make Revolving Loans in Dollars to the U.S. Borrower from time to time during the Revolving Credit Commitment Period. Amounts repaid or prepaid in respect of Term B Loans may not be reborrowed. During the Revolving Credit Commitment Period the U.S. Borrower may use the Revolving Credit Commitments by borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. Notwithstanding anything to the contrary contained in this Agreement, in no event may Revolving Loans be borrowed under this Article II (x) if, after giving effect thereto (and to any concurrent repayment or prepayment of Loans), (A)(i) the Aggregate Revolving Credit Exposure would exceed the Total Revolving Credit Commitment then in effect or (ii) the Revolving Credit Exposure of any Revolving Lender would exceed such Revolving Lender's Revolving Credit Commitment or (B) the Aggregate Revolving Credit Exposure would exceed $50.0 million prior to the time that at least $50.0 million has been borrowed under the Seller Loan Agreement or (y) during the continuance of a Boeing Funded Capital Expenditure Shortfall Event, provided that this clause (v) shall only apply during the Seller Loan Availability Period (for purposes of this Section 2.01(a) only, the Seller Loan Availability Period shall be deemed to have ended if a borrowing notice has been given by the Additional Borrower to borrow all available amounts as of the first business day of the then next calendar quarter).
(b) The Revolving Loans and Term B Loans may from time to time be (i) Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the applicable Borrower and notified to the Administrative Agent in accordance with Sections 2.02 and 2.03.
(c) Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required.
SECTION 2.02. Procedure for Borrowing. (a) The U.S. Borrower may
borrow under the Revolving Credit Commitments (subject to the limitations in
Section 2.01(a)) and the Additional Borrower may borrow the Term B Commitments
by giving the Administrative Agent notice substantially in the form of Exhibit B
(a "Borrowing Request"), which notice must be received by the Administrative
Agent prior to (a) 11:00 a.m., New York City time, three Business Days prior to
the requested Borrowing Date, in the case of a Eurodollar Borrowing, or (b)
11:00 a.m., New York City time, on the Business Day prior to the requested
Borrowing Date, in the case of an ABR Borrowing. The Borrowing Request from the
U.S. Borrower or the Additional Borrower, as the case may be, for each Borrowing
shall specify (i) whether the
requested Borrowing is to be a Revolving Credit Borrowing or a Term B Borrowing,
(ii) the amount to be borrowed, (iii) the requested Borrowing Date (which must
be the Effective Date, in the case of a Term B Borrowing), (iv) whether the
Borrowing is to be of Eurodollar Loans or ABR Loans, (v) if the Borrowing is to
be of Eurodollar Loans, the length of the initial Interest Period therefor, and
(vi) the identity of the applicable Borrower and the location and number of the
applicable Borrower's account to which funds are to be disbursed, which shall
comply with the requirements of this Agreement. If no election as to the Type of
Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing.
If no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the applicable Borrower shall be deemed to have selected an
Interest Period of one month's duration. Notwithstanding the foregoing, all
Borrowings on the Effective Date shall be ABR Loans.
(b) Each Borrowing shall be in a minimum aggregate principal amount of
(i) in the case of a Term B Borrowing, $5.0 million or an integral multiple of
$1.0 million in excess thereof or (ii) in the case of a Revolving Credit
Borrowing, $1.0 million or an integral multiple of $1.0 million in excess
thereof or, if less, the aggregate amount of the then Available Revolving Credit
Commitments.
(c) Upon receipt of the Term B Borrowing Request, the Administrative Agent shall promptly notify each Term B Lender of the aggregate amount of the Term B Borrowing and of the amount of such Term B Lender's pro rata portion thereof, which shall be based on their respective Term B Commitments. Each Term B Lender will make the amount of its pro rata portion of the Term B Borrowing available to the Administrative Agent for the account of Additional Borrower at the New York office of the Administrative Agent specified in Section 10.01 prior to 10:00 a.m., New York City time, on the Effective Date in funds immediately available to the Administrative Agent. Amounts so received by the Administrative Agent will promptly be made available to Additional Borrower by the Administrative Agent crediting the account of Additional Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Term B Lenders and in like funds as received by the Administrative Agent.
(d) Upon receipt of a Revolving Credit Borrowing Request, the Administrative Agent shall promptly notify each Revolving Lender of the aggregate amount of such Revolving Credit Borrowing and of the amount of such Revolving Lender's pro rata portion thereof, which shall be based on the respective Available Revolving Credit Commitments of all the Revolving Lenders. Each Revolving Lender will make the amount of its pro rata portion of each such Revolving Credit Borrowing available to the Administrative Agent for the account of the U.S. Borrower at the New York office of the Administrative Agent specified in Section 10.01 prior to 12:00 p.m., New York City time, on the Borrowing Date requested by the U.S. Borrower in funds immediately available to the Administrative Agent. Amounts so received by the Administrative Agent will promptly be made available to the U.S. Borrower by the Administrative Agent crediting the account of the U.S. Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Revolving Lenders and in like funds as received by the Administrative Agent; provided that if on the Borrowing Date of any Revolving Loans to be made to the U.S. Borrower, any Swingline Loans made to the U.S. Borrower or LC Disbursements for the account of the U.S. Borrower shall be then outstanding, the proceeds of such Revolving Loans shall first be applied to pay in full such
Swingline Loans or LC Disbursements, with any remaining proceeds to be made available to the U.S. Borrower as provided above; and provided further that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing Bank.
SECTION 2.03. Conversion and Continuation Options for Loans. (a) The applicable Borrower may elect from time to time to convert (i) Eurodollar Loans to ABR Loans, by giving the Administrative Agent prior notice of such election not later than 11:00 a.m., New York City time, on the Business Day prior to a requested conversion or (ii) ABR Loans to Eurodollar Loans by giving the Administrative Agent prior notice of such election not later than 11:00 a.m., New York City time, three Business Days prior to a requested conversion; provided that if any such conversion of Eurodollar Loans is made other than on the last day of an Interest Period with respect thereto, the applicable Borrower shall pay any amounts due to the Lenders pursuant to Section 2.17 as a result of such conversion. Any such notice of conversion to Eurodollar Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. All or any part of the outstanding Eurodollar Loans or ABR Loans may be converted as provided herein; provided that (i) no Loan may be converted into a Eurodollar Loan when any Default or Event of Default has occurred and is continuing and (ii) no Loan may be converted into a Eurodollar Loan after the date that is one month prior to the Revolving Credit Maturity Date or the Term B Loan Maturity Date, as applicable.
(b) Any Eurodollar Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the U.S. Borrower giving prior notice to the Administrative Agent, not later than 11:00 a.m., New York City time, three Business Days prior to a requested continuation setting forth the length of the next Interest Period to be applicable to such Loans; provided that no Eurodollar Loan may be continued as such (i) when any Default or Event of Default has occurred and is continuing and (ii) after the date that is one month prior to the Revolving Credit Maturity Date or the Term B Loan Maturity Date, as applicable; and provided, further, that if the U.S. Borrower shall fail to give any required notice as described above in this Section 2.03 or if such continuation is not permitted pursuant to the preceding proviso, then such Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period (in which case the Administrative Agent shall notify the U.S. Borrower of such conversion).
(c) In connection with any Eurodollar Loans, there shall be no more than 8 Interest Periods outstanding at any time.
(d) This Section shall not apply to Swingline Loans.
SECTION 2.04. Swingline Loans. (a) Subject to the terms and conditions hereof, the Swingline Lender agrees to make swingline loans (individually, a "Swingline Loan" and collectively, the "Swingline Loans") to the U.S. Borrower from time to time during the Revolving Credit Commitment Period in accordance with the procedures set forth in this Section 2.04, provided that (i) the aggregate principal amount of all Swingline Loans shall not exceed $10.0 million (the "Swingline Sublime") at any one time outstanding, (ii) the principal amount of any borrowing of Swingline Loans may not exceed the aggregate amount of the
Available Revolving Credit Commitments of all Revolving Lenders immediately
prior to such borrowing or result in the Aggregate Revolving Credit Exposure
then outstanding exceeding the Total Revolving Credit Commitments then in
effect, and (iii) in no event may Swingline Loans be borrowed hereunder if
(A)(x) a Default or Event of Default or Event of Termination shall have occurred
and be continuing and (y) such Default or Event of Default or Event of
Termination shall not have been subsequently cured or waived or (B) after giving
effect thereto, the Aggregate Revolving Credit Exposure would exceed $50.0
million prior to the time that at least $50.0 million has been borrowed under
the Seller Loan Agreement. Amounts borrowed under this Section 2.04 may be
repaid and, up to but excluding the Revolving Credit Maturity Date, reborrowed.
All Swingline Loans shall at all times be ABR Loans. The U.S. Borrower shall
give the Administrative Agent notice of any Swingline Loan requested hereunder
(which notice must be received by the Administrative Agent prior to 11:00 a.m.,
New York City time, on the requested Borrowing Date) specifying (A) the amount
to be borrowed, and (B) the requested Borrowing Date. Upon receipt of such
notice, the Administrative Agent shall promptly notify the Swingline Lender of
the aggregate amount of such borrowing. Not later than 2:00 p.m., New York City
time, on the Borrowing Date specified in such notice the Swingline Lender shall
make such Swingline Loan available to the Administrative Agent for the account
of the U.S. Borrower at the office of the Administrative Agent set forth in
Section 10.01 in funds immediately available to the Administrative Agent.
Amounts so received by the Administrative Agent will promptly be made available
to the U.S. Borrower by the Administrative Agent crediting the account of the
U.S. Borrower on the books of such office with the amount made available to the
Administrative Agent by the Swingline Lender (or, in the case of a Swingline
Loan made to finance the reimbursement of an LC Disbursement as provided in
Section 2.06(e), by remittance to the Issuing Bank) and in like funds as
received by the Administrative Agent. Each Borrowing pursuant to this Section
2.04 shall be in a minimum principal amount of $500,000 or an integral multiple
of $100,000 in excess thereof.
(b) Notwithstanding the occurrence of any Default or Event of Default
or Event of Termination or noncompliance with the conditions precedent set forth
in Article IV or the minimum borrowing amounts specified in Section 2.02, if any
Swingline Loan shall remain outstanding at 10:00 a.m., New York City time, on
the fifth Business Day following the Borrowing Date thereof and if by such time
on such fifth Business Day the Administrative Agent shall have received neither
(i) a notice of borrowing delivered by the U.S. Borrower pursuant to Section
2.02 requesting that Revolving Loans be made pursuant to Section 2.01 on the
immediately succeeding Business Day in an amount at least equal to the aggregate
principal amount of such Swingline Loan, nor (ii) any other notice reasonably
satisfactory to the Administrative Agent indicating the U.S. Borrower's intent
to repay such Swingline Loan on the immediately succeeding Business Day with
funds obtained from other sources, the Administrative Agent shall be deemed to
have received a notice from the U.S. Borrower pursuant to Section 2.02
requesting that ABR Revolving Loans be made pursuant to Section 2.01 on such
immediately succeeding Business Day in an amount equal to the amount of such
Swingline Loan, and the procedures set forth in Section 2.02 shall be followed
in making such ABR Revolving Loans; provided that for the purposes of
determining each Lender's Commitment Percentage with respect to such Borrowing,
the Swingline Loan to be repaid with the proceeds of such Borrowing shall be
deemed to not be outstanding. The proceeds of such ABR Revolving Loans shall be
applied to repay such Swingline Loan.
(c) If, for any reason, ABR Revolving Loans may not be, or are not, made pursuant to paragraph (b) of this Section 2.04 to repay any Swingline Loan as required by such paragraph, effective on the date such ABR Revolving Loans would otherwise have been made, each Revolving Lender severally, unconditionally and irrevocably agrees that it shall, without regard to the occurrence of any Default or Event of Default, purchase a participating interest in such Swingline Loan ("Unrefunded Swingline Loan") in an amount equal to the amount of the ABR Revolving Loan which would otherwise have been made pursuant to paragraph (b) of this Section 2.04. Each Revolving Lender will immediately transfer to the Administrative Agent, in immediately available funds, the amount of its participation, and the proceeds of such participations shall be distributed by the Administrative Agent to the Swingline Lender. All payments by the Revolving Lenders in respect of Unrefunded Swingline Loans and participations therein shall be made in accordance with Section 2.13.
(d) Notwithstanding the foregoing, a Lender shall not have any obligation to acquire a participation in a Swingline Loan pursuant to the foregoing paragraphs if a Default or Event of Default or Event of Termination shall have occurred and be continuing at the time such Swingline Loan was made and such Lender shall have notified the Swingline Lender in writing prior to the time such Swingline Loan was made, that such Default or Event of Default or such Event of Termination has occurred and that such Lender will not acquire participations in Swingline Loans made while such Default or Event of Default or such Event of Termination is continuing.
SECTION 2.05. Optional and Mandatory Prepayments of Loans; Repayments of Loans. (a) Each Borrower may at any time and from time to time prepay the Loans made to it (subject to compliance with the terms of Section 2.17), in whole or in part, subject to Sections 2.05(e)(iii) and 2.05(g), upon irrevocable notice to the Administrative Agent not later than 12:00 noon, New York City time, two Business Days prior to the date of such prepayment, specifying (i) the date and amount of prepayment, and (ii) the Class of Loans to be prepaid and whether the prepayment is of Eurodollar Loans, ABR Loans or a combination thereof (including in the case of Eurodollar Loans, the Borrowing to which such prepayment is to be applied and, if of a combination thereof, the amount allocable to each). Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid. Partial prepayments of Loans (other than Swingline Loans) shall be (a) in the case of Term B Borrowings, in an aggregate principal amount of $5.0 million or a whole multiple of $1.0 million in excess thereof and (b) in the case of Revolving Credit Borrowings, in an aggregate principal amount of $1.0 million or a whole multiple of $1.0 million in excess thereof (or in each case, if less, the remaining outstanding principal amount thereof). Partial prepayments of Swingline Loans shall be in an aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess thereof (or, if less, the remaining outstanding principal amount thereof).
(b) In the event and on such occasion that the Aggregate Revolving Credit Exposure exceeds the Total Revolving Credit Commitment, the U.S. Borrower shall prepay Revolving Credit Borrowings or Swingline Borrowings (or, if no such Borrowings are outstanding, deposit cash collateral in the account established with the Administrative Agent pursuant to Section 2.06(j)) in an aggregate amount equal to such excess.
(c) (i) If the Parent Guarantor shall issue any Equity Interests or Equity Rights (it being understood that the issuance of debt securities convertible into, or exchangeable or exercisable for, any Equity Interest or Equity Right shall be governed by Section 2.05(c)(ii)) (other than any Excluded Equity Issuance and other than the issuance of Equity Interests or Equity Rights of the Parent Guarantor to officers, directors or employees of the U.S. Borrower and its Subsidiaries) (each, an "Equity Issuance"), 50% of the Net Proceeds thereof, shall be applied within two Business Days after receipt thereof toward the prepayment of the Loans in accordance with Section 2.05(e).
(ii) If the Parent Guarantor or any of its Subsidiaries shall incur or permit the incurrence of any Indebtedness (including pursuant to debt securities which are convertible into, or exchangeable or exercisable for, any Equity Interest or Equity Rights) (other than Excluded Debt Issuances) (each, a "Debt Incurrence"), 100% of the Net Proceeds thereof shall be applied within two Business Days after receipt thereof toward the prepayment of the Loans in accordance with Section 2.05(e).
(iii) If, for any Excess Cash Flow Period, there shall be Excess Cash Flow for such Excess Cash Flow Period, the Excess Cash Flow Percentage of such Excess Cash Flow shall be applied, not later than 10 Business Days after the date financial statements with respect to the Fiscal Year then ending are required to be delivered pursuant to Section 5.01(b), toward the prepayment of the Loans in accordance with Section 2.05(e).
(iv) If the Parent Guarantor or any of its Subsidiaries shall receive any Acquisition Indemnity Payment, 65% of the Net Proceeds thereof shall be applied immediately after receipt thereof toward the prepayment of the Loans in accordance with Section 2.05(e).
(d) (i) The Additional Borrower shall repay the Term B Loans (and the U.S. Borrower shall prepay the Original WLLC Loan in an equal principal amount) in consecutive quarterly installments on the dates set forth below (each such day, an "Installment Payment Date"), commencing on September 30, 2005, in an aggregate amount equal to the amount specified below for each such Installment Payment Date.
Installment Payment Date Installment Amount ------------------------ ------------------ September 30, 2005 1,750,000.00 December 31, 2005 1,750,000.00 March 31, 2006 1,750,000.00 June 30, 2006 1,750,000.00 September 30, 2006 1,750,000.00 December 31, 2006 1,750,000.00 March 31, 2007 1,750,000.00 June 30, 2007 1,750,000.00 September 30, 2007 1,750,000.00 December 31, 2007 1,750,000.00 March 31, 2008 1,750,000.00 June 30, 2008 1,750,000.00 September 30, 2008 1,750,000.00 |
December 31, 2008 1,750,000.00 March 31, 2009 1,750,000.00 June 30, 2009 1,750,000.00 September 30, 2009 1,750,000.00 December 31, 2009 1,750,000.00 March 31, 2010 1,750,000.00 June 30, 2010 1,750,000.00 September 30, 2010 1,750,000.00 December 31, 2010 1,750,000.00 March 31, 2011 165,375,000.00 June 30, 2011 165,375,000.00 September 30, 2011 165,375,000.00 December 31, 2011 165,375,000.00 |
(ii) To the extent not previously paid, all Term B Loans shall be due and payable on the Term B Loan Maturity Date.
(e) (i) Mandatory prepayments of Loans made pursuant Section 2.05(c) will be applied to the then outstanding Term B Loans to reduce scheduled repayments with respect thereto required under Section 2.05(d) on a pro rata basis among the repayments with respect thereto remaining to be made on each Installment Payment Date.
(ii) After all the then outstanding amounts under the Term B Loans have been paid in full, mandatory prepayments of Loans required by Section 2.05(c) shall be applied to repay the outstanding Revolving Loans, which prepayment shall also result in the Revolving Credit Commitments being reduced ratably among the Revolving Lenders in accordance with their respective applicable Revolving Credit Commitments (provided that if the aggregate principal amount of Revolving Loans and Swingline Loans then outstanding is less than the amount of such excess (because Letters of Credit constitute a portion thereof), the U.S. Borrower shall, to the extent of the balance of such excess, replace outstanding Letters of Credit and/or deposit an amount in cash in a cash collateral account established with the Administrative Agent for the benefit of the Secured Parties on terms and conditions reasonably satisfactory to the Administrative Agent).
(iii) Optional prepayments of Loans shall be applied as elected by the applicable Borrower; provided that optional prepayments of Term B Loans shall be allocated to reduce scheduled prepayments with respect thereto under Section 2.05(d) on a pro rata basis among the prepayments with respect thereto remaining to be paid on each Installment Payment Date.
(f) If on any day on which Loans would otherwise be required to be
prepaid pursuant to this Section 2.05, but for the operation of this Section
2.05(f) (each a "Prepayment Date"), the amount of such required prepayment
exceeds the then outstanding aggregate principal amount of ABR Loans which are
of the Class required to be prepaid, and no Default or Event of Default exists
or is continuing, then on such Prepayment Date, (i) the applicable Borrower
shall deposit funds into the Collateral Account in an amount equal to such
excess, and only the outstanding ABR Loans which are of the Class required to be
prepaid shall be required
to be prepaid on such Prepayment Date, and (ii) on the last day of each Interest Period ending on or after such Prepayment Date in effect with respect to a Eurodollar Loan which is of the Class required to be prepaid, the Administrative Agent is irrevocably authorized and directed to apply funds from the Collateral Account (and liquidate investments held in the Collateral Account as necessary) to prepay such Eurodollar Loans for which the Interest Period is then ending to the extent funds are available in the Collateral Account.
(g) Notwithstanding any other provision of this Section 2.05, (i) with
respect to all prepayments required to be made pursuant to Section 2.05(c) of
the Term B Loans, at no time on or before the fifth anniversary of the Effective
Date (unless the Term B Loans shall have become due and payable by acceleration
under this Agreement following the occurrence of an Event of Default) shall any
prepayment of the Term B Loans by the Additional Borrower be required pursuant
to Section 2.05 (each, a "Blocked Repayment") to the extent that, after giving
effect to such prepayment, the sum of (A) the aggregate amount of prepayments of
Term B Loans made or required to be made pursuant to Section 2.05(c) at or prior
to such time and (B) the aggregate amount of repayments of the Term B Loans
scheduled to be made pursuant to Section 2.05(d) (to the extent required) on or
prior to the fifth anniversary of the Effective Date would exceed an amount
equal to 25% of the aggregate original principal amount of all Term B Loans;
provided that all Blocked Repayments shall be required to be applied, first, to
the Revolving Credit Commitments and Revolving Loans in accordance with Section
2.05(e)(ii); provided, further, that after the Revolving Credit Commitments have
been reduced to zero and all Letters of Credit have been replaced or cash
collateralized in accordance with Section 2.05(e)(ii), the cash amount of any
prepayment required by Section 2.05(c) that is not permitted to be paid by this
Section 2.05(g) shall be required to be deposited into a designated bank account
with a financial institution (reasonably satisfactory to the Administrative
Agent) that is not a Lender or an Affiliate of a Lender, which account shall be
subject to a "lock-box" agreement or other "blocked account" agreement for the
benefit of the Secured Parties in all respects reasonably satisfactory to the
Administrative Agent, which agreement shall provide that the funds held in such
account may be invested by the Additional Borrower in Permitted Investments
(such account, the "Designated Lock-Box Account") on the date of such prepayment
and shall be held until the day after the fifth anniversary of the Effective
Date, at which time the cash amounts previously deposited in the Designated
Lock-Box Account shall be utilized to prepay Loans in accordance with Section
2.05(c).
SECTION 2.05A. Asset Sales and Casualty Events. (a) If the Parent Guarantor or any of its Subsidiaries shall receive Net Proceeds from any Asset Sale (other than the sale or issuance of Equity Interests of the Borrower), 100% of such Net Proceeds shall be applied within two Business Days after receipt thereof toward an Offer to Repay Term B Loans or a prepayment of Revolving Loans as set forth in Section 2.05A(c); provided that (x) the Net Proceeds from Asset Sales permitted by Section 6.05 shall not be required to be applied as provided herein on such date if and to the extent that (1) no Event of Default then exists or would arise therefrom and (2) the U.S. Borrower delivers an officers' certificate to the Administrative Agent on or prior to the date of such Asset Sale stating that such Net Proceeds shall be reinvested in Property used or usable in the business of the U.S. Borrower and its Subsidiaries in each case within one year following the date of such Asset Sale (which certificate shall set forth the estimates of the proceeds to be so expended), and (y) if all or any portion of such Net Proceeds not so applied as provided herein is not so used within such one year period, such remaining
portion shall be applied on the last day of such period as specified in this
Section 2.05A(a); provided, further, if the Property subject to such Asset Sale
constituted Collateral under the Security Documents, then any capital assets
purchased with the Net Proceeds thereof pursuant to this subsection shall be
mortgaged or pledged, as the case may be, to the Collateral Agent, for its
benefit and for the benefit of the other Secured Parties in accordance with
Section 5.11.
(b) If the Parent Guarantor or any of its Subsidiaries shall receive proceeds from insurance or condemnation recoveries in respect of any Destruction or any proceeds or awards in respect of any Taking, 100% of the Net Proceeds thereof shall be applied immediately after receipt thereof toward an Offer to Repay Term B Loans or a prepayment of Revolving Loans as set forth in Section 2.05A(c) below; provided that (x) such Net Proceeds shall not be required to be so applied to the extent that the U.S. Borrower has delivered an officers' certificate to the Administrative Agent promptly following the receipt of such Net Proceeds stating that such proceeds shall be used to (1) repair, replace or restore any Property in respect of which such Net Proceeds were paid or (2) fund the substitution of other Property used or usable in the business of the U.S. Borrower or the Subsidiaries, in each case within one year following the date of the receipt of such Net Proceeds, and (y) if all or any portion of such Net Proceeds not so applied as provided herein is not so used within one year after the date of the receipt of such Net Proceeds, such remaining portion shall be applied on the last day of such period as specified in this Section 2.05A(b); provided, further, if the Property subject to such Destruction or Taking constituted Collateral under the Security Documents, then any replacement or substitution Property purchased with the Net Proceeds thereof pursuant to this subsection shall be mortgaged or pledged, as the case may be, to the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Section 5.11.
(c) (i) Upon the occurrence of any Triggering Event, the Additional Borrower shall prepare and provide to each Term B Lender a notice (each, an "Offer to Repay Notice"), which shall be substantially in the form of Exhibit S-1, and shall include an offer (the "Offer to Repay") pursuant to the Triggering Event Repayment Offer Covenant to prepay on the date (each, an "Offer Settlement Date") that is 5 Business Days after the date of the Offer to Repay Notice, the relevant portion of such Term B Lender's Term B Loan as determined in accordance with Section 2.05A(a) or 2.05A(b) and Section 2.13 with respect to such Triggering Event, and each Term B Lender (or its appointee) wishing to accept the Offer to Repay shall reply, substantially in the form of Exhibit S-2 and indicating whether such offer is accepted in whole or in part (and if so, to what extent) by the close of business on the Business Day immediately preceding the Offer Settlement Date. On each Offer Settlement Date, the Additional Borrower shall pay to those Term B Lenders who have accepted the related Offer To Repay the aggregate amount required to be paid pursuant to this Section 2.05A; provided that all non-accepted amounts shall be reallocated toward the repayment of Term B Loans of Term B Lenders accepting such Offer to Repay in the proportion and to the extent that such Term B Lenders accept such Offer to Repay. Prepayments of Loans made pursuant this Section 2.05A will be applied to the then outstanding Term B Loans to reduce scheduled prepayments with respect thereto required under Section 2.05(d) on a pro rata basis among the prepayments with respect thereto remaining to be made on each Installment Payment Date.
(ii) After all the then outstanding amounts under the Term B Loans have been paid in full, amounts in respect of which an Offer to Repay would otherwise be required by
Section 2.05A(a) and Section 2.05A(b) shall be applied to repay the outstanding Revolving Loans, which repayment shall also result in the Revolving Credit Commitments being reduced ratably among the Revolving Lenders in accordance with their respective applicable Revolving Credit Commitments (provided that if the aggregate principal amount of Revolving Loans and Swingline Loans then outstanding is less than the amount of such excess (because Letters of Credit constitute a portion thereof), the U.S. Borrower shall, to the extent of the balance of such excess, replace outstanding Letters of Credit and/or deposit an amount in cash in a cash collateral account established with the Administrative Agent for the benefit of the Secured Parties on terms and conditions reasonably satisfactory to the Administrative Agent).
(d) If on an Offer Settlement Date the amount in respect of which such Offer to Repay has been accepted exceeds the then outstanding aggregate principal amount of ABR Loans which are of the Class in respect of which such Offer to Repay has been made, and no Default or Event of Default exists or is continuing, then on such Offer Settlement Date, (i) the Additional Borrower shall deposit funds into the Collateral Account in an amount equal to such excess, and only the outstanding ABR Loans which are of the Class in respect of which such Offer to Repay has been made, and in respect of which it has been accepted, shall be repaid on such Offer Settlement Date, and the Offer Settlement Date in respect of the balance of the Offer to Repay shall be extended and (ii) on the last day of each Interest Period after such Offer Settlement Date in effect with respect to a Eurodollar Loan which is of the Class required to be prepaid and owing to a Lender who has accepted such Offer to Repay and not been repaid to the full extent of such acceptance, the Offer Settlement Date shall be fixed as that date and the Administrative Agent is irrevocably authorized and directed to apply funds from the Collateral Account (and liquidate investments held in the Collateral Account as necessary) to prepay such Eurodollar Loans for which the Interest Period is then ending to the extent funds are available in the Collateral Account.
SECTION 2.06. Letters of Credit.(a) General. Subject to the terms and conditions set forth herein, the U.S. Borrower may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time on the Effective Date or during the Revolving Credit Commitment Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the U.S. Borrower to, or entered into by the U.S. Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the U.S. Borrower shall hand deliver or facsimile (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the U.S. Borrower also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the U.S. Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, (i) the LC Exposure shall not exceed $50.0 million, (ii) the Aggregate Revolving Credit Exposure shall not exceed the Total Revolving Credit Commitment and (iii) prior to the time that at least $50.0 million has been borrowed under the Seller Loan Agreement, the Aggregate Revolving Credit Exposure shall not exceed $50.0 million. With respect to any Letter of Credit which contains any "evergreen" automatic renewal provision, the Issuing Bank shall be deemed to have consented to any such extension or renewal provided that all of the requirements of this Section 2.06 are met and no Default or Event of Default exists at the time such Letter of Credit is issued, extended or renewed.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Revolving Credit Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Revolving Lender's Commitment Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Revolving Lender's Commitment Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the U.S. Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the U.S. Borrower for any reason. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or an Event of Default or reduction or termination of the Revolving Credit Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the U.S. Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC Disbursement is made, if the U.S. Borrower shall have received written notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such written notice has not been received by the U.S. Borrower prior to such time on such date, then not later than 12:00 noon, New York City time, on (i) the Business Day that the U.S. Borrower receives such written notice, if such written notice is received prior
to 10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day immediately following the day that the U.S. Borrower receives such written notice, if such written notice is not received prior to such time on the day of receipt; provided that the U.S. Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.02 that such payment be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the U.S. Borrower's obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the U.S. Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the U.S. Borrower in respect thereof and such Revolving Lender's Commitment Percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Commitment Percentage of the payment then due from the U.S. Borrower, in the same manner as provided in Section 2.02 with respect to Loans made by such Revolving Lender (and Section 2.02 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent of any payment from the U.S. Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Revolving Lenders and the Issuing Bank as their interests may appear. Any payment made by a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the U.S. Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The U.S. Borrower's obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section 2.06 shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not substantially comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the U.S. Borrower's obligations hereunder. Neither the Administrative Agent, the Revolving Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the U.S. Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby
waived by the U.S. Borrower to the extent permitted by applicable law) suffered by the U.S. Borrower that are caused by the Issuing Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the U.S. Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the U.S. Borrower of its obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the U.S. Borrower shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made, the unpaid amount
thereof shall bear interest, for each day from and including the date such LC
Disbursement is made to but excluding the date that the U.S. Borrower reimburses
such LC Disbursement, at the rate per annum then applicable to ABR Revolving
Loans; provided that if the U.S. Borrower fails to reimburse such LC
Disbursement when due pursuant to paragraph (e) of this Section 2.06, then
Section 2.08(c) shall apply. Interest accrued pursuant to this paragraph shall
be for the account of the Issuing Bank, except that interest accrued on and
after the date of payment by any Revolving Lender pursuant to paragraph (e) of
this Section 2.06 to reimburse the Issuing Bank shall be for the account of such
Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the U.S. Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the U.S. Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.10(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing
Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the U.S. Borrower receives notice from the
Administrative Agent or the Requisite Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the U.S. Borrower shall deposit in the Collateral
Account an amount in cash equal to the LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to any Borrower
described in clause (a) of Section 7.01 or clause (a) of Section 7.02 or any
Event of Default described in clause (i) of Section 7.01 or clause (h) of
Section 7.02 or clause (n) of Section 7.01 by virtue of an Event of Default
under clause (a) or (h) of Section 7.02 or clause (k) of Section 7.02 by virtue
of an Event of Default under clause (a) or (i) of Section 7.01. Each such
deposit shall be held by the Collateral Agent as collateral for the payment and
performance of the obligations of each Borrower under this Agreement and each
Borrower hereby grants the Collateral Agent a security interest in respect of
each such deposit and the Collateral Account in which such deposits are held.
The Collateral Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over the Collateral Account. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Collateral Agent and at the
Borrowers' risk and expense, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in the Collateral Account.
Moneys deposited in the Collateral Account pursuant to this Section 2.06(j)
shall be applied by the Collateral Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the U.S. Borrower for the LC Exposure at such time or, if the maturity of the
Loans has been accelerated (but subject to the consent of Revolving Lenders with
LC Exposure representing greater than 50% of the total LC Exposure), be applied
to satisfy other obligations of each Borrower under this Agreement. If the U.S.
Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount together with
interest income (if any) (to the extent not applied as aforesaid) shall be
returned to the U.S. Borrower within three Business Days after all Defaults or
Events of Default have been cured or waived.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) (i) The U.S. Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of the relevant Lenders in respect of Revolving Credit Borrowings, on the Revolving Credit Maturity Date (or such earlier date as, and to the extent that, such Revolving Loan becomes due and payable pursuant to Section 2.05 or Article VII), the unpaid principal amount of each Revolving Loan and each Swingline Loan made to it by each such Lender and (ii) the Additional Borrower hereby unconditionally promises to pay the Administrative Agent for the account of the Term B Lenders on the Term B Loan Maturity Date (or such earlier date as, and to the extent that, such Term B Loan becomes due and payable pursuant to Section 2.05 or Article VII), the unpaid principal amount of each Term B Loan held by each such Term B Lender. Each Borrower hereby further agrees to pay interest in immediately available funds at the applicable
office of the Administrative Agent (as specified in Section 2.13(a)) on the
unpaid principal amount of the Revolving Loans, Swingline Loans and Term B
Loans, as applicable, made to it from time to time from the Effective Date until
payment in full thereof at the rates per annum, and on the dates, set forth in
Section 2.08. All payments required hereunder shall be made in Dollars.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the applicable Borrower to the appropriate lending office of such Lender resulting from each Loan made by such lending office of such Lender from time to time, including the amounts of principal and interest payable and paid to such lending office of such Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
Section 10.04, and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount of each such Loan,
the Class and Type of each such Loan and the Interest Period applicable thereto,
(ii) the amount of any principal or interest due and payable or to become due
and payable from the applicable Borrower to each Lender hereunder in respect of
each such Loan and (iii) the amount of any sum received by the Administrative
Agent hereunder from the applicable Borrower in respect of each such Loan and
each Lender's share thereof.
(d) The entries made in the Register and accounts maintained pursuant to paragraphs (b) and (c) of this Section 2.07 and the Notes maintained pursuant to paragraph (e) of this Section 2.07 shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the applicable Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain such account, such Register or such subaccount, as applicable, or any error therein, shall not in any manner affect the obligation of the applicable Borrower to repay (with applicable interest) the Loans made to the applicable Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Loans of each Class made by each Lender to the applicable Borrower shall, if requested by the applicable Lender (which request shall be made to the Administrative Agent), be evidenced by a single Note duly executed on behalf of the applicable Borrower, in substantially the form attached hereto as Exhibit G-1 or G-2, as applicable, with the blanks appropriately filled, payable to the order of such Lender.
SECTION 2.08. Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) for each day during each Interest Period with respect thereto at a rate per annum equal to:
(i) in the case of a Eurodollar Revolving Loan, (A) the LIBO Rate determined for such Interest Period, plus (B) the Applicable Rate; or
(ii) in the case of a Eurodollar Term B Loan, (A) the LIBO Rate determined for such Interest Period plus (B) the Applicable Rate.
(b) Each ABR Loan (including each Swingline Loan) shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as
the case may be, or over a year of 360 days when the Alternate Base Rate is determined by reference to clause (c) of the definition of "Alternate Base Rate") at a rate per annum equal to the Alternate Base Rate plus the Applicable Rate.
(c) If (A) all or a portion of (i) the principal amount of any Loan,
(ii) any interest payable thereon or (iii) any Commitment Fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity
thereof or by acceleration or otherwise) or (B) an Event of Default described in
Section 7.01(i) shall be continuing, such overdue amount (in the case of clause
(A)) and all Obligations (in the case of clause B)) shall bear interest at a
rate per annum which is (x) in the case of overdue principal (except as
otherwise provided in clause (y) below), the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section 2.08
plus 2.00% per annum or (y) in the case of any overdue interest, Commitment Fee
or other amount, the rate described in Section 2.08(b) applicable to an ABR
Revolving Loan plus 2.00% per annum, in each case from the date of such
nonpayment (in the case of clause (A)) or such Event of Default (in the case of
clause B,)) to (but excluding) the date on which such amount is paid in full
(after as well as before judgment) (in the case of clause (A)) or such Event of
Default is cured (in the case of clause (B)).
(d) Interest shall be payable in arrears on each Interest Payment Date
and on the Term B Loan Maturity Date (in the case of Term B Loans) and the
Revolving Credit Maturity Date (in the case of Revolving Loans); provided that
(i) interest accrued pursuant to paragraph (c) of this Section shall be payable
on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion. Interest in respect of each Loan shall accrue from and including the
first day of an Interest Period to but excluding the last day of such Interest
Period.
SECTION 2.09. Computation of Interest. Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the applicable Borrower and the Lenders in the absence of manifest error.
SECTION 2.10. Fees. (a) The U.S. Borrower agrees to pay a commitment fee (a "Commitment Fee") to each Revolving Lender, for which payment will be made in arrears through the Administrative Agent on the last Business Day of March, June, September and December beginning after the Effective Date, and on the Commitment Fee Termination Date (as defined below). The Commitment Fee due to each Revolving Lender shall commence to accrue for a period commencing on the Effective Date (or, in the case of a Revolving Lender which becomes a Revolving Lender after the Effective Date, the date on which such Revolving Lender becomes a Revolving Lender hereunder pursuant to Section 10.04(b)) and shall cease to accrue on the date (the "Commitment Fee Termination Date") that is the earlier of (i) the date on which the Revolving Credit Commitment of such Revolving Lender shall be terminated as provided herein and (ii) the first date after the end of the Revolving Credit Commitment Period. The Commitment Fee accrued to each Revolving Lender shall equal the Commitment Fee Percentage multiplied by such Revolving Lender's Commitment Fee Average Daily Amount (as defined below) for the applicable quarter (or shorter period commencing on the Effective Date (or, in the
case of a Revolving Lender which becomes a Revolving Lender after the Effective Date, the date on which such Revolving Lender becomes a Revolving Lender hereunder pursuant to Section 10.04(b)) and ending with such Lender's Commitment Fee Termination Date). A Revolving Lender's "Commitment Fee Average Daily Amount" with respect to a calculation period shall equal the average daily amount during such period calculated using the daily amount of such Revolving Lender's Revolving Credit Commitment less such Revolving Lender's Revolving Credit Exposure (excluding clause (c) of the definition thereof for purposes of determining the Commitment Fee Average Daily Amount only) for any applicable days during the Revolving Credit Commitment Period. All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days.
(b) The U.S. Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at a rate equal to the Applicable Rate for Eurodollar Revolving Loans on the average daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Revolving Lender's Revolving Credit Commitment terminates and the date on which such Revolving Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Revolving Credit Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank's standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees (collectively, "LC Fees") accrued through and including the last day of March, June, September and December of each calendar year during the Revolving Credit Commitment Period shall be payable on the last Business Day of such March, June, September and December, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Revolving Credit Commitments terminate and any such fees accruing after the date on which the Revolving Credit Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand therefor. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
(c) The U.S. Borrower agrees to pay to the Administrative Agent the administrative fee set forth in the Fee Letter (the "Agent Fees").
(d) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution. Once paid, none of the Fees shall be refundable.
SECTION 2.11. Termination, Reduction or Adjustment of Commitments. (a)
Unless previously terminated, (i) the Term B Commitments shall terminate at 5:00
p.m., New York City time, on the Effective Date and (ii) the Revolving Credit
Commitments shall terminate on the Revolving Credit Maturity Date.
(b) The U.S. Borrower shall have the right, upon one Business Day's notice to the Administrative Agent, to terminate or, from time to time, reduce the amount of the Revolving Credit Commitments; provided that no such termination or reduction of Revolving Credit Commitments shall be permitted if, after giving effect thereto and to any repayments of the Loans made on the effective date thereof, the Aggregate Revolving Credit Exposure then outstanding would exceed the Total Revolving Credit Commitment then in effect.
(c) The U.S. Borrower shall pay to the Administrative Agent for the account of the applicable Revolving Lenders, on each date of termination or reduction of the Revolving Credit Commitments, the Commitment Fee on the amount of the Revolving Credit Commitments so terminated or reduced accrued to the date of such termination or reduction.
(d) To the extent any reduction in the Revolving Credit Commitments reduces the then Available Revolving Credit Commitments of all Lenders to an amount equal to or less than the sum of (a) the Swingline Sublimit and (b) the maximum allowable LC Exposure, then such reduction in Revolving Credit Commitments shall reduce on a pro rata basis the Swingline Commitment and the maximum amount of LC Exposure permitted by Section 2.06(b) by an amount such that the then Available Revolving Credit Commitments are equal to or less than the sum of (a) and (b).
SECTION 2.12. Inability to Determine Interest Rate; Unavailability of Deposits; Inadequacy of Interest Rate. If prior to 11:00 a.m., London time, two Business Days before the first day of any Interest Period, including an initial Interest Period, for a requested Eurodollar Borrowing:
(i) the Administrative Agent shall have determined in good faith
(which determination shall be conclusive and binding upon the Borrowers)
that, by reason of circumstances affecting the relevant market generally,
adequate and reasonable means do not exist for ascertaining the Adjusted
LIBO Rate for such Eurodollar Borrowing for such Interest Period, or
(ii) the Administrative Agent shall have received notice from a majority in interest of the Lenders of the applicable Class that the Adjusted LIBO Rate determined or to be determined for such Interest Period for such Eurodollar Borrowing will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,
then the Administrative Agent shall give facsimile or telephonic notice thereof to the each Borrower and to the Lenders by 12:00 noon, New York City time, on the same day. The Administrative Agent shall give facsimile or telephonic notice to each Borrower and the Lenders as soon as practicable after the circumstances giving rise to such notice no longer exist, and until such notice has been given, any affected Eurodollar Loans shall not be (x) converted or continued pursuant to Section 2.03 or (y) made pursuant to a Borrowing Request, and shall be continued or made as an ABR Loans, as the case may be.
SECTION 2.13. Pro Rata Treatment and Payments. (a) Each reduction of the Revolving Credit Commitments of the Revolving Lenders shall be made pro rata according to
the amounts of such Revolving Lenders' Commitment Percentages. Each payment
(including each prepayment) by the Borrowers on account of principal of and
interest on Loans which are ABR Loans shall be made pro rata according to the
respective outstanding principal amounts of such ABR Loans then held by the
Lenders of the applicable Class. Subject to Section 2.05A, each payment
(including each prepayment) by any Borrower on account of principal of and
interest on Loans which are Eurodollar Loans designated by such Borrower to be
applied to a particular Eurodollar Borrowing shall be made pro rata according to
the respective outstanding principal amounts of such Loans then held by the
Lenders of the applicable Class. Subject to Section 2.05A, each payment
(including each prepayment) by the U.S. Borrower on account of principal of and
interest on Swingline Loans shall be made pro rata according to the respective
outstanding principal amounts of the Swingline Loans or participating interests
therein, as the case may be, then held by the relevant Lenders. All payments
(including prepayments) to be made by any Borrower hereunder, whether on account
of principal, interest, fees or otherwise, shall be made without setoff or
counterclaim and shall be made prior to 10:00 a.m., New York time, on the due
date thereof to the Administrative Agent, for the account of the Lenders of the
applicable Class, at the Administrative Agent's New York office specified in
Section 10.01 in the currency in which the applicable obligation is denominated
and in immediately available funds. The Administrative Agent shall distribute
such payments to the Lenders entitled thereto in the same currency as received
and promptly upon receipt in like funds as received. If any payment hereunder
(other than payments on Eurodollar Loans) becomes due and payable on a day other
than a Business Day, such payment shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension. If any payment on
a Eurodollar Loan becomes due and payable on a day other than a Business Day,
the maturity thereof shall be extended to the next succeeding Business Day (and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension) unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day.
(b) Subject to Section 2.12, unless the Administrative Agent shall have been notified in writing by any Lender prior to a Borrowing that such Lender will not make the amount that would constitute its share of such Borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this Section 2.13(b) shall be conclusive in the absence of manifest error. If such Lender's share of such Borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Revolving Loans hereunder, on demand, from the applicable Borrower, but without prejudice to any right or claim that the applicable Borrower may have against such Lender.
(c) If at any time insufficient funds are received by and available to the Administrative Agent from a particular Borrower to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder from such Borrower, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder from such Borrower, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due from such Borrower to such parties.
SECTION 2.14. Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law, or in the interpretation or application thereof, shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans shall forthwith be suspended until such time as the making or maintaining of Eurodollar Loans shall no longer be unlawful, and (b) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to ABR Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law.
SECTION 2.15. Requirements of Law. (a) If at any time any Lender or the Issuing Bank determines that the introduction after the Effective Date of, or any change after the Effective Date in or in the interpretation of, any law, treaty or governmental rule, regulation or order (other than any change by way of imposition or increase of reserve requirements included in determining the Adjusted LIBO Rate) or the compliance by such Lender or the Issuing Bank with any guideline, request or directive from any central bank or other Governmental Authority (whether or not having the force of law), shall have the effect of increasing the cost to such Lender or the Issuing Bank for agreeing to make or making, funding or maintaining any Eurodollar Loans or participating in, issuing or maintaining any Letter of Credit, then the applicable Borrower shall from time to time, within five Business Days of demand therefor by such Lender or the Issuing Bank (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender or the Issuing Bank additional amounts sufficient to compensate such Lender or the Issuing Bank for such increased cost. A certificate setting forth in reasonable detail the basis for calculating the amount of such increased cost, submitted to the applicable Borrower and the Administrative Agent by such Lender or the Issuing Bank, shall be conclusive and binding for all purposes, absent manifest error. Such Lender or the Issuing Bank, as applicable, shall promptly notify the Administrative Agent and the applicable Borrower in writing of the occurrence of any such event, such notice to state, in reasonable detail, the reasons therefor and the additional amount required fully to compensate such Lender or the Issuing Bank, as applicable, for such increased cost or reduced amount. Such additional amounts shall be payable directly to such Lender or the Issuing Bank, as applicable, within five Business Days of the applicable Borrower's receipt of such notice, and such notice shall, in the absence of manifest error, be conclusive and binding on such Borrower.
(b) If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator or other Governmental Authority in each case after the Effective Date affects or would affect the amount of capital required or expected to be maintained by any Lender or the Issuing Bank (or a holding company controlling such Lender or the Issuing Bank) and such Lender or the Issuing Bank determines (in its sole and absolute discretion) that the rate of return on its capital (or the capital of its holding company, as the case may be) as a consequence of its Revolving Credit Commitment or the Loans made by it or its participations in Swingline Loans or any issuance, participation or maintenance of Letters of Credit is reduced to a level below that which such Lender or the Issuing Bank (or its holding company) could have achieved but for the occurrence of any such circumstance, then, in any such case upon notice from time to time by such Lender or the Issuing Bank to the applicable Borrower, such Borrower shall immediately pay directly to such Lender or the Issuing Bank, as the case may be, additional amounts sufficient to compensate such Lender or the Issuing Bank (or its holding company) for such reduction in rate of return. A statement of such Lender or the Issuing Bank as to any such additional amount or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrowers. In determining such amount, such Lender or the Issuing Bank may use any method of averaging and attribution that it (in its sole and absolute discretion) shall deem applicable.
(c) In the event that the Issuing Bank or any Lender determines that any event or circumstance that will lead to a claim under this Section 2.15 has occurred or will occur, the Issuing Bank or such Lender will use its best efforts to so notify the applicable Borrower; provided that, subject to the next succeeding sentence, any failure to provide such notice shall in no way impair the rights of the Issuing Bank or such Lender to demand and receive compensation under this Section 2.15, but without prejudice to any claims of such Borrower for compensation for actual damages sustained as a result of any failure to observe this undertaking. Notwithstanding the foregoing, no Borrower shall be required to compensate a Lender or the Issuing Bank pursuant to this Section 2.15 for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the applicable Borrower of the event or circumstances giving rise to a right of claim pursuant to this Section 2.15 and of such Lender's or the Issuing Bank's intention to claim compensation therefor (except that, if the event or circumstances giving rise to such right of claim is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
SECTION 2.16. Taxes. (a) All payments by the Loan Parties of principal of, and interest on, the Loans and all other amounts (including fees) payable hereunder shall be made without set-off, counterclaim or other defense, free and clear of, and without deduction or withholding for, any and all present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, assessments, deductions, withholdings or other charges of any nature whatsoever imposed by any taxing authority on the Administrative Agent, the Issuing Bank or any Lender (or any assignee of such Lender or the Issuing Bank, as the case may be, or a Participant or a change in designation of the lending office of a Lender or the Issuing Bank, as the case may be (a "Transferee")), including any interest, additions to tax or penalties applicable thereto ("Taxes"), except as required by applicable law. If any Indemnified Taxes are required to be withheld by applicable law, rule or regulation from any payment by a Loan Party, such Loan Party shall withhold and remit such Taxes in accordance with such requirement. In the
event that any withholding or deduction from any payment to be made by a Loan Party hereunder or under any other Loan Documents is required in respect of any Indemnified Taxes pursuant to any applicable law, rule or regulation then such Loan Party will:
(i) timely pay directly to the relevant authority in accordance with applicable law the full amount required to be so withheld or deducted;
(ii) promptly forward to the Administrative Agent an official receipt or other documentation (or copy thereof) reasonably satisfactory to the Administrative Agent evidencing such payment to such authority; and
(iii) pay to the Administrative Agent for the account of the Lenders or the Issuing Bank or Transferees, as the case may be, such additional amount or amounts as are necessary to ensure that the net amount actually received by each Lender or the Issuing Bank or Transferees, as the case may be, will equal the full amount such Lender or the Issuing Bank or Transferees, as the case may be, would have received had no such withholding or deduction (including any withholding or deduction applicable to additional amounts payable under this Section 2.16) been required.
For purposes hereof, "Indemnified Taxes" shall mean (i) any Taxes imposed under Part XIII of the Income Tax Act (Canada) (as the same may be amended, supplemented or replaced from to time) and (ii) all Taxes other than Taxes imposed on or measured by the recipient's net income or taxable capital by a jurisdiction under the laws of which such Lender or Transferee is organized or incorporated or in which its principal executive office or applicable lending office is located or in which it conducts a trade or business or has a permanent establishment (other than a trade, business or permanent establishment deemed to arise by virtue of the transactions contemplated by this Agreement) or is otherwise subject to such Taxes without regard to the transactions contemplated by this Agreement (provided, however, in the case of a Lender or a Transferee that is an affiliate of a Lender and that is a United States person within the meaning of Section 7701(a)(30) of the United States Internal Revenue Code of 1986, as amended and that makes and holds its Loans through a lending office located in the United States (such Lender and any such Transferee referred to herein as a "U.S. Taxpayer Lender"), Indemnified Taxes shall include any Taxes imposed on or measured by the recipient's net income or taxable capital by any jurisdiction other than the United States or a State or any political subdivision of the United States or a State (as the terms "United States" and "State" are defined in sections 7701(a)(9) and 7701(a)(10) of the United States Internal Revenue Code of 1986, as amended) to which such U.S. Taxpayer Lender would not have been subject but for the transactions contemplated by this Agreement (an "Indemnified Foreign Tax")).
(b) The Loan Parties agree to timely pay any and all present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies (including interest, fines and penalties in addition to tax) arising from any payment made under any Loan Document or from the execution, delivery, registration or enforcement of, or otherwise with respect to, any Loan Document ("Other Taxes").
(c) If any Indemnified Taxes or Other Taxes are directly asserted against the Administrative Agent, the Issuing Bank or any Lender or Transferee with respect to any payment
received by the Administrative Agent, the Issuing Bank or such Lender or Transferee hereunder or under any other Loan Documents, the Administrative Agent, the Issuing Bank or such Lender or Transferee may pay such Indemnified Taxes or Other Taxes and the applicable Loan Party will promptly pay such additional amounts (including any penalties, interest or expenses) as shall be necessary in order that the net amount received by such Person after the payment of such Indemnified Taxes (including any Indemnified Taxes on such additional amount) or Other Taxes shall equal the amount such Person would have received had such Indemnified Taxes or Other Taxes not been asserted. In addition, the applicable Borrower shall also reimburse each Lender or Transferee or the Issuing Bank, upon the written request of such Lender or Transferee or the Issuing Bank, for net additional taxes imposed on or measured by the net income of such Person pursuant to the laws of the jurisdiction in which such Person is organized or incorporated, or a jurisdiction in which the principal executive office or lending office of such Person is located or in which such Person conducts a trade or business or has a permanent establishment, or under the laws of any political subdivision or taxing authority of any such jurisdiction, as such Person shall determine are or were payable by such Person, in respect of amounts payable to such Person pursuant to this Section 2.16 in respect of Indemnified Taxes imposed as a consequence of payments by the applicable Borrower, taking into account the amount of Indemnified Taxes (x) that are allowed as a deduction in determining taxes imposed on or measured by the net income or allowed as a credit against any taxes imposed on or measured by net income and (y) in respect of which an amount is payable to such Person pursuant to this Section 2.16.
(d) If any Borrower fails to pay any Indemnified Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent, for the account of the Issuing Bank, the respective Lenders or Transferees, the required receipts or other required documentary evidence, such Borrower shall indemnify the Issuing Bank, Lenders and Transferees for any incremental Indemnified Taxes, Taxes, Other Taxes, interest, penalties or other costs (including reasonable attorneys' fees and expenses) that may become payable by the Issuing Bank, any Lender or Transferee as a result of any such failure. For purposes of this Section 2.16, a distribution hereunder by the Administrative Agent to or for the account of the Issuing Bank, any Lender or Transferee shall be deemed a payment by the applicable Borrower.
(e) Each Lender or Transferee that is organized under the laws of a
jurisdiction other than the United States of America or any state or political
subdivision thereof shall, on or prior to the Effective Date (in the case of
each Lender that is a party hereto on the Effective Date) or on or prior to the
date of any assignment, participation or change in the designated lending office
hereunder (in the case of a Transferee), execute and deliver, if legally able to
do so, to the applicable Borrower and the Administrative Agent (i) one or more
(as the applicable Borrower or the Administrative Agent may reasonably request)
accurate and complete original signed copies of United States Internal Revenue
Service Forms W-8ECI or W-8BEN or such other forms or documents (or successor
forms or documents), appropriately completed, as may be applicable to establish
the extent, if any, to which a payment to such Lender or Transferee is exempt
from or entitled to a reduced rate of withholding or deduction of Taxes or (ii)
if the Lender or Transferee is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service Form
W-8ECI or Form W-8BEN (with respect to a complete exemption under an income tax
treaty) pursuant to clause (i) above, (x) a certificate substantially in the
form of Exhibit P (any such certificate, a "Section 2.16 Certificate") and (y)
two accurate and complete original signed copies of Internal Revenue Service
Form W-
8BEN (with respect to the portfolio interest exemption) (or successor form) certifying to such Lender's or Transferor's entitlement as of such date to a complete exemption from United States withholding tax with respect to payments of interest to be made under this Agreement and under any Note. In addition, each Lender and Transferee agrees that from time to time after the Effective Date, when a lapse in time or change in the Lender's or Transferee's circumstances renders the previous certification obsolete or inaccurate in any material respect, it will, to the extent legally able to do so, deliver to the applicable Borrower or the Agent two new accurate and complete original signed copies of Internal Revenue Service Form W-8ECI, Form W-8BEN (with respect to the benefits of any income tax treaty), or Form W-8BEN (with respect to the portfolio interest exemption) and a Section 2.16 Certificate, as the case may be, and such other forms as may be required in order to confirm or establish the entitlement of such Lender to a continued exemption from or reduction in United States withholding tax with respect to payments under the Loan Documents. In addition, if legally able to do so, each Lender or Transferee that is organized under the laws of a jurisdiction other than Canada or any political subdivision thereof shall deliver on or prior to the Effective Date (in the case of each Lender that is a party hereto on the Effective Date) or on or prior to the date of any assignments or participations (in the case of a Transferee) to the applicable Borrower and Administrative Agent, either written certification that it is not entitled to any exemption or reduction of withholding tax under the laws of Canada or, if it is so entitled, such properly completed and executed documentation as will permit such payments to be made without withholding or deduction of Taxes under the laws of Canada or at a reduced rate. In addition, each Lender and Transferee agrees that from time to time after the Effective Date, when a lapse in time or change in the Lender's or Transferee's circumstances renders the previous certification obsolete or inaccurate in any material respect, it will, to the extent legally able to do so, deliver to the applicable Borrower and the Administrative Agent such forms or certifications as may be required in order to confirm or establish the entitlement of such Lender to a continued exemption from or reduction in Canadian withholding tax with respect to payments under the Loan Documents.
(f) No Borrower shall be required to indemnify or to pay any additional amounts to the Issuing Bank or any Lender or Transferee with respect to any Indemnified Taxes pursuant to this Section 2.16 to the extent that (i) any obligation of the applicable Borrower to withhold, deduct or pay amounts with respect to such Indemnified Tax (other than a Tax imposed by Canada and other than an Indemnified Foreign Tax) existed under generally accepted interpretation and application of the law on the date the Issuing Bank or such Lender or Transferee, other than a U.S. Taxpayer Lender, became a party to this Agreement or otherwise becomes a Transferee, except to the extent that, at the time such Lender or Transferee becomes a party to this Agreement or otherwise becomes a Transferee, such Person's assignor was already entitled to receive indemnification or additional amounts from a Loan Party with respect to any such Indemnified Tax under the provisions hereunder; provided that this clause (i) shall not apply to any Tax imposed on a Lender or Transferee in connection with an interest or participation in any Loan or other obligation that such Lender or Transferee was required to acquire pursuant to Section 2.19, (ii) to the extent such Indemnified Taxes are imposed solely because any Lender or Transferee fails to timely provide the forms or certificates required by the provisions of the immediately preceding paragraph or (iii) in the case of a payment of a U.S source fee (other than a fee treated as interest for U.S. federal income tax purposes) to a Lender or Transferee, other than a U.S. Taxpayer Lender, described in clause (ii) of Section 2.16(e), to the extent that such forms or certificates do not establish a complete exemption from U.S.
withholding taxes with respect to such payment. Notwithstanding anything to the contrary, it is understood and agreed, for the avoidance of doubt, that the obligation of the Loan Parties to indemnify for Indemnified Taxes withheld or deducted from any payment (including, without limitation, fees) to be made by the Loan Parties hereunder and to pay additional amounts under this Section 2.16 shall apply with respect to any and all Indemnified Taxes imposed on or with respect to the Issuing Bank and each Lender and Transferee (i) with respect to a Tax imposed by Canada or a political subdivision thereof or therein, whether or not there has been, and (ii) with respect to any other Tax, as a result of, a change in law or regulation or a change in the interpretation or application thereof by any Governmental Authority having jurisdiction over such Person occurring after the time such Person becomes a party to this Agreement.
(g) In the event that the Issuing Bank or any Lender determines that any event or circumstance that will lead to a claim by it under this Section 2.16 has occurred, the Issuing Bank or such Lender will use commercially reasonable efforts to so notify each Borrower; provided that any failure to provide such notice shall in no way impair the rights of the Administrative Agent, the Issuing Bank, any Lender or any Transferee to demand and receive compensation under this Section 2.16.
(h) If any Borrower pays any additional amount under this Section 2.16 to a Lender and such Lender determines in its sole discretion that it has actually realized in connection therewith a refund or any reduction of, or credit against, its Tax liabilities (a "Tax Benefit") such Lender shall pay to such Borrower an amount that the Lender shall, in its sole discretion, determine is equal to the after-tax net benefit obtained, if any, by the Lender as consequence of such Tax Benefit net of all out-of-pocket expenses of such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such Tax Benefit); provided, however, that (i) any Lender may determine, in its sole discretion consistent with the policies of such Lender, whether to seek a Tax Benefit; (ii) any Taxes that are imposed on a Lender as a result of a disallowance or reduction (including through the expiration of any tax credit carryover or carryback of such Lender that otherwise would not have expired) of any Tax Benefit with respect to which such Lender has made a payment to such Borrower pursuant to this Section 2.16(h) shall be treated as Tax for which such Borrower is obligated to indemnify such Lender pursuant to this Section 2.16; (iii) nothing in this Section 2.16(h) shall require the Lender to disclose any confidential information to any Loan Party (including, without limitation, its tax returns); and (iv) notwithstanding anything to the contrary, in no event will any Lender be required to pay any amount to such Borrower the payment which would place such Lender in a less favorable net after-tax position than such Lender would have been in if the additional amounts giving rise to such Tax Benefits had never been paid.
SECTION 2.17. Indemnity. In the event any Lender shall incur any loss or expense (including any loss (other than lost profit) or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to make, continue or maintain any portion of the principal amount of any Loan as, or to convert any portion of the principal amount of any Loan into, a Eurodollar Loan) as a result of any conversion of a Eurodollar Loan to an ABR Loan or repayment or prepayment of the principal amount of any Eurodollar Loan on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 2.03, 2.05, 2.07, 2.14, 2.15 or 2.20 or otherwise, or any failure to borrow or convert any Eurodollar Loan after notice thereof shall have been
given hereunder, whether by reason of any failure to satisfy a condition to such Borrowing or otherwise, then, upon the written notice of such Lender to the applicable Borrower (with a copy to the Administrative Agent), the applicable Borrower with respect to such Loan shall, within five Business Days of its receipt thereof, pay directly to such Lender such amount as will (in the reasonable determination of such Lender) reimburse such Lender for such loss or expense. Such written notice (which shall include calculations in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on such Borrower.
SECTION 2.18. Change of Lending Office. Each Lender (or Transferee)
agrees that, upon the occurrence of any event giving rise to the operation of
Section 2.14, 2.15 or 2.16 with respect to such Lender (or Transferee), it will,
if requested by any Borrower, use commercially reasonable efforts (subject to
overall policy considerations of such Lender (or Transferee)) to designate
another lending office for any Loans affected by such event with the object of
avoiding the consequences of such event; provided that such designation is made
on terms that, in the sole judgment of such Lender, cause such Lender and its
respective lending offices to suffer no material economic, legal or regulatory
disadvantage; and provided, further, that nothing in this Section 2.18 shall
affect or postpone any of the obligations of any Borrower or the rights of any
Lender (or Transferee) pursuant to Sections 2.14, 2.15 and 2.16.
SECTION 2.19. Sharing of Setoffs. Each Lender agrees that if it shall, through the exercise of a right of banker's lien, setoff or counterclaim against any Borrower (in each case to the extent permitted hereunder), or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of any Loans or participations in LC Disbursements which at the time shall be due and payable as a result of which the unpaid principal portion of its Loans and participations in LC Disbursements which at the time shall be due and payable shall be proportionately less than the unpaid principal portion of such Loans and participations in LC Disbursements of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in such Loans and participations in LC Disbursements of such other Lender, so that the aggregate unpaid principal amount of such Loans and participations in LC Disbursements held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all such Loans and participations in LC Disbursements as prior to such exercise of banker's lien, setoff or counterclaim or other event; provided, however, that if any such purchase or purchases or adjustments shall be made pursuant to this Section and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustments restored without interest. Each Borrower expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in a Loan or an LC Disbursement deemed to have been so purchased may exercise any and all rights of banker's lien, setoff or counterclaim with respect to any and all moneys owing by either Borrower to such Lender by reason thereof as fully as if such Lender were a direct creditor directly to such Borrower in the amount of such participation.
SECTION 2.20. Assignment of Commitments Under Certain Circumstances. In the event that (a) any Lender shall have delivered a notice or certificate pursuant to
Section 2.14 or 2.15, or any Borrower shall be required to make additional payments to any Lender under Section 2.16 (each, an "Increased Cost Lender") then, with respect to each such Increased Cost Lender (the "Terminated Lender"), the applicable Borrower shall have the right, but not the obligation, at its own expense, upon notice to such Terminated Lender and the Administrative Agent, to replace such Terminated Lender with (x) another Lender or (y) an assignee (in accordance with and subject to the restrictions contained in Section 10.04), and such Terminated Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in Section 10.04) all its interests, rights and obligations under this Agreement to such other Lender or assignee; provided, however, that no Terminated Lender shall be obligated to make any such assignment unless (i) such assignment shall not conflict with any law or any rule, regulation or order of any Governmental Authority and (ii) the affected Terminated Lender shall have been paid in immediately available funds on the date of such assignment the principal of and interest accrued to the date of payment on the Loans made by such Terminated Lender and participations in LC Disbursements and Swingline Loans held by such Terminated Lender and all commitment fees and other fees owed to such Terminated Lender hereunder and all other amounts accrued for such Terminated Lender's account or owed to it hereunder (including, without limitation, any Commitment Fees).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Administrative Agent to enter into this Agreement and to extend credit hereunder and under the other Loan Documents on the Effective Date, the Loan Parties, jointly and severally, make the representations and warranties set forth in this Article III (after giving effect to the Transactions) and upon the occurrence of each Credit Event thereafter:
SECTION 3.01. Organization, etc. Each Loan Party (a) is a corporation or other form of legal entity, and each of its Subsidiaries is a corporation, partnership or other form of legal entity, validly organized and existing and in good standing under the laws of the jurisdiction of its incorporation or organization, as the case may be, (b) is duly qualified to do business and is in good standing as a foreign corporation or foreign partnership (or comparable foreign qualification, if applicable, in the case of any other form of legal entity), as the case may be, in each jurisdiction where the nature of its business requires such qualification, and (c) has full power and authority and holds all requisite governmental licenses, permits and other approvals to (i) enter into and perform its obligations under this Agreement and each other Loan Document to which it is a party and (ii) own or hold under lease its Property and to conduct its business substantially as currently conducted by it, except, in the case of clauses (b) and (c)(ii) only, where the failure to do so could not reasonably be expected to have a Material Adverse Effect. The Additional Borrower was formed on May 16, 2005 and the Additional Borrower Subsidiaries were formed on May 26, 2005, in the case of NSULC, and May 24, 2005, in the case of WLLC. Each of the Additional Borrower and the Additional Borrower Subsidiaries was formed for the primary purpose of effecting the Term Transaction and as of the Effective Date has no material assets (other than, in the case of the Additional Borrower, its ownership of all the Equity Interests of NSULC, in the case of NSULC, its ownership of Equity Interests of WLLC and, in the case of WLLC, the loans payable to it by the U.S. Borrower (made as a part of the
Term Transaction)) or liabilities (other than its obligations under the Loan Documents and the Seller Loan Documents).
SECTION 3.02. Due Authorization, Non-Contravention, etc. The execution, delivery and performance by each Loan Party of this Agreement and each other Loan Document to which it is a party, the borrowing of the Loans, the use of the proceeds thereof and the issuance of the Letters of Credit hereunder are within each Loan Party's corporate, partnership or comparable powers, as the case may be, have been duly authorized by all necessary corporate, partnership or comparable and, if required, stockholder action, as the case may be, and do not
(a) contravene the Organizational Documents of any Loan Party or any of its respective Subsidiaries;
(b) contravene any law, statute, rule or regulation binding on or affecting any Loan Party or any of its respective Subsidiaries;
(c) violate or result in a default or event of default or an acceleration of any rights or benefits under any indenture, agreement or other instrument binding upon any Loan Party or any of its respective Subsidiaries; or
(d) result in, or require the creation or imposition of, any Lien on any assets of any Loan Party or any of its respective Subsidiaries, except Liens created under the Loan Documents and the Seller Loan Documents,
except, in the cases of clauses (b), (c) and (d) only, as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.03. Government Approval, Regulation, etc. No consent, authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body or other Person is required for the due execution, delivery or performance by any Borrower or any other Loan Party of this Agreement or any other Loan Document, the borrowing of the Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder, nor for the consummation of the Transactions, except (i) such as have been obtained or made and are in full force and effect, (ii) filings necessary to perfect Liens under the Security Documents and (iii) those, the failure of which to obtain or make, would not reasonably be expected to have a Material Adverse Effect. No Loan Party or any of its respective Subsidiaries is an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 3.04. Validity, etc. This Agreement has been duly executed and delivered by each Loan Party and constitutes, and each other Loan Document to which any Loan Party is to be a party will, on the due execution and delivery thereof and assuming the due execution and delivery of this Agreement by each of the other parties hereto, constitute, the legal, valid and binding obligation of such Loan Party enforceable in accordance with its respective
terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors' rights generally and to general principles of equity.
SECTION 3.05. Representations and Warranties in the Acquisition Agreement; Boeing Agreements; IRB Agreements. (a) Each of the representations and warranties made by any of the Loan Parties set forth in Article IV of the Acquisition Agreement is true and correct in all material respects. To the knowledge of the Loan Parties, each of the representations and warranties of Seller set forth in Article III of the Acquisition Agreement is true and correct in all material respects.
(b) The Borrowers have provided to the Lead Arranger and the Co-Arrangers true and correct copies of each Boeing Agreement and each IRB Agreement.
SECTION 3.06. Financial Information. (a) (x) The statement of certain assets to be acquired and liabilities to be assumed and the related statement of cost center activity of the Acquired Business for the three years ended December 31, 2004, and for the quarter ended March 31, 2005, copies of which have been furnished to the Administrative Agent and each Lender, have been prepared in accordance with GAAP consistently applied, and present fairly in all material respects the financial condition of the Acquired Business as of the dates thereof and the results of its cost center activity and certain cash flow information for the periods then ended; and (y) except as provided in the following sentence, the financial statements referred to in clause (x) above for the three years ended December 31, 2004 have been audited by independent registered public accountants of nationally recognized standing and are accompanied by an unqualified opinion of such accountants, a copy of which can be provided to each Lender that has so requested in accordance with the procedures for such request set forth by such accountants for receipt of such opinion as set forth on the Intralinks Platform relating to the Financing Transactions, provided such Lender complies with such procedures.
(b) Except as disclosed in the financial statements referred to above or the notes thereto or in the Information Memorandum, none of the Parent Guarantor or its Subsidiaries has any Indebtedness, contingent liabilities, long-term commitments or unrealized losses that have had or reasonably could be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.07. No Material Adverse Effect. Since December 31, 2004, no event or circumstance has occurred that has had, or could reasonably be expected to have, a Material Adverse Effect.
SECTION 3.08. Litigation. Except as set forth on Schedule 3.08, there is no pending or, to the knowledge of the Loan Parties, threatened litigation, action or proceeding (including, without limitation, any existing or new litigation relating to the Acquisition Transactions) against the Parent Guarantor or any of its Subsidiaries or the Acquired Business or the Additional Borrower or the Additional Borrower Subsidiaries, or the ability of the parties to consummate the transactions contemplated hereby (including the Transactions), which could reasonably be expected to have a Material Adverse Effect or which purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document or the transactions contemplated hereby or thereby (including the Transactions).
SECTION 3.09. Compliance with Laws and Agreements. None of the Loan
Parties has violated, is in violation of or has been given written notice of any
violation of any laws (other than Environmental Laws, which are the subject of
Section 3.14), regulations or orders of any Governmental Authority applicable to
it or its property or any indenture, agreement or other instrument binding upon
it or its property, except for any violations which could not reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing. No breach, default, violation, cancellation,
termination or other event that could reasonably be expected to have a Material
Adverse Effect has occurred under any Boeing Agreement.
SECTION 3.10. Subsidiaries. Schedule 3.10 sets forth the name of, and the direct or indirect ownership interest of the Parent Guarantor, the U.S. Borrower and the Additional Borrower in, each of their respective Subsidiaries and identifies each Subsidiary that is a Loan Party, in each case as of the Effective Date. All the issued and outstanding Equity Interests of the Additional Borrower are owned, directly or indirectly, by the Sponsors, free and clear of Liens except as created by the Security Documents, Liens created under the Seller Loan Documents and non-consensual Permitted Liens). The sole general partner of the Additional Borrower is the General Partner. All the issued and outstanding Equity Interests of NSULC are owned by the Additional Borrower free and clear of Liens except for Liens created by the Security Documents, Liens created under the Seller Loan Documents and non-consensual Permitted Liens. All the issued and outstanding Equity Interests of WLLC are owned by NSULC free and clear of Liens except for Liens created by the Security Documents, Liens created under the Seller Loan Documents and non-consensual Permitted Liens.
SECTION 3.11. Ownership of Properties. (a) Each of the U.S. Borrower and its Subsidiaries has good and marketable title in fee simple to (or other similar title in jurisdictions outside the United States of America), or valid leasehold interests in, or easements or other limited property interests in, or is licensed to use, all its properties and assets (including all Mortgaged Properties), except for defects in the foregoing that do not materially interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes and except where the failure to do so in the aggregate could not reasonably be expected to have a Material Adverse Effect. All such properties and assets are free and clear of Liens, other than Permitted Liens.
(b) As of the Effective Date, Schedule 3.11(b) contains and will contain a true and complete list of each parcel of Real Property (i) owned in fee by any Loan Party as of the Effective Date and (ii) leased, subleased or otherwise occupied or utilized by any Loan Party, as lessee or otherwise, as of the Effective Date whether such lease, sublease or other instrument requires the consent of the landlord or grantee thereunder or other parties thereto to the Acquisition Transactions.
(c) Each of the U.S. Borrower and its Subsidiaries has complied with all obligations under all leases and other Real Property Agreements (including, without limitation, the IRB Agreements) to which it is a party, except where the failure to comply could not reasonably be expected to have a Material Adverse Effect, and all such leases and other Real Property Agreements are in full force and effect, except in respect of which the failure to be in full force and effect could not reasonably be expected to have a Material Adverse Effect. Each
of the U.S. Borrower and its Subsidiaries enjoys peaceful and undisturbed possession under all such leases, other than leases in respect of which the failure to enjoy peaceful and undisturbed possession could not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
(d) Each of the U.S. Borrower and its Subsidiaries owns, possesses, is licensed or otherwise has the right to use, or could obtain ownership or possession of, all patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect thereto necessary for the present conduct of its business, except for those the failure to own, possess, license or use could not reasonably be expected to have a Material Adverse Effect, and without any known conflict or alleged conflict with the rights of others, except where such conflicts could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(e) As of the Effective Date, no Loan Party or any of its respective Subsidiaries has received any written notice of, or has any knowledge of, any pending or contemplated condemnation proceeding affecting any of the Mortgaged Properties or any sale or disposition thereof in lieu of condemnation that remains unresolved as of the Effective Date.
(f) Except as set forth on Schedule 3.11(f), neither the U.S. Borrower nor any of its Subsidiaries is obligated on the Effective Date under any right of first refusal, option or other contractual right to sell, assign or otherwise dispose of any Mortgaged Property or any interest therein.
SECTION 3.12. Taxes. Each of the Parent Guarantor, each Borrower and
its Subsidiaries has timely filed all federal, foreign and all other material
tax returns and reports required by law to have been filed by it and has timely
paid all taxes and governmental charges due (whether or not shown on any tax
return), except any such taxes or charges which are being diligently contested
in good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books; provided that any
such contest of taxes or charges with respect to Collateral shall have the
effect of preventing the forfeiture or sale of such Collateral. Each of the
Parent Guarantor, each Borrower and its Subsidiaries has made adequate provision
in accordance with GAAP for all taxes not yet due and payable. Neither the
Parent Guarantor, nor any Borrower, nor any of its Subsidiaries has ever been a
party to any understanding or arrangement constituting a "tax shelter" within
the meaning of Section 6662(d)(2)(C)(iii) of the Code or within the meaning of
Section 6111(c) or Section 6111(d) of the Code as in effect immediately prior to
the enactment of the American Jobs Creation Act of 2004, or has ever
"participated" in a "reportable transaction" within the meaning of Treasury
Regulation Section 1.6011-4, except as could not be reasonably expected to,
individually or in the aggregate, result in a Material Adverse Effect.
SECTION 3.13. Pension and Welfare Plans. Except as set forth on Schedule 3.13, no ERISA Event has occurred or is reasonably expected to occur which could reasonably be expected to have a Material Adverse Effect or give rise to a Lien on the assets of any Loan Party or a Subsidiary. The U.S. Borrower and its Subsidiaries and their ERISA Affiliates are in compliance in all respects with the presently applicable provisions of ERISA and the Code with respect to each Plan except for failures to so comply which could not reasonably
be expected to have a Material Adverse Effect. Except as set forth on Schedule
3.13, no condition exists or event or transaction has occurred with respect to
any Plan which reasonably might result in the incurrence by the U.S. Borrower or
any of its Subsidiaries or any ERISA Affiliate of any liability, fine or penalty
which could reasonably be expected to have a Material Adverse Effect. Except as
set forth on Schedule 3.13, the present value of all accumulated benefit
obligations of all underfunded Pension Plans (based on the assumptions used for
purposes of statement of Financial Accounting Standards No. 87) did not, as of
the date of the most recent financial statements reflecting such amounts, exceed
the fair market value of the assets of all such underfunded Pension Plans by an
amount that could reasonably be expected to have a Material Adverse Effect if
the Pension Plans were terminated. Using actuarial assumptions and computation
methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the
aggregate liabilities of each Loan Party or ERISA Affiliate to all Multiemployer
Plans in the event of a complete withdrawal therefrom, as of the close of the
most recent fiscal year of each such Multiemployer Plan, could not reasonably be
expected to result in a Material Adverse Effect. Except as set forth on Schedule
3.13, neither the U.S. Borrower nor any of its Subsidiaries has any contingent
liability with respect to post-retirement benefits provided by the U.S. Borrower
or any of its Subsidiaries under a Welfare Plan, other than (i) liability for
continuation coverage described in Part 6 of Subtitle B of Title I of ERISA and
(ii) liabilities that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
Except as could not reasonably be expected to have a Material Adverse Effect, (a) each Foreign Plan has been maintained in compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities, and (b) neither Borrower nor any of its Subsidiaries has incurred any obligation in connection with the termination of or withdrawal from any Foreign Plan.
SECTION 3.14. Environmental Warranties. (a) Except as set forth on Schedule 3.14(a) all facilities and property owned, leased or operated by any Borrower or any of its Subsidiaries, and all operations conducted thereon, are in compliance with all Environmental Laws, except for such noncompliance that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 3.14(b), there are no pending or threatened (in writing):
(i) Environmental Claims received by any Borrower or any of its Subsidiaries, or
(ii) written claims, complaints, notices or inquiries received by any Borrower or any of its Subsidiaries regarding Environmental Liability,
in each case which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth on Schedule 3.14(c), there have been no Releases of Hazardous Materials at, on, under or from any property now or, to any Loan Party's knowledge, previously owned, leased or operated by the U.S. Borrower or any of its Subsidiaries that, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect.
(d) The U.S. Borrower and its Subsidiaries have been issued and are in compliance with all Environmental Permits necessary for their operations, facilities and businesses and each is in full force and effect, except for such Environmental Permits which, if not so obtained or as to which the U.S. Borrower and its Subsidiaries are not in compliance, or are not in effect, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
(e) No property now or, to any Loan Party's knowledge, previously owned, leased or operated by the U.S. Borrower or any of its Subsidiaries is listed or proposed (with respect to owned property only) for listing on the CERCLIS or on any similar state list of sites requiring investigation or cleanup, or on the National Priorities List pursuant to CERCLA.
(f) There are no underground storage tanks, active or abandoned, including petroleum storage tanks, surface impoundments or disposal areas, on or under any property now or, to any Loan Party's knowledge, previously owned or leased by the U.S. Borrower or any of its Subsidiaries which, singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(g) Neither the U.S. Borrower nor any of its Subsidiaries has transported or arranged for the transportation of any Hazardous Material to any location which is listed or proposed for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list or which is the subject of federal, state or local enforcement actions or other investigations which would reasonably be expected to lead to any Environmental Claim against the U.S. Borrower or such Subsidiary.
(h) No liens have been recorded pursuant to any Environmental Law with respect to any property or other assets currently owned or leased by the U.S. Borrower or its Subsidiaries.
(i) Neither the U.S. Borrower nor any of its Subsidiaries is currently conducting any Remedial Action pursuant to any Environmental Law, nor has any of the Loan Parties or any of their respective Subsidiaries assumed by contract, agreement or operation of law any obligation under Environmental Law, the cost of which, singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(j) There are no polychlorinated biphenyls or asbestos or asbestos-containing material present at any property owned, leased or operated by the U.S. Borrower or any of its Subsidiaries, which, singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
SECTION 3.15. Regulations T, U and X. The Loans, the use of the proceeds thereof, this Agreement and the transactions contemplated hereby will not result in a violation of or be inconsistent with any provision of Regulation T, Regulation U or Regulation X.
SECTION 3.16. Disclosure; Accuracy of Information; Pro Forma Balance Sheets and Projected Financial Statements. (a) Neither this Agreement nor any other document, certificate or statement, in each case concerning any Loan Party or the Acquired Business, furnished to the Administrative Agent or any Lender by or on behalf of any Loan Party in connection herewith (including, without limitation, the Information Memorandum) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained herein and therein not misleading, in light of the circumstances under which they were made; provided that to the extent this or any such document, certificate or statement (including without limitation the Information Memorandum) was based upon or constitutes a forecast or projection, the Loan Parties represent only that they acted in good faith and utilized reasonable assumptions and due care in the preparation of such document, certificate or statement, it being understood that forecast and projections are subject to uncertainties and contingencies and no assurance can be given that any forecast or projection will be realized.
(b) The pro forma consolidated balance sheets as of December 31, 2004 and March 31, 2005, prepared giving effect to the Transactions as if the Transactions had occurred on such date and furnished to the Lenders, (i) were prepared in good faith based on the same assumptions used to prepare the pro forma financial statements included in the Information Memorandum, (ii) accurately reflect all material adjustments necessary to give effect to the Transactions and (iii) present fairly the pro forma financial position of the U.S. Borrower and its consolidated Subsidiaries as of their respective dates, as if the Transactions had occurred on such date.
(c) The pro forma consolidated income statement projections for the U.S. Borrower and its Subsidiaries, pro forma consolidated balance sheet projections for the U.S. Borrower and its Subsidiaries and pro forma consolidated cash flow projections for the U.S. Borrower and its Subsidiaries, all for the Fiscal Years ending 2005 through 2011, inclusive, and on a quarterly basis through and including Fiscal Year 2006 and annually thereafter which were furnished to the Lenders (the "Projected Financial Statements") and which give effect to the Transactions and all Indebtedness and Liens incurred or created in connection with the Transactions were prepared in good faith based on assumptions that are reasonable as of the date of such projections and as of the Effective Date and all material assumptions with respect to the Projected Financial Statements are set forth therein. The Projected Financial Statements present a good faith estimate of the consolidated financial information contained therein at the date thereof, it being recognized by the Administrative Agent and the Lenders, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the projections will differ from the projected results and that the difference may be material.
SECTION 3.17. Insurance. The properties of each Borrower and each of their respective Subsidiaries are insured with financially sound and reputable insurance companies in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and operating and owning properties in the same or
similar locations, and as required to be maintained pursuant to the Security Documents. All such insurance (including the related insurance policies) is in full force and effect, all premiums with respect thereto that are due and payable have been duly paid and no Loan Party has received or is aware of any notice of violation or cancellation thereof and each Loan Party has complied in all material respects with the material requirements of each such policy.
SECTION 3.18. Labor Matters. Except as could not reasonably be expected to have a Material Adverse Effect (for purposes of this representation being made on the Effective Date only, with references to the Loan Parties in such definition being deemed to be references to the Borrowers and their respective Subsidiaries taken as a whole), (a) there are no strikes, lockouts or slowdowns against the Loan Parties pending or, to the knowledge of any Loan Party, threatened; (b) the hours worked by and payments made to employees of the Loan Parties have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters; and (c) all payments due from the Loan Parties, or for which any claim may be made against the Loan Parties, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Loan Parties.
SECTION 3.19. Solvency. Immediately following the making of each Loan and after giving effect to the application of the proceeds of such Loans, (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) each Loan Party will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
SECTION 3.20. Securities. Upon the issuance thereof, the common Equity Interests of each of the Parent Guarantor's, the U.S. Borrower's and the Additional Borrower's Subsidiaries will have been duly authorized, issued and delivered and will be fully paid and non-assessable. The Equity Interests of each Subsidiary held, directly or indirectly, by each Borrower are owned, directly or indirectly, by the applicable Borrower free and clear of all Liens except the Liens created by the Security Documents, Liens created by the Seller Loan Documents and non-consensual Permitted Liens. There are not, as of the Effective Date, any existing options, warrants, calls, subscriptions, convertible or exchangeable securities, rights, agreements, commitments or arrangements for any Person to acquire any common stock of the U.S. Borrower, the Additional Borrower or any of their respective Subsidiaries or any other securities convertible into, exchangeable for or evidencing the right to subscribe for any such common stock, except as disclosed in the financial statements delivered pursuant to Sections 5.01(a) and (b) or otherwise disclosed to the Lenders prior to the Effective Date.
SECTION 3.21. Indebtedness Outstanding. Set forth on Schedule 3.21, hereto is a list and description of all Indebtedness of the Loan Parties and their respective Subsidiaries
(other than the Loans) that will be outstanding immediately after the Effective Date (such Indebtedness, "Indebtedness to Remain Outstanding").
SECTION 3.22. Security Documents. (a) The Pledge Agreement is effective to create in favor of the Collateral Agent for its benefit and the benefit of the Secured Parties legal, valid and enforceable security interests in the Securities Collateral (as defined in the Pledge Agreement) and, when such Securities Collateral is delivered to the Collateral Agent or appropriate financing statements are filed, the Pledge Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the pledgor thereunder in such Securities Collateral. The Onex Pledge Agreement is effective to create in favor of the Collateral Agent for its benefit and the benefit of the Secured Parties legal, valid and enforceable security interests in the Securities Collateral (as defined in the Onex Pledge Agreement) and, when such Securities Collateral is delivered to the Collateral Agent or appropriate financing statements are filed, the Onex Pledge Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the pledgor thereunder in such Securities Collateral. The Canadian Pledge Agreement is effective to create in favor of the Collateral Agent for its benefit and the benefit of the Secured Parties legal, valid and enforceable security interests in the Securities Collateral (as defined in the Canadian Pledge Agreement) and, when such Securities Collateral is delivered to the Collateral Agent or appropriate financing statements are filed, the Canadian Pledge Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the pledgor thereunder in such Securities Collateral.
(b) (i) The Security Agreement is effective to create in favor of the Collateral Agent for its benefit and the benefit of the Secured Parties legal, valid and enforceable security interests in the Collateral (as defined in the Security Agreement) and (ii) when (x) financing statements in appropriate form are filed in the offices specified on Schedule 7 to the Perfection Certificate and (y) upon the taking of possession or control by the Collateral Agent of any such Collateral in which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by the Security Agreement), the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral (other than the Intellectual Property (as defined in the Security Agreement)) to the extent such Lien and security interest can be perfected by the filing of a financing statement pursuant to the UCC or by possession or control by the Collateral Agent, in each case prior and superior in right to any other Person, other than any holder of Permitted Liens.
(c) When the filings in clause (b)(ii)(x) above of this Section 3.22 are made and when the Security Agreement (or a short form security agreement substantially in the form of Annex V-A, Annex V-B or Annex V-C, as applicable, to the Security Agreement) is filed in the United States Patent and Trademark Office and the United States Copyright Office, the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Intellectual Property (as defined in the Security Agreement) in which a security interest may be perfected by such filing, recording or registration (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered trademarks, trademark applications and copyrights acquired by the Loan Parties after the Effective Date), in
each case prior and superior in right to any other Person other than with respect to Permitted Liens.
(d) Each Mortgage identifying the Secured Parties as Secured Parties therein executed and delivered as of the Effective Date is, or, to the extent any Mortgage identifying the Secured Parties as Secured Parties therein is duly executed and delivered thereafter by the relevant Loan Party, will be, effective to create, subject to the exceptions listed in each title insurance policy covering such Mortgage, in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, a legal, valid and enforceable Lien on and security interest in all of the Loan Parties' right, title and interest in and to the Mortgaged Properties thereunder and the proceeds thereof, and when the Mortgages are filed in the offices specified on Schedule 3.22(d), the Mortgages shall constitute a Lien on, and security interest in, all right, title and interest of the Loan Parties in that part of such Mortgaged Properties that constitute Real Property and fixtures and the proceeds thereof, in each case prior and superior in right to any other Person, other than with respect to the rights of Persons pursuant to Permitted Liens.
SECTION 3.23. Anti-Terrorism Laws. (a) None of the Loan Parties or, to the knowledge of any of the Loan Parties, any of their Affiliates is in violation of any laws relating to terrorism or money laundering ("Anti Terrorism Laws"), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the "Executive Order"), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56.
(b) No Loan Party or, to the knowledge of any of the Loan Parties, any of their Affiliates or their respective brokers or other agents acting or benefiting in any capacity in connection with the Loans is any of the following:
(i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;
(ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;
(iii) a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;
(iv) a Person or entity that commits, threatens or conspires to commit or supports "terrorism" as defined in the Executive Order; or
(v) a Person or entity that is named as a "specially designated national and blocked person" on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website or any replacement website or other replacement official publication of such list.
(c) No Loan Party or, to the knowledge of any Loan Party, any of its brokers or other agents acting in any capacity in connection with the Loans (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit
of any Person described in clause (b) above, (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.
SECTION 3.24. Subordination of Seller Loan Agreement. The Obligations are "Senior Secured Debt," within the meaning of the Subordination and Intercreditor Agreement and the WLLC Subordination Agreement and will be "Senior Secured Debt" within the meaning of each document governing any Permitted Kansas Bond Financing.
SECTION 3.25. IRB Agreements. (a) Each of the Boeing IRB Asset Trust (the "Boeing Trust") and the TBC Trust (the "TBC Trust" and together with the Boeing Trust, the "Trusts") has been duly organized and as of the Effective Date is validly existing as a statutory trust under the Delaware Statutory Trust Act and has full power and authority and holds all requisite governmental licenses, permits and approvals to (i) enter into and perform its obligations under the IRB Agreements to which it is a party and to consummate the IRB Actions and (ii) conduct the business to be conducted under the IRB Agreements and as contemplated by the IRB Agreements.
(b) The execution, delivery and performance of the IRB Agreements by each Loan Party which is a party thereto and the consummation of the IRB Transactions are within each such Loan Party's powers, have been duly authorized by all necessary action and do not:
(i) contravene the Organizational Documents of such Loan Party;
(ii) contravene any law, statute, rule or regulation binding on or affecting such Loan Party;
(iii) violate or result in a default or event of default or an acceleration of any rights or benefits under any Boeing IRB Document or any indenture, agreement or other instrument binding upon such Loan Party; or
(iv) result in, or require the creation or imposition of, any Lien on any assets of any such Loan Party or the IRB Assets.
(c) The execution, delivery and performance of the IRB Agreements by each Trust which is a party thereto and the consummation of the IRB Actions are within each such Trust's powers, have been duly authorized by all necessary action and do not:
(i) contravene the Organizational Documents of such Trust;
(ii) contravene any law, statute, rule or regulation binding on or affecting such Trust;
(iii) violate or result in a default or event of default or an acceleration of any rights or benefits under any Boeing IRB Document or any indenture, agreement or other instrument binding upon such Trust; or
(iv) result in, or require the creation or imposition of, any Lien on any assets of any such Trust or the IRB Assets.
(d) No consent, authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body or other Person is required for the due execution, delivery or performance by each Trust, each Loan Party and Seller of the IRB Agreements and the consummation of the IRB Transactions, except such as have been obtained or made and are in full force and effect.
(e) Each IRB Agreement has been duly executed and delivered by each Trust and Loan Party thereto and constitutes the legal, valid and binding obligation of each Trust and Loan Party party thereto, enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors' rights generally and to general principles of equity.
(f) The U.S. Borrower and/or its Subsidiaries have valid leasehold interests free and clear of all Liens (other than non-consensual Permitted Liens) in the IRB Assets pursuant to the Buyer Sublease.
(g) The IRB Pledge Agreement is effective to create in favor of the U.S. Borrower a legal, valid and enforceable security interest in the Transferred Asset Ownership Class of interests of the Boeing Trust and, when such interests are delivered to the U.S. Borrower and appropriate financing statements are filed, the IRB Pledge Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of TBC Trust in the Transferred Asset Ownership Class of interests of the Boeing Trust, prior and superior in right to any other Person.
ARTICLE IV
CONDITIONS
SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans, and the obligation of each Issuing Bank to issue Letters of Credit, in each case, on the Effective Date are subject, at the time of the making of such Loans or the issuance of such Letters of Credit, to satisfaction of the following conditions on or prior to the Effective Date:
(a) The Administrative Agent (or its counsel) shall have received from
each party hereto either (i) a counterpart of this Agreement and each Loan
Document to which such Person is a party signed on behalf of such party or
(ii) written evidence satisfactory to the Administrative Agent (which may
include facsimile transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement and
each other Loan Document to which such Person is a party.
(b) The Administrative Agent shall have received from each Borrower a Closing Certificate, dated the Effective Date and signed on behalf of such Borrower by a Financial Officer of the U.S. Borrower.
(c) The Administrative Agent shall have received a certificate of the secretary or assistant secretary of each Loan Party dated the Effective Date, certifying (i) that attached thereto is a true and complete copy of each Organizational Document of such Loan Party certified (to the extent applicable) as of a recent date by the Secretary of State of the state of its organization, that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of each Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect and (iii) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party (together with a certificate of another officer as to the incumbency and specimen signature of the secretary or assistant secretary executing the certificate in this clause (c));
(d) The Administrative Agent shall have received a favorable written opinion (i) of Kaye Scholer LLP, counsel to the Loan Parties, and (ii) of Davies Ward Phillips & Vineberg LLP, counsel to the Loan Parties, (iii) of Richards, Layton & Finger, Delaware counsel to the Boeing Trust and TBC Trust, (iv) Kutak Rock LLP, Kansas counsel to the Loan Parties, (v) Brown, Drew & Massey, LLP, Wyoming counsel to the Loan Parties, and (vi) Stewart McKelvey Stirling Scales, Nova Scotia counsel to the Loan Parties, in each case which opinions shall be addressed to each Agent and the Lenders, dated the Effective Date and in form and substance reasonably satisfactory to the Administrative Agent.
(e) The Administrative Agent shall have received favorable written opinions of local counsel to the Loan Parties as specified in Schedule 4.01(e), which opinions (x) shall be addressed to each Agent and each of the Lenders and be dated the Effective Date, (y) shall cover the enforceability of the respective Mortgage and perfection of the Liens and security interests granted pursuant to the relevant Security Documents and such other matters incident to the transactions contemplated herein as the Agents may reasonably request and (z) shall be in form and substance reasonably satisfactory to the Administrative Agent.
(f) All documents executed or submitted in connection with this Agreement, the borrowings hereunder and the other Loan Documents shall be reasonably satisfactory to the Lenders.
(g) The absence of any change, circumstance or effect occurring since December 31, 2004 that has had or could reasonably be expected to have a material adverse effect on the Acquired Business, financial condition, affairs or results of operations of the Acquired Business or on the assets to be acquired in the Acquisition taken as a whole, or on the ability of the Parent Guarantor and its Subsidiaries to use such assets taken as a whole, in a manner consistent with the current use of such assets by Seller, excluding 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 (including but not limited to any action or inaction by the Acquired Business's vendors).
(h) (a) The Lenders shall have received statements of assets to be acquired and liabilities to be assumed of the Acquired Business for each of the three fiscal years ended December 31, 2004, and the related statements of cost center activity of the Acquired Business for each of the fiscal years then ended, which have been audited as described in the Information Memorandum, (b) Lenders who have so requested m accordance with the procedures for such request set forth on the Intralinks Platform relating to the Financing Transactions shall have received the reports thereon of independent registered public accountants of nationally recognized standing (provided such Lenders have complied with the procedures set forth by such accountants for receipt of such reports as set forth on the Intralinks Platform relating to the Financing Transactions), which reports shall contain no limitations or qualifications as to scope or otherwise and no exceptions (except for customary notation of "carve-out" accounting) and shall state specifically that such statements fairly present in all material respects the financial condition of the Acquired Business in accordance with generally accepted accounting principles (including the notes thereto) and (c) the Lenders shall have received unaudited statements of assets to be acquired and liabilities to be assumed of the Acquired Business for March 31, 2005, and the related statements of units shipped and of cost center activity of the Acquired Business for March 31, 2005, which audited and unaudited financial statements (i) shall be in form and scope reasonably satisfactory to the Lenders and (ii) shall not be materially inconsistent with the financial statements previously provided to the Lenders.
(i) All corporate and legal proceedings and all instruments and agreements in connection with the transactions contemplated by this Agreement and the other Loan Documents to occur on or prior to the Effective Date shall in be form and substance reasonably satisfactory to the Administrative Agent, and the Administrative Agent shall have received all information and copies of all documents and papers, including records of corporate proceedings, governmental approvals, good standing certificates and bring down telegrams or facsimiles, if any, which the Administrative Agent reasonably may have requested in connection therewith, such documents and papers where appropriate to be certified by proper corporate or governmental authorities.
(j) The Lenders shall have received a certificate of the chief financial officer of the U.S. Borrower in the form of Exhibit M and reasonably satisfactory to the Administrative Agent, confirming the solvency of each of the Loan Parties on a consolidated basis after giving effect to the Transactions.
(k) The Acquisition shall have been consummated or shall be consummated simultaneously with or immediately following the initial funding of Loans under this Agreement in accordance with the Acquisition Agreement and all other related documentation (without amendment, modification or waiver thereof which is materially adverse to the Lenders (as reasonably determined by the Lead Arranger) without the prior consent of the Lenders), the Administrative Agent shall have received a true and correct executed copy of each Acquisition Document (including without limitation the Pledge Consent Letter whereby Seller acknowledges the pledge granted to the Secured Parties in connection with the Loans) and Seller Loan Document and a reliance letter reasonably satisfactory to the Administrative Agent from each counsel delivering a legal opinion in
connection with the Acquisition Agreement stating that the Lenders may rely on such opinion as if it had been addressed to the Lenders.
(l) The Lenders shall have received (i) the pro forma consolidated balance sheet referred to in Section 3.16(b), and the Lenders shall be reasonably satisfied that such balance sheet is not materially inconsistent with the most recent forecasts previously provided to the Lenders and (ii) the Projected Financial Statements, which shall not be materially inconsistent with the most recent projections previously provided to the Lead Arranger prior to the date of the Commitment Letter.
(m) The Lenders shall have received, sufficiently in advance of the Effective Date, all documentation and other information requested by the Administrative Agent and required by bank regulatory authorities under applicable "know your customer" and anti-money laundering rules and regulations, including without limitation, the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), including without limitation the information described in Section 10.18.
(n) The Parent Guarantor shall have contributed to the U.S. Borrower in cash as common equity not less than $375,000,000 of capital contribution received by the Parent Guarantor (the "Equity Investments").
(o) The Administrative Agent shall have received satisfactory evidence that all loans outstanding under, and all other amounts due in respect of, the Indebtedness of the Loan Parties (other than the Indebtedness to Remain Outstanding) shall have been repaid in full (or satisfactory arrangements made for such repayment) and the commitments thereunder shall have been permanently terminated, and all related guarantees and security interests shall have been terminated (or provisions reasonably satisfactory to the Administrative Agent shall have been made for their termination).
(p) After giving effect to the Transactions, none of the Parent
Guarantor or any Borrower or their respective Subsidiaries shall have
outstanding any Indebtedness other than (i) the Loans and other extensions
of credit under this Agreement, (ii) the Seller Loan Agreement, and (iii)
other Indebtedness of the type described in Section 6.01(a)(iii), (iv),
(v), (vi), (viii), (ix), (x), (xi), (xii) and/or (xv).
(q) All requisite material governmental authorities and third parties shall have approved or consented to the Acquisition Transactions to the extent required, all applicable appeal periods shall have expired and there shall be no judicial or regulatory action by a governmental agency, actual or threatened, that could reasonably be expected to restrain, prevent or impose materially burdensome conditions on the Acquisition Transactions.
(r) No litigation or administrative proceeding or development in any litigation or administrative proceeding (including, without limitation, existing or new litigation relating to the Acquisition) by any entity (private or governmental) shall be pending or, to the knowledge of any Borrower, threatened that could reasonably be expected to have, a
Material Adverse Effect or a material adverse effect on the ability of the parties to consummate the Transactions.
(s) The Administrative Agent shall have received all Fees payable to the Administrative Agent or any Lender on or prior to the Effective Date under the Fee Letter and all other amounts due and payable pursuant to the Loan Documents on or prior to the Effective Date, including reimbursement or payment of all reasonable out-of-pocket expenses (including reasonable fees, charges and disbursements of Cahill Gordon & Reindel LLP and domestic and foreign local counsel) required to be reimbursed or paid by the Borrowers hereunder or under any other Loan Document, in each case to the extent invoiced.
(t) The Collateral Agent shall have received counterparts of the Security Agreement and Pledge Agreement signed by each Loan Party and the Collateral Agent shall have received the following in form and substance reasonably satisfactory to the Collateral Agent:
(A) certificates representing all Pledged Securities, together with executed and undated stock powers and/or assignments in blank;
(B) instruments representing all intercompany Indebtedness payable to any Loan Party, together with executed and undated instruments of assignment endorsed in blank;
(C) certificates of insurance required under the Security Documents;
(D) appropriate financing statements or comparable documents authorized by (and executed by, to the extent applicable) the appropriate entities in proper form for filing under the provisions of the UCC and applicable domestic or local laws, riles or regulations in each of the offices where such filing is necessary or appropriate, in the Collateral Agent's reasonable discretion, to grant to the Collateral Agent a perfected first priority Lien on such Collateral, superior and prior to the rights of all third persons other than the holders of Permitted Liens;
(E) UCC, judgment and tax lien search reports listing all effective financing statements or comparable documents which name any applicable Loan Party as debtor and which are filed in those jurisdictions in which, any Loan Party is organized, any of such Collateral is located and the jurisdictions in which any applicable Loan Party's principal place of business is located in the United States, together with copies of such existing financing statements;
(F) evidence of the preparation for recording or filing, as applicable, of all recordings and filings of each such Security Document, including, without limitation, with the United States Patent and Trademark Office and the United States Copyright Office, and delivery and recordation, if necessary, of such other security and other documents, including, without limitation, UCC-3 (or other equivalent) termination statements with respect to UCC (or other equivalent)
filings that do not constitute Permitted Liens, as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the Liens created, or purported or intended to be created, by such Security Documents;
(G) evidence that all other actions reasonably necessary or, in the reasonable opinion of the Collateral Agent, desirable to perfect the security interest created by the Security Documents have been taken; and
(H) a completed Perfection Certificate dated the Effective Date and signed by an executive officer or Financial Officer of the U.S. Borrower, together with all attachments contemplated thereby, including the results of a search of the UCC (or equivalent) filings made with respect to the Loan Parties in the jurisdictions contemplated by the Perfection Certificate.
(u) The Collateral Agent shall have received the following documents and instruments:
(A) Mortgages encumbering each Mortgaged Property in which the applicable Loan Party holds an ownership, leasehold or other interest (as indicated on Schedule 4.01(u)(A) hereto) in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, each duly executed and acknowledged by the applicable Loan Party, and otherwise in form for recording in the recording office where each such Mortgaged Property is situated, together with such certificates, affidavits, questionnaires or returns as shall be required in connection with the recording or filing thereof to create a lien under applicable law, and such UCC-1 financing statements and other similar statements as are contemplated by the counsel opinions described in Section 4.01(e) in respect of such Mortgages, all of which shall be in form and substance reasonably satisfactory to the Collateral Agent, and any other instruments necessary to grant a mortgage lien under the laws of any applicable jurisdiction, which Mortgages and financing statements and other instruments shall when recorded be effective to create a Lien on such Mortgaged Property subject to no other Liens except Permitted Liens;
(B) with respect to each Mortgaged Property, such consents, approvals, amendments, supplements, estoppels, tenant subordination agreements or other instruments, in form acceptable to the Collateral Agent, as necessary or required to consummate the transactions contemplated hereby or as shall reasonably be deemed necessary by the Collateral Agent in order for the owner or holder of the fee, leasehold or other interest constituting such Mortgaged Property to grant the Liens contemplated by the Mortgages with respect to such Mortgaged Property;
(C) with respect to each Mortgage, a policy (or commitment to issue a policy) of title insurance insuring (or committing to insure) the Lien of such Mortgage as a valid first or second, as the case may be, mortgage Lien on the real property and fixtures described therein in an amount not less than the amount set forth on Schedule 4.01(u)(C) (100% of the fair market value thereof), which policies (or commitments) shall (w) be issued by the Title Company, (x) include
such reinsurance arrangements (with provisions for direct access) as shall be reasonably acceptable to the Collateral Agent, (y) contain a "tie-in" or "cluster" endorsement (if available under applicable law) (i.e., policies which insure against losses regardless of location or allocated value of the insured property --- up to a stated maximum coverage amount) and have been supplemented by such endorsements (or where such endorsements are not available, opinions of special counsel, architects or other professionals reasonably acceptable to the Collateral Agent to the extent that such opinions can be obtained at a cost which is reasonable with respect to the value of the real property subject to such Mortgage) as shall be reasonably requested by the Collateral Agent (including, without limitation, endorsements, to the extent available in each jurisdiction at commercially reasonably rates, on matters relating to usury, first loss, last dollar, zoning, contiguity, variable rate, revolving credit, doing business, access, survey, address and so-called comprehensive coverage over covenants and restrictions) and (z) contain only such exceptions to title as shall be agreed to by the Collateral Agent on or prior to the Effective Date with respect to such Mortgaged Property;
(D) with respect to each Mortgaged Property, policies or certificates of insurance as required by the Mortgage relating thereto, which policies or certificates shall comply with the insurance requirements contained in such Mortgage;
(E) with respect to each owned Mortgaged Property, a Survey in form acceptable to the Collateral Agent;
(F) with respect to each Mortgaged Property, such affidavits, certificates, information (including financial data) and instruments of indemnification (including, without limitation, a so-called "gap" indemnification) as shall be required to induce the Title Company to issue the policy or policies (or commitment) and endorsements contemplated in subparagraph (C) above;
(G) evidence acceptable to the Collateral Agent of payment by the appropriate Loan Party or Subsidiary thereof of all applicable title insurance premiums, search and examination charges, survey costs and related charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the Mortgages and issuance of the title insurance policies referred to in subparagraph (C) above;
(H) with respect to each Real Property or Mortgaged Property, copies of all leases or other agreements relating to possessory interests to which any Loan Party or Subsidiary thereof is a party. To the extent any of the foregoing in which any Loan Party is a landlord or sublandlord affect any Mortgaged Property, such agreement shall be subordinate to the Mortgage to be recorded against such Mortgaged Property and otherwise reasonably acceptable to the Collateral Agent; and
(I) with respect to each Mortgaged Property, a completed Federal Emergency Management Agency Standard Flood Hazard Determination.
(v) The Collateral Agent shall have received evidence and be reasonably satisfied that the insurance required by Section 5.04 and the Security Documents is in effect as of the Effective Date.
(w) The Additional Borrower and Seller shall have entered into the Seller Loan Documents providing for aggregate borrowings of up to $150.0 million. The Seller Loan Documents shall have become effective and shall be in form and substance reasonably satisfactory to the Administrative Agent.
(x) The definitive documentation for the 787 Program shall, subject to the terms and conditions of the 787 Agreement, provide for advance payments from Seller to the U.S. Borrower of not less than $200.0 million on or prior to July 31, 2005, $100.0 million on or prior to February 15, 2006, $100.0 million on or prior to May 15, 2006, $100.0 million on or prior to August 15, 2006, $100.0 million on or prior to November 15, 2006, $25.0 million payable on or prior to February 15, 2007, $25.0 million payable on or prior to May 15, 2007, $25.0 million payable on or prior to August 15, 2007 and $25.0 million payable on or prior to November 15, 2007.
(y) The IRB Transactions (including the execution and delivery of the Assignment Agreement, the Buyer Sublease and the IRB Pledge Agreement) shall have occurred.
(z) The Tax Indemnity Agreements shall have been executed and delivered and Onex Corporation shall have delivered to the Administrative Agent the Onex Corporation Tax Certificate.
SECTION 4.02. Conditions to Each Credit Event. The agreement of each Lender to make any Loan and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit (excluding continuations and conversions of Loans) (such event being called a "Credit Event") requested to be made by it on any date (including the Effective Date) is subject to the satisfaction of the following conditions:
(a) The Administrative Agent shall have received a notice of such Credit Event as required by Section 2.02 or 2.04, as applicable.
(b) The representations and warranties set forth in Article III hereof (except, with respect to Loans made on the Effective Date only, for Section 3.07, provided that with respect to Loans made on such date, the Loan Parties hereby expressly represent and warrant that the condition set forth in Section 4.01(g) has been satisfied in full) and in the other Loan Documents shall be true and correct in all material respects (except that any representation or warranty that is qualified as to "materiality" or "Material Adverse Effect" shall be true and correct in all respects) with the same effect as if then made (unless expressly stated to relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that any representation
or warranty that is qualified as to "materiality" or "Material Adverse Effect" shall be true and correct in all respects) as of such earlier date).
(c) At the time of and immediately after such Credit Event, no Default or Event of Default shall have occurred and be continuing.
Each Credit Event shall be deemed to constitute a representation and warranty by the Borrowers on the date of such Credit Event, as to the matters specified in paragraphs (b) and (c) of this Section 4.02.
SECTION 4.03. Conditions to Effectiveness of the Amended and Restated Credit Agreement. This Amended and Restated Credit Agreement shall become effective on and as of the first date (the "Restatement Effective Date") on which all of the following conditions precedent shall have been satisfied in full:
(a) The Administrative Agent (or its counsel) shall have received from each party hereto a counterpart of this Amended and Restated Credit Agreement signed on behalf of such party.
(b) The Administrative Agent shall have received from each Borrower a Restatement Closing Certificate, substantially in the form of Exhibit U, dated the Restatement Effective Date and signed on behalf of such Borrower by a Financial Officer of the U.S. Borrower.
(c) The Administrative Agent shall have received an Affirmation and Consent, substantially in the form of Exhibit V (the "Affirmation and Consent"), dated the Restatement Effective Date, executed and delivered by each Loan Party, Onex Corporation and the General Partner.
(d) The representations and warranties set forth in Article III hereof and in the other Loan Documents shall be on and as of the Restatement Effective Date true and correct in all material respects (except that any representation or warranty that is qualified as to "materiality" or "Material Adverse Effect" shall be true and correct in all respects) with the same effect as if then made (unless expressly stated to relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that any representation or warranty that is qualified as to "materiality" or "Material Adverse Effect" shall be true and correct in all respects) as of such earlier date).
(e) As of the Restatement Effective Date, no Default or Event of Default shall have occurred and be continuing.
(f) The Administrative Agent shall have received a favorable written opinion of Kaye Scholer LLP, counsel to the Loan Parties, which opinion shall be addressed to each Agent and the Lenders, dated the Restatement Effective Date and in form and substance reasonably satisfactory to the Administrative Agent.
(g) All reasonable out-of-pocket expenses to the extent invoiced prior to the Restatement Effective Date (including reasonable fees, charges and disbursements of Cahill Gordon & Reindel LLP and McCarthy Tetrault LLP) of the Agents in connection with this Amended and Restated Credit Agreement shall have been reimbursed or paid by the Borrowers.
ARTICLE V
AFFIRMATIVE COVENANTS OF THE U.S. LOAN PARTIES
The Parent Guarantor and the U.S. Borrower each hereby covenants and agrees with the Lenders that on or after the Effective Date and until the Commitments have expired or terminated and the principal of and interest on each Loan and all Fees and other amounts payable hereunder or under any other Loan Document have been paid in full (other than contingent indemnification obligations that are not then due and payable) and all Letters of Credit have expired, terminated or been collateralized and all LC Disbursements shall have been reimbursed:
SECTION 5.01. Financial Information. Reports, Notices, etc. The U.S. Borrower will furnish, or will cause to be furnished, to each Lender and the Administrative Agent copies of the following financial statements, reports, notices and information:
(a) as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the U.S. Borrower, a consolidated balance sheet of the U.S. Borrower and its Subsidiaries as of the end of such Fiscal Quarter and consolidated statements of earnings and cash flow of the U.S. Borrower and its Subsidiaries for such Fiscal Quarter and for the same period in the prior Fiscal Year and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter (including a note with a consolidating balance sheet and statements of earnings and cash flows for each Non-Guarantor Subsidiary), certified by a Financial Officer of the U.S. Borrower as fairly presenting in all material respects the financial position, results of operations and cash flows of the U.S. Borrower and its Subsidiaries in accordance with GAAP consistently applied and a narrative report and management's discussion and analysis, in a form reasonably satisfactory to the Administrative Agent, of the financial condition and results of operations for such Fiscal Quarter and the then elapsed portion of the Fiscal Year, as compared to the comparable periods in the previous Fiscal Year and budgeted amounts (it being understood that such information may be furnished in the form of a Form 10-Q) (provided that in each case for the first four Fiscal Quarters after the Effective Date, to the extent such data with respect to the same period of the prior Fiscal Year or an earlier period of the same Fiscal Year (as the case may be) is not available, such comparison shall be only to the amounts budgeted for the same period);
(b) as soon as available and in any event within 90 days after the end of each Fiscal Year of the U.S. Borrower (other than with respect to the Fiscal Year ending December 31, 2005, for which reports must be provided within 105 days of such Fiscal Year end) a copy of the annual audit report for such Fiscal Year for the U.S. Borrower and its Subsidiaries, including therein a consolidated balance sheet of the U.S. Borrower
and its Subsidiaries as of the end of such Fiscal Year and consolidated statements of earnings and cash flow of the U.S. Borrower and its Subsidiaries for such Fiscal Year (including a note with a consolidating balance sheet and statements of earnings and cash flows for each Non-Guarantor Subsidiary), in each case certified (without any Impermissible Qualification) in a manner reasonably acceptable to the Administrative Agent by an independent public accounting firm reasonably acceptable to the Administrative Agent, together with a certificate from a Financial Officer of the U.S. Borrower (a "Compliance Certificate") containing a computation in reasonable detail of, and showing compliance with, each of the financial ratios and restrictions contained in the Financial Covenants and to the effect that, in making the examination necessary for the signing of such certificate, such Financial Officer has not become aware of any Default or Event of Default that has occurred and is continuing, or, if such Financial Officer has become aware of such Default or Event of Default, describing such Default or Event of Default and the steps, if any, being taken to cure it, and concurrently with the delivery of the foregoing financial statements, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default or Event of Default under Section 6.12 or 6.13 (which certificate may be limited to the extent required by accounting rules or guidelines) and a narrative report and management's discussion and analysis, in a form reasonably satisfactory to the Administrative Agent, of the financial condition and results of operations of the U.S. Borrower for such Fiscal Year, as compared to amounts for the previous Fiscal Year and budgeted amounts (it being understood that such information may be furnished in the form of a Form 10-K) (provided that in each case for the first Fiscal Year after the Effective Date, to the extent such data with respect to the prior Fiscal Year is not available, such comparison shall be only to the amounts budgeted for the same period, provided that such comparison need not be covered by the certification of the independent public accounting firm referred to above);
(c) as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the U.S. Borrower, a Compliance Certificate containing a computation in reasonable detail of, and showing compliance with, each of the financial ratios and restrictions contained in the Financial Covenants and to the effect that, in making the examination necessary for the signing of such certificate, such Financial Officers have not become aware of any Default or Event of Default that has occurred and is continuing, or, if such Financial Officers have become aware of such Default or Event of Default, describing such Default or Event of Default and the steps, if any, being taken to cure it;
(d) no later than January 15 of each Fiscal Year of the U.S. Borrower, commencing with the Fiscal Year beginning January 1, 2006, a detailed consolidated budget by Fiscal Quarter for such Fiscal Year beginning January 1, 2006 (including a projected consolidated balance sheet and related statements of projected operations and cash flow as of the end of and for each Fiscal Quarter during such Fiscal Year beginning January 1, 2006) and for each such Fiscal Year thereafter through the Final Maturity Date (including a projected consolidated balance sheet and related statements of projected
operations and cash flow as of the end of each such Fiscal Year) and, promptly when available, any significant revisions of such budgets;
(e) promptly upon receipt thereof, copies of all material written reports submitted to the U.S. Borrower by independent certified public accountants in connection with each annual, interim or special audit of the books of the U.S. Borrower or any of its Subsidiaries made by such accountants, including any management letters submitted by such accountants to management in connection with their annual audit;
(f) promptly and in any event within five days after becoming aware of the occurrence of any Default or Event of Default, a statement of a Financial Officer of the U.S. Borrower setting forth details of such Default or Event of Default and the action which the U.S. Borrower has taken and proposes to take with respect thereto;
(g) promptly and in any event within five Business Days after (i) the occurrence of any adverse development with respect to any litigation, action or proceeding against a U.S. Loan Party or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or (ii) the commencement of any litigation, action or proceeding against a U.S. Loan Party or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect or that purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document or the transactions contemplated hereby or thereby, notice thereof and, to the extent requested by the Administrative Agent, copies of all documentation relating thereto;
(h) promptly after the sending or filing thereof, copies of all reports which the Parent Guarantor sends to its security holders generally in their capacity as such, and all reports, registration statements (other than on Form S-8 or any successor form) or other materials (including affidavits with respect to reports) which the Parent Guarantor or any of its Subsidiaries or any of their officers files with the SEC or any national securities exchange;
(i) promptly upon becoming aware of the taking of any specific actions by the Parent Guarantor or any other Person to terminate any Pension Plan (other than a termination pursuant to Section 4041(b) of ERISA which can be completed without the Parent Guarantor or any ERISA Affiliate having to provide more than $1.0 million in addition to the normal contribution required for the plan year in which termination occurs to make such Pension Plan sufficient), or the occurrence of an ERISA Event which could result in a Lien on the assets of any U.S. Loan Party or a Subsidiary or in the incurrence by a U.S. Loan Party of any liability, fine or penalty which could reasonably be expected to have a Material Adverse Effect, or any increase in the contingent liability of a U.S. Loan Party with respect to any post-retirement Welfare Plan benefit if the increase in such contingent liability which could reasonably be expected to have a Material Adverse Effect, notice thereof and copies of all documentation relating thereto;
(j) upon request by the Administrative Agent, copies of: (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any U.S. Loan
Party or ERISA Affiliate with the Internal Revenue Service with respect to each Pension Plan; (ii) to the extent available, the most recent actuarial valuation report for each Pension Plan; (iii) all notices received by any U.S. Loan Party or ERISA Affiliate from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event; and (iv) such other documents or governmental reports or filings relating to any Plan as the Administrative Agent shall reasonably request;
(k) promptly and in any event within five Business Days, notice of any other development that could reasonably be expected to have a Material Adverse Effect;
(l) promptly, and in any event within five Business Days of the receipt of any written notice from the Seller with respect to the cancellation of any programs covered by any of the Boeing Agreements;
(m) promptly, from time to time, such other information respecting the condition or operations, financial or otherwise, of the Parent Guarantor or any of its Subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request;
(n) with respect to each Test Period for which a Cure Right will be exercised, on the date the financial statements pursuant to Section 5.01(a) or (b) have been, or should have been, delivered for the applicable fiscal period, the U.S. Borrower shall deliver together with such financial statements a certificate of a Financial Officer of the U.S. Borrower containing a computation in reasonable detail of the applicable Event of Default and a notice of its intent to cure (a "Notice of Intent to Cure") such Event of Default through the issuance of Permitted Cure Securities as contemplated pursuant to Section 7.07;
(o) promptly and in any event within five days after becoming aware of the occurrence of any Boeing Funded Capital Expenditure Shortfall Event, a statement of a Financial Officer of the U.S. Borrower setting forth the details of the Boeing Funded Capital Expenditures Shortfall Event (including the Boeing Shortfall Amount) and the action which the U.S. Borrower has taken and proposes to take with respect thereto; and
(p) promptly and in any event within five days after the expiration of the Seller Loan Availability Period.
SECTION 5.02. Compliance with Laws, etc. Each of the Parent Guarantor and the U.S. Borrower will, and will cause each of their respective Subsidiaries to, comply in all respects with all applicable laws, rules, regulations and orders, except where such noncompliance, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
SECTION 5.03. Maintenance of Properties. Each of the Parent Guarantor and the U.S. Borrower will, and will cause each of their respective Subsidiaries to, maintain, preserve, protect and keep its material properties and assets in good repair, working order and condition, and make necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times except where the
failure to do so would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
SECTION 5.04. Insurance. Each of the Parent Guarantor and the U.S.
Borrower will, and will cause each of their respective Subsidiaries to, maintain
or cause to be maintained with financially sound and responsible insurance
companies insurance with respect to its properties material to the business of
the U.S. Loan Parties and their respective Subsidiaries against such casualties
and contingencies and of such types and in such amounts with such deductibles as
is customary in the case of similar businesses operating in the same or similar
locations (including, without limitation, (i) physical hazard insurance on an
"all risk" basis including an industry standard Lenders Loss Payable Clause,
(ii) commercial general liability against claims for bodily injury, death or
property damage and including the Administrative Agent and the Collateral Agent
as additional insured parties or, in the case of property insurance, loss payee,
(iii) boiler and machinery insurance covering all electrical and mechanical
equipment and vessels under pressure constituting Collateral, (iv) business
interruption insurance, (v) worker's compensation insurance as may be required
by any Requirement of Law and (vi) such other insurance against risks as the
Administrative Agent or the Collateral Agent may from time to time require).
Each such insurance policy shall provide that it may not be cancelled or
otherwise terminated without at least thirty (30) days' prior written notice,
and ten (10) days in the event of nonpayment of premium to the Administrative
Agent. To the extent any such policy is cancelled, adversely modified or
renewed, each of the Parent Guarantor and the U.S. Borrower shall, and shall
cause each of their respective Subsidiaries to, deliver a Certificate of
Insurance to the Administrative Agent, together with evidence reasonably
satisfactory to the Administrative Agent of the payment of the premium therefor.
Each of the Parent Guarantor and the U.S. Borrower will, and will cause each other U.S. Loan Party to, with respect to each Mortgaged Property, obtain flood insurance in such total amount as the Administrative Agent or the Requisite Lenders may from time to time require, if at any time the area in which any improvements are located on any Mortgaged Property is designated a "flood hazard area" in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as amended from time to time.
SECTION 5.05. Books and Records: Visitation Rights: Maintenance of Ratings. (a) Each of the Parent Guarantor and the U.S. Borrower will, and will cause each of their respective Subsidiaries to, keep books and records which accurately reflect in all material respects its business affairs and material transactions and permit the Administrative Agent or any Lender or their representatives, at reasonable times and intervals, to (x) visit all of its offices, (y) discuss its financial matters with its officers and independent public accountant and (z) upon the reasonable request of the Administrative Agent or a Lender, examine (and, at the expense of the U.S. Borrower, photocopy extracts from) any of its books or other corporate or partnership records (provided that as long as no Default or Event of Default has occurred and is continuing, (a) the U.S. Loan Parties shall bear the expense of not more than one such visit per Fiscal Year and (b) such visits shall be coordinated through the Administrative Agent).
(b) The U.S. Borrower shall use commercially reasonable efforts to continue to have this Agreement and the Revolving Loans hereunder rated by each of Moody's and S&P.
SECTION 5.06. Environmental Covenant. Each of the Parent Guarantor and the U.S. Borrower will, and will cause each of their respective Subsidiaries to:
(a) use and operate all of its facilities and properties in compliance with all Environmental Laws except for such noncompliance which, singly or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, keep all Environmental Permits in effect and remain in compliance therewith and handle all Hazardous Materials in compliance with all applicable Environmental Laws, except for any noncompliance that could not reasonably be expected to have a Material Adverse Effect;
(b) promptly notify the Administrative Agent and provide copies of all written inquiries, claims, complaints or notices from any Person relating to the environmental condition of its facilities and properties or compliance with or liability under any Environmental Law which could reasonably be expected to have a Material Adverse Effect, and promptly cure and have dismissed with prejudice or contest in good faith any actions and proceedings relating thereto;
(c) in the event of the presence of any Hazardous Material on any Mortgaged Property which is in violation of any Environmental Law or which could reasonably be expected to result in an Environmental Liability which violation or Environmental Liability could reasonably be expected to have a Material Adverse Effect, each applicable U.S. Loan Party and its Subsidiaries, upon discovery thereof, shall take all necessary steps to initiate and expeditiously complete all response, corrective and other action to mitigate and eliminate any such adverse effect in accordance with and to the extent required by applicable Environmental Laws, and shall keep the Administrative Agent informed of their actions;
(d) at the written request of the Administrative Agent or the Requisite Lenders, which request shall specify in reasonable detail the basis therefor, each U.S. Loan Party will provide, at such U.S. Loan Party's sole cost and expense, an environmental site assessment report (which may include where appropriate testing and sampling, including sampling of soil and ground water) concerning any Mortgaged Property now or hereafter owned or leased by such U.S. Loan Party or any of its respective Subsidiaries, prepared by an environmental consulting firm reasonably acceptable to the Administrative Agent, indicating the presence or absence of Hazardous Materials and the potential cost of any Remedial Action in connection with such Hazardous Materials on, at, under or emanating from such Mortgaged Property pursuant to any applicable Environmental Law; provided that such request may be made only (i) if an Event of Default has occurred and is continuing for not less than 60 days or (ii) if (x) the performance of such requested actions could not reasonably be expected to adversely affect the ability of the U.S. Borrower to recover from the Seller pursuant to the Seller's indemnity obligations under the Acquisition Agreement and (y) the Administrative Agent or the Requisite Lenders reasonably believe that (A) the U.S.
Borrower or any such Mortgaged Property is not in compliance with Environmental Law and such noncompliance could reasonably be expected to have a Material Adverse Effect, or (B) circumstances exist that could reasonably be expected to form the basis of an Environmental Claim against such U.S. Loan Party or to result in Environmental Liability, in each case that could reasonably be expected to have a Material Adverse Effect (in such events as are listed in this subparagraph, the environmental site assessment shall be focused upon the noncompliance or other circumstances as applicable). If any U.S. Loan Party fails to provide the same within 45 days after such request was made the Administrative Agent may order the same, and such U.S. Loan Party shall grant and hereby grants to the Administrative Agent and the Requisite Lenders and their agents access to such Mortgaged Property and specifically grants the Administrative Agent and the Requisite Lenders an irrevocable non-exclusive license, subject to the rights of tenants, to perform such an assessment, all at such U.S. Loan Party's sole cost and expense; and
(e) promptly, from time to time, provide such information and certifications which the Administrative Agent may reasonably request from time to time to evidence compliance with this Section 5.06.
SECTION 5.07. Information Regarding Collateral. (a) Each of the Parent Guarantor and the U.S. Borrower will, and will cause each of the other U.S. Loan Parties to, furnish to the Administrative Agent and the Collateral Agent prompt written notice of any change (i) in such U.S. Loan Party's legal name, (ii) in the location of any U.S. Loan Party's chief executive office or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility), (iii) in any U.S. Loan Party's corporate structure, (iv) in any U.S. Loan Party's Federal Taxpayer Identification Number or organizational identification number or (v) in any U.S. Loan Party's jurisdiction of organization. Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any other U.S. Loan Party to, effect or permit any change referred to in the preceding sentence unless (i) it shall have given the Administrative Agent and the Collateral Agent written notice not later than 10 days after any such change and (ii) all filings have been made under the UCC or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interests in all the Collateral. Each of the Parent Guarantor and the U.S. Borrower will, and will cause each other U.S. Loan Party to, promptly notify the Administrative Agent if any material portion of the Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual financial statements
with respect to the preceding Fiscal Year pursuant to clause (b) of Section
5.01, the U.S. Borrower shall deliver to the Administrative Agent a certificate
of a Financial Officer or the chief legal officer of the U.S. Borrower (A)
updating, to the extent necessary, to reflect (i) the list of owned and leased
Real Property, (ii) any changes to the names or locations of any Loan Party or
(iii) any other information reasonably requested by the Administrative Agent
with respect to the Collateral or (B) confirming that there has been no change
in such information since the date of the Perfection Certificate or the latest
supplement to the Perfection Certificate.
SECTION 5.08. Existence; Conduct of Business. Each of the Parent Guarantor and the U.S. Borrower will, and will cause each of their respective Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect (a) its legal existence and (b) the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business, except (other than in respect of the legal existence of the U.S. Borrower) where the failure to do so could not reasonably be expected to have a Material Adverse Effect; provided that nothing in this Section 5.08 shall prohibit any merger or consolidation, liquidation or dissolution permitted under Section 6.03 or sale or other disposition permitted under Section 6.05.
SECTION 5.09. Performance of Obligations. Each of the Parent Guarantor and the U.S. Borrower will, and will cause each of their respective Subsidiaries to, perform all of their respective obligations under the terms of each mortgage, indenture, security agreement, other debt instrument and material contract by which they are bound or to which they are a party except for such noncompliance as in the aggregate could not reasonably be expected to have a Material Adverse Effect.
SECTION 5.10. Casualty and Condemnation. Each of the Parent Guarantor and the U.S. Borrower (a) will furnish to the Administrative Agent and the Lenders prompt written notice of any casualty, Destruction or other insured damage to any Collateral in an amount in excess of $5.0 million or the commencement of any action or proceeding for the Taking of any Collateral or any part thereof or interest therein under power of eminent domain or by condemnation or similar proceeding and (b) will ensure that the Net Proceeds of any such event (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and applied in accordance with the applicable provisions of this Agreement.
SECTION 5.11. Pledge of Additional Collateral. Within 30 days after the acquisition of assets of the type that would have constituted Collateral on the Effective Date pursuant to the Security Documents (including pursuant to the release of IRB Assets from the IRB Agreements) (the "Additional Collateral"), each of the Parent Guarantor and the U.S. Borrower will, and will cause each of the other U.S. Loan Parties to, take all necessary action, including the filing of appropriate financing statements under the provisions of the UCC, applicable domestic or local laws, rules or regulations in each of the offices where such filing is necessary or appropriate, or entering into or amending the Guarantee Agreement and the Security Documents, to grant to the Collateral Agent for its benefit and the benefit of the Secured Parties, a perfected first priority Lien, subject in each case only to Permitted Liens, in such Collateral in each case pursuant to and to the full extent required by the Security Documents and this Agreement (including, without limitation, satisfaction of the conditions set forth in subsections (t) and (u) of Section 4.01). In the event that any U.S. Loan Party acquires an interest in additional Real Property having a fair market value in excess of $1.0 million as determined in good faith by the U.S. Borrower (including pursuant to the release of any such Real Property that constituted an IRB Asset from the IRB Agreements) or renews any Real Property Agreement, including, without limitation, the renewal of any Real Property Agreement relating to the "3300 South Turnpike Drive Facility" (as referred to on Schedule 3.11(b) hereof), (whether or not the subject of a Mortgage or other Security Documents), the Parent Guarantor or the U.S. Borrower or (to the extent applicable) will cause the other U.S. Loan Parties to, and using its commercially reasonable efforts in respect of any such leases, take such actions and execute such documents as
the Collateral Agent shall require to confirm the Lien of a Mortgage, if applicable, or to create a new Mortgage or other Security Documents (including, without limitation, satisfaction of the conditions set forth in subsections (t) and (u) of Section 4.01). All actions taken by the parties in connection with the pledge of Additional Collateral, including, without limitation, reasonable costs of counsel for the Administrative Agent and the Collateral Agent, shall be for the account of the U.S. Borrower, which shall pay all sums due on demand.
SECTION 5.12. Further Assurances. Each of the Parent Guarantor and the U.S. Borrower will, and will cause each of the other U.S. Loan Parties to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents and the delivery of appropriate opinions of counsel), which are required under any applicable law, or which the Administrative Agent, the Collateral Agent or the Requisite Lenders may reasonably request, to effectuate the transactions contemplated by the Loan Documents or to grant, preserve, protect or perfect the Liens created by the Security Documents or the validity or priority of any such Lien, all at the expense of the U.S. Loan Parties. Each of the Parent Guarantor and the U.S. Borrower will, and will cause each of the other U.S. Loan Parties to, provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents.
SECTION 5.13. Use of Proceeds. The U.S. Borrower covenants and agrees that the proceeds of the Term B Loan Borrowings received from the Additional Borrower Parties on the Effective Date will be used to effect the Acquisition Transactions and to pay fees and expenses payable hereunder as set forth in the Commitment Letter. The U.S. Borrower covenants and agrees that all Revolving Credit Borrowings will be used for general corporate purposes.
SECTION 5.14. Payment of Taxes. Each of the Parent Guarantor and the U.S. Borrower will, and will cause each of their respective Subsidiaries to, pay and discharge all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any Properties belonging to it, prior to the date on which material penalties attach thereto, and all lawful claims which, if unpaid, might become a Lien or charge upon any Properties of the Parent Guarantor, the U.S. Borrower or any of their respective Subsidiaries or cause a failure or forfeiture of title thereto; provided that neither the Parent Guarantor nor the U.S. Borrower nor any of their respective Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim that is being contested in good faith and by proper proceedings diligently conducted, which proceedings have the effect of preventing the forfeiture or sale of the Property or asset that may become subject to such Lien, if it has maintained adequate reserves with respect thereto in accordance with and to the extent required under GAAP. Each of the Parent Guarantor and the U.S. Borrower will, and will cause each of their respective Subsidiaries to, timely file or cause to be timely filed all material tax returns required to be filed by it.
SECTION 5.15. Interest Rate Protection. No later than the 60th day after the Effective Date, the U.S. Borrower shall enter into, and for a minimum of 3 years thereafter maintain, Hedging Agreements with terms and conditions reasonably acceptable to the
Administrative Agent that result in at least 50% of the aggregate principal amount of the U.S. Borrower's Consolidated Indebtedness being effectively subject to a fixed or minimum interest rate reasonably acceptable to the Administrative Agent.
SECTION 5.16. Guarantees. In the event that any direct or indirect Subsidiary of the U.S. Borrower existing on the Effective Date has not previously executed the Guarantee Agreement or in the event that any Person becomes a direct or indirect Subsidiary (other than a Foreign Subsidiary or a Non-Guarantor Subsidiary) of the U.S. Borrower after the Effective Date, the U.S. Borrower will promptly notify the Administrative Agent of that fact and cause such Subsidiary to promptly execute and deliver to the Administrative Agent a counterpart of the Guarantee Agreement and deliver to the Collateral Agent a counterpart of the Security Agreement and the Pledge Agreement and to take all such further actions and execute all such further documents and instruments (including actions, documents and certificates comparable to those described in Section 4.01(t) and (u) and including the Subordination and Intercreditor Agreement) as may be necessary or, in the reasonable opinion of the Administrative Agent, desirable to create (i) in favor of the Collateral Agent, for the benefit of itself and of the Secured Parties, a valid and perfected first priority Lien a valid and perfected Lien on all of the Property and assets of such Subsidiary described in the applicable Security Documents.
SECTION 5.17. Seller Loan Agreement. The U.S. Borrower shall borrow in one or more drawings from the applicable Additional Borrower Party pursuant to the Subsequent WLLC Loan the full amount available to the Additional Borrower under the Seller Loan Agreement by no later than December 31, 2008 if the U.S. Borrower's ratio of Senior Indebtedness as of September 30, 2008 to Consolidated EBITDA for the Test Period ended September 30, 2008 is 1.75:1 or greater.
SECTION 5.18. 787 Program. If at any time Seller and the U.S. Borrower shall enter into any 787 Program, the definitive documentation for such 787 Program shall provide for advance payments from Seller to the U.S. Borrower of not less than $200.0 million on or prior to July 31, 2005, $100.0 million on or prior to February 15, 2006, $100.0 million on or prior to May 15, 2006, $100.0 million on or prior to August 15, 2006, $100.0 million on or prior to November 15, 2006, $25.0 million payable on or prior to February 15, 2007, $25.0 million payable on or prior to May 15, 2007, $25.0 million payable on or prior to August 15, 2007 and $25.0 million payable on or prior to November 15, 2007.
SECTION 5.19. Phase II Environmental Studies. To the extent not exercised prior to the Effective Date, the U.S. Borrower shall exercise all rights to conduct Phase II Studies at the Tulsa and McAlester Facilities (as such terms are used in the Acquisition Agreement), as set forth in Section 6.13(a) of the Acquisition Agreement, and shall use its best efforts to complete all such Phase II Studies within the time period set forth in Section 6.13(a)(v) of the Acquisition Agreement. The U.S. Borrower shall promptly provide copies of the Phase II Studies to the Administrative Agent and keep the Administrative Agent informed concerning any actions, including Remedial Actions taken based on such studies.
SECTION 5.20. IRB Agreements. (i) The U.S. Borrower agrees to promptly take all actions necessary or desirable (x) for ownership of all Non-Qualifying Assets to be transferred to the U.S. Borrower as and to the extent it is permitted to do so under the IRB
Agreements and (y) for the actions set forth in the next to last sentence of
Section 2.01(a) in the Buyer Sublease to be completed.
(ii) The U.S. Borrower agrees to promptly enforce all rights and remedies it may have under the IRB Agreements in connection with its rights to possess and utilize the IRB Assets without payment of rent after the Effective Date and to have ownership of all Non-Qualifying Assets to be transferred to it as and to the extent permitted under the IRB Agreements.
SECTION 5.21. Repayment of Original WLLC Loan. The U.S. Borrower agrees to make repayments under the Original WLLC Loan at times and in amounts sufficient for the Additional Borrower to make all repayments of Term B Loans required under Section 2.05 and Section 2.05A.
SECTION 5.22. Tax Indemnity Agreements. Each U.S. Loan Party shall take all action applicable to such party necessary or required under the Tax Indemnity Agreements (including providing any required or necessary notices thereunder) to cause the applicable indemnifying parties thereunder to pay all amounts due and payable under any Tax Indemnity Agreement in accordance with the terms thereof.
SECTION 5.23. Post-Closing Collateral Matters. Unless the provisions of this Section 5.23 are waived, modified or otherwise amended by the Collateral Agent in its sole discretion, (i) the Parent Guarantor and the U.S. Borrower shall use commercially reasonable efforts to deliver to the Collateral Agent within 60 days after the Effective Date (it being understood that if Parent Guarantor and U.S. Borrower shall have used commercially reasonable efforts to obtain such waiver within such 60-day period but the same shall not have been obtained within such period, Parent Guarantor and U.S. Borrower shall not be required to seek such waiver after such 60-day period) an executed waiver from each party to the Kansas Industrial Energy Supply Company Tenants-In-Common Management Agreement, which waiver shall permit the U.S. Borrower to pledge its interest therein to the Collateral Agent for its benefit and the benefit of the Secured Parties pursuant to the Security Documents, (ii) the U.S. Borrower shall file with the United States Patent and Trademark Office the Patent Assignment within five days after the Effective Date and promptly deliver to the Collateral Agent the notice of recordation of such Patent Assignment received from the United States Patent and Trademark Office (but in any event within 15 days after the U.S. Borrower's receipt of such notice of recordation) and (iii) Additional Borrower shall use commercially reasonable efforts to deliver to the Collateral Agent within 45 days after the Effective Date a control agreement in form and substance reasonably satisfactory to the Collateral Agent and executed by Royal Bank of Canada and the Additional Borrower with respect to the Securities Account of the Additional Borrower identified on the Perfection Certificate.
ARTICLE V-A
AFFIRMATIVE COVENANTS OF THE ADDITIONAL BORROWER PARTIES
The Additional Borrower hereby covenants and agrees with the Lenders that on or after the Effective Date and until the Commitments have expired or terminated and the principal of and interest on each Loan and all Fees and other amounts payable hereunder or under any other Loan Document have been paid in full (other than contingent indemnification obligations that are not then due and payable) and all Letters of Credit have expired, terminated or been collateralized and all LC Disbursements shall have been reimbursed:
SECTION 5.01A. Reports, Notices, etc. The Additional Borrower will furnish, or will cause to be furnished, to each Lender and the Administrative Agent copies of the following financial statements, reports, notices and information:
(a) Promptly and in any event within five days after becoming aware of the occurrence of any Additional Borrower Default or Additional Borrower Event of Default, a statement of an authorized representative the general partner of the Additional Borrower setting forth details of such Additional Borrower Default or Additional Borrower Event of Default and the action which the Additional Borrower has taken and proposes to take with respect thereto;
(b) Promptly and in any event within five Business Days after (i) the occurrence of any adverse development with respect to any litigation, action or proceeding against any Additional Borrower Party or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or (ii) the commencement of any litigation, action or proceeding against any Additional Borrower Party or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect or that purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document or the transactions contemplated hereby or thereby, notice thereof and, to the extent requested by the Administrative Agent, copies of all documentation relating thereto;
(c) Promptly after the sending or filing thereof, copies of all reports which the Additional Borrower sends to its security holders generally in their capacity as such, and all reports, registration statements (other than on Form S-8 or any successor form) or other materials (including affidavits with respect to reports) which the Additional Borrower or any of the Additional Borrower Subsidiaries or any of their respective officers files with the SEC or any national securities exchange;
(d) Promptly, notice of any other development that could reasonably be expected to have a Material Adverse Effect; and
(e) Promptly, from time to time, such other information respecting the condition or operations, financial or otherwise, of the Additional Borrower or any of the Additional Borrower Subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request.
SECTION 5.02A. Compliance with Laws, etc. The Additional Borrower will, and will cause each of the Additional Borrower Subsidiaries to, comply in all respects with all applicable laws, rules, regulations and orders, except where such noncompliance, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
SECTION 5.03A. Books and Records; Visitation Rights. (a) The Additional Borrower will, and will cause each of the Additional Borrower Subsidiaries to, keep books and records which accurately reflect in all material respects its business affairs and material transactions and permit the Administrative Agent or any Lender or their representatives, at reasonable times and intervals, to (x) visit all of its offices, (y) discuss its financial matters with its officers and independent public accountant and (z) upon the reasonable request of the Administrative Agent or a Lender, examine (and, at the expense of the Additional Borrower, photocopy extracts from) any of its books or other corporate or partnership records (provided that as long as no Default or Event of Default has occurred and is continuing, (a) the Additional Borrower Parties shall bear the expense of not more than one such visit per Fiscal Year and (b) such visits shall be coordinated through the Administrative Agent).
(b) The Additional Borrower shall use commercially reasonable efforts to continue to have this Agreement and the Term B Loans hereunder rated by each of Moody's and S&P.
SECTION 5.04A. Information Regarding Collateral. The Additional
Borrower will, and will cause each of the Additional Borrower Subsidiaries to,
furnish to the Administrative Agent and the Collateral Agent prompt written
notice of any change (i) in such Additional Borrower Party's legal name, (ii) in
the location of any Additional Borrower Party's chief executive office or any
office or facility at which Collateral owned by it is located (including the
establishment of any such new office or facility), (iii) in any Additional
Borrower Party's corporate structure, (iv) in any Additional Borrower Party's
Federal Taxpayer Identification Number or organizational identification number
or (v) in any Additional Borrower Party's jurisdiction of organization. The
Additional Borrower will not, and will not permit any of the Additional Borrower
Subsidiaries to, effect or permit any change referred to in the preceding
sentence unless (i) it shall have given the Administrative Agent and the
Collateral Agent written notice not later than 10 days after such change and
(ii) all filings have been made under the UCC or otherwise that are required in
order for the Collateral Agent to continue at all times following such change to
have a valid, legal and perfected security interests in all the Collateral. The
Additional Borrower will, and will cause each of the Additional Borrower
Subsidiaries to, promptly notify the Administrative Agent if any material
portion of the Collateral is damaged or destroyed.
SECTION 5.05A. Existence: Conduct of Business. The Additional Borrower will, and will cause each of the Additional Borrower Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect (a) its legal existence, (b) its qualification as a foreign corporation or partnership (or comparable foreign qualification, if applicable, in the case of any other form of legal entity) and (c) the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business.
SECTION 5.06A. Pledge of Additional Collateral. Within 30 days after the acquisition of assets of the type that would have constituted Collateral on the Effective Date pursuant to the Security Documents (the "Additional Borrower Party Additional Collateral"), the Additional Borrower will, and will cause each of the Additional Borrower Subsidiaries to, take all necessary action, including the filing of appropriate financing statements under the provisions of the UCC, applicable domestic or local laws, rules or regulations in each of the offices where such filing is necessary or appropriate, or entering into or amending the Guarantee Agreement and the Security Documents, to grant to the Collateral Agent for its benefit and the benefit of the Secured Parties a perfected first priority Lien, subject only to Permitted Liens, in such Collateral in each case pursuant to and to the full extent required by the Security Documents and this Agreement (including, without limitation, satisfaction of the conditions set forth in subsection (t) of Section 4.01). All actions taken by the parties in connection with the pledge of Additional Borrower Party Additional Collateral, including, without limitation, reasonable costs of counsel for the Administrative Agent and the Collateral Agent, shall be for the account of the Additional Borrower, which shall pay all sums due on demand.
SECTION 5.07A. Further Assurances. The Additional Borrower will, and will cause each of the Additional Borrower Subsidiaries to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents and the delivery of appropriate opinions of counsel), which may be required under any applicable law, or which the Administrative Agent, the Collateral Agent or the Requisite Lenders may reasonably request, to effectuate the transactions contemplated by the Loan Documents or to grant, preserve, protect or perfect the Liens created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Additional Borrower. The Additional Borrower will, and will cause each of the Additional Borrower Subsidiaries to, provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents.
SECTION 5.08A. Use of Proceeds. The Additional Borrower covenants and agrees that the proceeds of the Term B Loan Borrowings will be used to effect the Term Transaction. The Additional Borrower covenants and agrees that the proceeds of any borrowing under the Seller Loan Agreement will be used in the manner set forth in the definition of Term Transaction.
SECTION 5.09A. Payment of Taxes. The Additional Borrower will, and will cause each of the Additional Borrower Subsidiaries to, pay and discharge all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any Properties belonging to it, prior to the date on which material penalties attach thereto, and all lawful claims which, if unpaid, might become a Lien or charge upon any Properties of the Additional Borrower or any of the Additional Borrower Subsidiaries or cause a failure or forfeiture of title thereto; provided that neither the Additional Borrower nor any of the Additional Borrower Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim that is being contested in good faith and by proper proceedings diligently conducted, which proceedings have the effect of preventing the forfeiture or sale of the Property or asset that may become subject to such Lien, if it has maintained adequate reserves with respect thereto in
accordance with and to the extent required under GAAP. The Additional Borrower will, and will cause each of the Additional Borrower Subsidiaries to, timely file or cause to be timely filed all material tax returns required to be filed by it.
SECTION 5.10A. Seller Loan Agreement. The Additional Borrower shall borrow in one or more drawings the full amount under the Seller Loan Agreement by no later than December 31, 2008 if the U.S. Borrower's ratio of Senior Indebtedness as of September 30, 2008 to Consolidated EBITDA for the Test Period ended September 30, 2008 is 1.75:1 or greater.
SECTION 5.11A. Triggering Events. Upon the occurrence of a Triggering Event, the Additional Borrower shall comply with the requirements of Section 2.05A regarding the timely making of an Offer to Repay and sending of an Offer to Repay Notice.
SECTION 5.12A. Tax Status. (a) The Additional Borrower shall maintain its status as a corporation for United States income tax purposes.
(b) NSULC shall maintain its status as a disregarded entity for United States income tax purposes.
(c) WLLC shall maintain its status as a disregarded entity for United States income tax purposes.
SECTION 5.13A. Tax Indemnity Agreements. Each Additional Borrower Party shall take all action applicable to such party necessary or required under the Tax Indemnity Agreements (including providing any required or necessary notices thereunder) to cause the applicable indemnifying or guaranteeing parties thereunder to pay all amounts due and payable under any Tax Indemnity Agreement in accordance with the terms thereof. No Additional Borrower Party shall assign any of its rights under any Tax Indemnity Agreement or cause to be assumed and thereby be released from any of its duties thereunder.
ARTICLE VI
NEGATIVE COVENANTS OF THE U.S. LOAN PARTIES
Until the Commitments have expired or terminated and the principal of and interest on each Loan and all Fees and other amounts payable hereunder or under any other Loan Document have been paid in full (other than contingent indemnification obligations that are not then due and payable) and all Letters of Credit have expired, terminated or been collateralized and all LC Disbursements shall have been reimbursed, each of the Parent Guarantor and the U.S. Borrower hereby covenants and agrees with the Lenders that:
SECTION 6.01. Indebtedness; Certain Equity Securities. (a) Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist (including by way of Guarantee) any Indebtedness, except:
(i) Indebtedness incurred and outstanding under the Loan Documents;
(ii) Indebtedness of the Loan Parties (a) incurred and outstanding under the Seller Loan Agreement in an aggregate principal amount not to exceed $150.0 million plus the amount of any accrued interest or interest added to the aggregate principal balance of the loans under the Seller Loan Agreement in lieu of cash payment thereof in accordance with the terms of the Seller Loan Agreement and (b) after earlier of (x) the first date on which not less than $150.0 million is outstanding under the Seller Loan Agreement and (y) December 31, 2008, any Permitted Refinancing thereof;
(iii) Indebtedness to Remain Outstanding and any Permitted Refinancing thereof;
(iv) Indebtedness of the U.S. Borrower to any Subsidiary Loan Party and of any Subsidiary Loan Party to the U.S. Borrower or any other Subsidiary Loan Party;
(v) Guarantees by the U.S. Borrower or any Subsidiary Loan Party of Indebtedness of any other Subsidiary Loan Party or the U.S. Borrower, in each case, to the extent such Indebtedness was permitted to be incurred hereunder, and if such Indebtedness is subordinated to the Obligations under the Loan Documents, such Guarantee is as subordinated in right of payment to the Obligations;
(vi) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within five Business Days of its incurrence;
(vii) Indebtedness of the U.S. Borrower or any Subsidiary of the U.S. Borrower incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof; provided that (A) such Indebtedness is incurred prior to or within 120 days after such acquisition or the completion of such construction or improvement (provided that this subclause (A) shall not apply with respect to fixed or capital assets owned as of and since the Effective Date so long as the proceeds of such Indebtedness incurred after the Effective Date are utilized to repay Loans to the extent required pursuant to Section 2.05(c)(ii)) and (B) the aggregate principal amount of Indebtedness permitted by this clause (vii) shall not exceed $50.0 million at any time outstanding;
(viii) Hedging Agreements entered into in the ordinary course of business and not for speculative purposes;
(ix) Indebtedness owed to any Person providing worker's compensation, health, disability or other employee benefits or property, casualty or liability insurance to the U.S. Borrower or any Subsidiary, pursuant to reimbursement or indemnification obligations to such Person;
(x) Indebtedness of the U.S. Borrower and its Subsidiaries in respect of performance bonds, bid bonds, appeal bonds, surety bonds, bankers' acceptances and similar obligations and trade-related letters of credit, in each case provided in the
ordinary course of business and not in connection with indebtedness for money borrowed, including those incurred to secure health, safety and environmental obligations in the ordinary course of business;
(xi) Indebtedness arising from agreements of the U.S. Borrower or any Subsidiary of the U.S. Borrower providing for indemnification, adjustment of purchase price, earn-outs or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary of the U.S. Borrower, other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary of the U.S. Borrower for the purpose of financing such acquisition;
(xii) obligations in respect of performance and surety bonds and completion guarantees provided by the U.S. Borrower or any of its Subsidiaries in the ordinary course of business and not in connection with indebtedness for money borrowed;
(xiii) Indebtedness incurred by Non-Guarantor Subsidiaries and Foreign Subsidiaries which is Non-Recourse Debt;
(xiv) any Permitted Sponsor Indebtedness;
(xv) Prepaid Insurance in an amount not to exceed $15.0 million at any time outstanding;
(xvi) Permitted Kansas Bond Financing not to exceed $100.0 million at any time outstanding;
(xvii) Permitted IRB Lease Obligations;
(xviii) Indebtedness assumed in connection with any Permitted
Acquisition; provided that such Indebtedness is not incurred in
contemplation of such Permitted Acquisition, and modifications,
refinancings, refundings, renewals or extensions thereof, so long as (x) no
Default then exists or would arise therefrom, (y) the U.S. Borrower and its
Subsidiaries are in compliance, on a Pro Forma Basis after giving effect to
the incurrence of such Indebtedness, with the covenants contained in
Sections 6.12 and 6.13 recomputed as at the date of the last ended Test
Period, as if such incurrence (and any related repayment of other
Indebtedness) had occurred on the first day of the relevant Test Period and
(z) no more than $40.0 million in aggregate principal amount of
Indebtedness may be outstanding under this subclause (xviii) at any time;
(xix) Permitted Subordinated Indebtedness, so long as (x) no Default
then exists or would arise therefrom, (y) the U.S. Borrower and its
Subsidiaries are in compliance, on a Pro Forma Basis after giving effect to
the incurrence of such Indebtedness, with the covenants contained in
Sections 6.12 and 6.13 recomputed as at the date of the last ended Test
Period, as if such incurrence (and any related repayment of other
Indebtedness) had occurred on the first day of the relevant Test Period and
(z) no more than $40.0 million in aggregate principal amount of Permitted
Subordinated Indebtedness may be outstanding under this subclause (xix) at
any time;
(xx) other unsecured Indebtedness of the U.S. Borrower or any Subsidiary of the U.S. Borrower in an aggregate principal amount not exceeding $25.0 million at any time outstanding; and
(xxi) Indebtedness of the Parent Guarantor under the Remarketing Agreement which obligations to perform shall not become due until after the Discharge of Obligations has occurred.
(b) The Parent Guarantor will not, directly or indirectly, issue any Disqualified Capital Stock other than to the U.S. Borrower or a Subsidiary Loan Party. The U.S. Borrower will not permit any of its Subsidiaries to, directly or indirectly, issue any Preferred Stock other than to the U.S. Borrower or a Subsidiary Loan Party.
SECTION 6.02. Liens. Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on any Property or asset (including any income or revenues (including accounts receivable)) now owned or hereafter acquired by them, except the following (herein collectively referred to as "Permitted Liens"):
(i) Liens in favor of the Collateral Agent under the Security Documents;
(ii) Liens created under the Seller Loan Documents or any Permitted Refinancing thereof; provided that any such Lien is subordinated to the Lien securing the Obligations in accordance with the terms of the Subordination and Intercreditor Agreement;
(iii) Liens on assets acquired after the Effective Date existing at the time of acquisition thereof by the U.S. Borrower or any of its Subsidiaries; provided that such Liens were not incurred in connection with, or in contemplation of, such acquisition and do not extend to any as sets of the U.S. Borrower or any of its Subsidiaries other than the specific assets so acquired (and improvements thereon);
(iv) landlords', carriers', warehousemen's, mechanics', suppliers', materialmen's, attorney's or other like liens, in any case incurred in the ordinary course of business which are not overdue for a period of more than 45 days or which are being contested in good faith and by appropriate proceedings promptly instituted and diligently conducted; provided that (A) a reserve or other appropriate provision, if any, as is required by GAAP shall have been made therefor, and (B) such Liens relating to statutory obligations, surety or appeal bond or performance bonds shall only extend to or cover cash and Permitted Investments not in the Collateral Account;
(v) Liens existing on the Effective Date and set forth on Schedule
6.02(v) and any renewals, replacements or extensions thereof, provided that
(i) no additional property is covered thereby and (ii) the amount secured
or benefited thereby is not increased (except, in connection with any
refinancing, refunding, renewal or extension thereof, by an amount equal to
accrued interest, a reasonable premium paid in connection with such
renewal, replacement or extension, as applicable, and fees and expenses
reasonably incurred in connection therewith);
(vi) Liens for taxes, assessments or governmental charges or claims or other like statutory Liens that do not secure Indebtedness for borrowed money and (A) that are not yet delinquent or (B) that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor;
(vii) Liens to secure Indebtedness (including Capital Lease Obligations) of the type described in Section 6.01(a)(vii) covering only the assets acquired or improved with such Indebtedness;
(viii) Liens in the form of zoning restrictions, easements, rights of way, licenses, reservations, covenants, conditions or other restrictions on the use of real property or other minor irregularities in title (including leasehold title) that do not (1) secure Indebtedness or (2) materially interfere with the ordinary conduct of the Parent Guarantor, the U.S. Borrower and their respective Subsidiaries, taken as a whole;
(ix) Liens not for borrowed money in the form of pledges or deposits securing bids, tenders, performance, payment of insurance premiums, statutory obligations, surety bonds, appeal bonds, leases to which the U.S. Borrower or any of its Subsidiaries is a party and other obligations of a like nature, in each case, made in the ordinary course of business, provided that such Liens shall in no event encumber any Collateral other than cash and Permitted Investments not in the Collateral Account;
(x) Liens resulting from any judgments, awards or orders to the extent that such judgments, awards or orders do not cause or constitute an Event of Default under this Agreement;
(xi) Liens in the form of licenses, leases or subleases granted or created by the U.S. Borrower or any of its Subsidiaries, which licenses, leases or subleases do not interfere, individually or in the aggregate, in any material respect with the business of the U.S. Borrower and its Subsidiaries, taken as a whole;
(xii) Liens on fixtures or personal property held by or granted to landlords pursuant to leases to the extent that such Liens are not yet due and payable; provided that with respect to any such Liens on any material portion of the Collateral in existence on the Effective Date which Liens individually or in the aggregate materially impair the use (for its intended purposes) or the value of such Collateral, the U.S. Borrower or any applicable Subsidiary of the U.S. Borrower has used its commercially reasonable efforts to obtain a landlord lien waiver reasonably satisfactory to the Collateral Agent;
(xiii) Liens solely on any cash earnest money deposits made by the U.S. Borrower or any of its Subsidiaries in connection with any letter of intent of a Permitted Acquisition otherwise permitted hereunder;
(xiv) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(xv) any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any Real Property which Liens do not individually or in the aggregate materially interfere with the conduct of the business of the U.S. Borrower and its Subsidiaries taken as a whole;
(xvi) bankers' Liens, rights of setoff and similar Liens existing solely with respect to cash and Permitted Investments on deposit in one or more accounts maintained by any U.S. Loan Party or any Subsidiary of the U.S. Borrower, in each case granted in the ordinary course of business in favor of the bank or banks which such accounts are maintained, securing amounts owing to such bank with respect to cash management or other account arrangements, including those involving pooled accounts and netting arrangements, provided that in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness;
(xvii) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;
(xviii) pledges or deposits in the ordinary course of business in connection with worker's compensation, unemployment insurance and other social security legislation, other than any lien imposed by ERISA;
(xix) Liens representing the right of Seller to purchase certain assets from the U.S. Borrower or any of its Subsidiaries and set-off rights under the Boeing Agreements;
(xx) Liens on amounts deposited into escrow pursuant to and in accordance with the definition of "IAM Pension Fund Contributions";
(xxi) Liens incurred in the ordinary course of business of the U.S. Borrower or any of its Subsidiaries with respect to obligations that do not in the aggregate exceed $1.0 million at any time outstanding;
(xxii) Liens with respect to unearned premiums of Prepaid Insurance incurred pursuant to Section 6.01(a)(xv); and
(xxiii) Liens in favor of the U.S. Borrower or any Subsidiary Loan Party on Property of non-Loan Parties;
provided, however, that no consensual Liens shall be permitted to exist, directly or indirectly, on any Securities Collateral (as defined in the Security Agreement) other than Liens in favor of the Collateral Agent and Liens permitted by Section 6.02(ii).
SECTION 6.03. Fundamental Changes: Line of Business. (a) Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with them, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default or Event of Default shall have occurred and be continuing, (i) any Wholly Owned Subsidiary of the U.S. Borrower may merge or consolidate with and into the U.S. Borrower in a transaction in which the U.S.
Borrower is the surviving Person, (ii) any Wholly Owned Subsidiary of the U.S. Borrower may merge or consolidate with and into any Wholly Owned Subsidiary of the U.S. Borrower in a transaction in which the surviving Person is a Wholly Owned Subsidiary of the U.S. Borrower and (if any party to such merger or consolidation is a Subsidiary Loan Party) is a Subsidiary Loan Party, (iii) any Wholly Owned Subsidiary of the U.S. Borrower or the Parent Guarantor used primarily as a financing vehicle in connection with a Permitted Kansas Bond Financing may merge or consolidate with and into the U.S. Borrower or the Parent Guarantor; provided that the U.S. Borrower or the Parent Guarantor is the surviving Person of that merger or consolidation and the Permitted Kansas Bond Financing obligations attributable to such Subsidiary have been discharged in full and such Subsidiary shall have no other Indebtedness, (iv) Permitted Acquisitions may be consummated through merger or consolidation so long as the surviving Person is the U.S. Borrower (in the case of an acquisition by the U.S. Borrower) or a Subsidiary Loan Party (in the case of an acquisition by a Subsidiary Loan Party) and (v) any merger, consolidation of a Person whose only assets are the subject of any Asset Sale permitted by Section 6.05; provided that in connection with the foregoing, each of the Parent Guarantor and the U.S. Borrower will, and will cause each Subsidiary Loan Party to, take all actions necessary or reasonably requested by the Collateral Agent to maintain the perfection of or perfect, as the case may be, protect and preserve the Liens on the Collateral granted to the Collateral Agent pursuant to the Security Documents and otherwise comply with the provisions of Sections 5.11, 5.12 and 5.16, in each case, on the terms set forth therein and to the extent applicable.
(b) Notwithstanding the foregoing, (x) any Subsidiary of the U.S. Borrower may dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the U.S. Borrower or any other Subsidiary Loan Party and (y) any Non-Guarantor Subsidiary may liquidate and distribute its assets ratably to its shareholders (provided that in connection with the foregoing, the Parent Guarantor and U.S. Borrower will, and will cause each Subsidiary Loan Party to, take all actions necessary or reasonably requested by the Collateral Agent to maintain the perfection of or perfect, as the case may be, protect and preserve Liens on Collateral granted to the Collateral Agent pursuant to the Security Documents and otherwise comply with the provisions of Sections 5.11, 5.12 and 5.16, in each case, on the terms set forth therein and to the extent applicable).
(c) The U.S. Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, engage in any business other than businesses of the type conducted by the U.S. Borrower and the Subsidiary Loan Parties on the Effective Date and businesses similar, complementary, or reasonably related thereto and reasonable extensions thereof, including, without limitation, the modification, maintenance, repair and overhaul businesses and the direct marketing and sale of spare parts and units.
(d) Each of the Parent Guarantor and the U.S. Borrower will not establish, create or acquire any additional Subsidiaries of any of them without the prior written consent of the Requisite Lenders; provided that, without such consent, the U.S. Borrower may establish or create (x) one or more direct or indirect Wholly Owned Subsidiaries of the U.S. Borrower so long as Sections 5.11, 5.12 and 5.16 shall be complied with, and (y) one or more Non-Guarantor Subsidiaries or Foreign Subsidiaries, so long as any Investment in such Non-Guarantor
Subsidiary or Foreign Subsidiary, together with all other investments in Non-Guarantor Subsidiaries and Foreign Subsidiaries since the Effective Date, is permitted by Section 6.04(x).
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, purchase, hold or acquire (including pursuant to any merger with any Person that was not a Wholly Owned Subsidiary of the U.S. Borrower prior to such merger) any Equity Interests in or evidences of Indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment in, any other Person, or provide other credit support for any Person or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit (each of the foregoing, an "Investment" and collectively, "Investments"), except:
(i) Permitted Investments;
(ii) Investments existing on the Effective Date (or in respect of which a binding commitment to make such Investment exists on the Effective Date) and set forth on Schedule 6.04;
(iii) Investments by the Parent Guarantor in the U.S. Borrower and by the U.S. Borrower and the Subsidiaries of the U.S. Borrower in the U.S. Borrower or any Subsidiary Loan Parties; provided that any such Investment held by a U.S. Loan Party shall be pledged pursuant to a Pledge Agreement;
(iv) Investments permitted by Sections 6.01(a)(viii);
(v) Guarantees constituting Indebtedness permitted by Section 6.01(a)(v);
(vi) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;
(vii) loans and advances to employees, officers and directors of the Parent Guarantor or its Subsidiaries in the ordinary course of business (including, without limitation, for travel, entertainment and relocation expenses) not to exceed $10.0 million in the aggregate at any time outstanding;
(viii) loans and advances to employees, officers and directors of Parent Guarantor or any of its Subsidiaries to the extent used to acquire Equity Interests of Parent Guarantor to the extent such transactions are cashless;
(ix) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers compensation, performance and similar deposits entered into as a result of the operations of the business in the ordinary course of business;
(x) Investments in Non-Guarantor Subsidiaries and Foreign Subsidiaries in an aggregate amount (when taken together with the aggregate amount of all Acquisition Consideration (plus the fair market value of any Equity Interests or Equity Rights of the Parent Guarantor paid as consideration in a Permitted Acquisition) paid since the Effective Date with respect to acquisitions of Foreign Subsidiaries and Non-Guarantor Subsidiaries pursuant to clause (xii) of this Section 6.04) not to exceed $40.0 million at any time outstanding;
(xi) Investments representing amounts deposited into escrow pursuant to and in accordance with the definition of "IAM Pension Fund Contributions";
(xii) (i) Permitted Acquisitions for aggregate Acquisition Consideration since the Effective Date not to exceed $40.0 million and (ii) after December 31, 2006, any additional Permitted Acquisitions if, on a Pro Forma Basis after giving effect to each such acquisition (and any related incurrence or repayment of Indebtedness), the Total Leverage Ratio is less than or equal to 2.75:1, for aggregate Acquisition Consideration since the Effective Date not to exceed $100.0 million (exclusive of any Acquisition Consideration paid in accordance with subclause (i) immediately above and exclusive of Acquisition Consideration in the form of or funded from Excluded Equity Issuances); provided that, with respect to any Permitted Acquisition made in accordance with this clause (xii), the aggregate amount of Acquisition Consideration paid since the Effective Date with respect to acquisitions of Foreign Subsidiaries and Non-Guarantor Subsidiaries shall not exceed, when taken together with the then outstanding Investments made pursuant to clause (x) of this Section 6.04, $40.0 million;
(xiii) Investments in respect of bonds owned by the U.S. Borrower or any Subsidiary Loan Party as described in clause (f) of the definition of "Permitted Kansas Bond Financing"; provided that Permitted Kansas Bond Financing is permitted by Section 6.01(a)(xvi);
(xiv) Investments in respect of industrial revenue bonds owned by the U.S. Borrower or a Subsidiary Loan Party in connection with a Permitted IRB Lease Obligations; provided that Permitted IRB Lease Obligations is permitted by Section 6.01(a)(xvii); and
(xv) other Investments by the U.S. Borrower or any Subsidiary Loan Party not to exceed $25.0 million in the aggregate at any time outstanding.
SECTION 6.05. Asset Sales. Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, sell, transfer, lease or otherwise dispose of any asset, including any Equity Interest owned by them, and the U.S. Borrower will not permit any of its Subsidiaries to, directly or indirectly, issue any additional Equity Interest in such Subsidiary, except:
(i) sales of inventory or used, surplus, obsolete, outdated, inefficient or worn out equipment and other property in the ordinary course of business;
(ii) sales, transfers and dispositions to the U.S. Borrower or any other Subsidiary Loan Party; provided that in connection with the foregoing, each of the Parent Guarantor and the U.S. Borrower will, and will cause the Subsidiary Loan Parties to, take all actions necessary or reasonably requested by the Collateral Agent to maintain the perfection of or perfect, as the case may be, protect and preserve the Liens on the Collateral granted to the Collateral Agent pursuant to the Security Documents and otherwise comply with the provisions of Sections 5.11, 5.12 and 5.16, in each case, on the terms set forth therein and to the extent applicable;
(iii) the lease or sublease of Real Property or personal property in the ordinary course of business and not constituting a sale and leaseback transaction;
(iv) sales of Permitted Investments on ordinary business terms;
(v) Liens permitted by Section 6.02 and Investments permitted under
Section 6.04;
(vi) sales, transfers and other dispositions of property by any Subsidiary of the U.S. Borrower that is not a Subsidiary Loan Party to another Subsidiary of the U.S. Borrower that is not a Subsidiary Loan Party;
(vii) non-exclusive licenses and sublicenses of intellectual property in the ordinary course of business;
(viii) the abandonment or cancellation of intellectual property that is not material or is no longer used or useful in any material respect in the business of the Parent Guarantor and its Subsidiaries;
(ix) sales or forgiveness of accounts receivable in the ordinary course of business in connection with the collection or compromise thereof;
(x) issuances of Equity Interests in a Subsidiary of the U.S. Borrower to the U.S. Borrower or a Subsidiary Loan Party;
(xi) sales, transfer or other dispositions of (a) Property to Seller
required pursuant to Section 5.2.1 of the SBP as in effect on the Effective
Date sold to the Seller for consideration of not less than as set forth in
the SBP with respect thereto, (b) obsolete equipment and inventory to the
Seller, (c) Property to Seller pursuant to Section 12.2E or 25.2 (by
reference to Section 12.0) of the GTA or Section 7.2E, 9.2 (by reference to
Section 7.0.) or 9.3 (by reference to Section 8.2F) of the 787 GTA, in each
case as in effect on the Effective Date and (d) Property to Seller in
accordance with Section 14.0 (by reference to Section 13.2E) of the GTA or
Section 10.1 (by reference to Section 8.2F) of the 787 GTA, in each case as
in effect on the Effective Date; provided that the fair market value of all
such Property so transferred to Seller pursuant to this subclause (d) shall
not exceed $35.0 million in any Fiscal Year;
(xii) sales of Real Property interests listed on Schedule 6.05(xii) in connection with the exercise of a purchase option with respect thereto by the Seller;
(xiii) sales, transfers and dispositions of assets (other than Equity Interests of a Subsidiary of the U.S. Borrower, unless, after giving effect to such sale, transfer or disposition, such Subsidiary no longer constitutes a Subsidiary of the U.S. Borrower and the U.S. Borrower is permitted to make an Investment under Section 6.04 in an amount equal to the Equity Interests retained by the U.S. Borrower or any of its Subsidiaries in such Person) not otherwise permitted under this Section; provided that the aggregate fair market value of all assets sold, transferred or otherwise disposed of in reliance upon this clause (xiii) shall not, in the aggregate, exceed $25.0 million during any Fiscal Year and $75.0 million in the aggregate and the Net Proceeds thereof are applied as required by Section 2.05A(a); and
(xiv) the donation of the "Antennae Range";
provided that all sales, transfers, leases and other dispositions permitted
hereby shall be made for fair value and, in the case of clauses (xii) and
(xiii), for at least 75% cash and Permitted Investments and in the case of
clause (xi) 100% cash (other than sales, transfers or dispositions under clause
(b), (c) or (d) thereof to the extent Seller is entitled to a right of set-off).
SECTION 6.06. Sale and Leaseback Transactions. Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, enter into any arrangement, directly or indirectly, whereby they shall sell or transfer any Property, real or personal, used or useful in their business, whether now owned or hereafter acquired, and thereafter rent or lease such Property or other Property that they intend to use for substantially the same purpose or purposes as the Property being sold or transferred (any such transaction, a "Sale and Leaseback Transaction") unless (i) the sale of such Property is permitted by Section 6.05 and (ii) any Liens arising in connection with its use of such Property are permitted by Section 6.02.
SECTION 6.07. Restricted Payments. Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except:
(i) any Subsidiary of the U.S. Borrower may declare and pay dividends to the U.S. Borrower, any Subsidiary Loan Party and ratably to any other holders of such Subsidiary's Equity Interests with respect to their Equity Interests;
(ii) the Parent Guarantor may pay dividends consisting solely of shares of its common Equity Interests or additional shares of the same class of shares as the dividend being paid and that do not constitute Disqualified Capital Stock;
(iii) so long as no Event of Default shall have occurred and be continuing, the U.S. Borrower may pay cash dividends to the Parent Guarantor for the purpose of enabling the Parent Guarantor to purchase, redeem or acquire any of its Equity Interests or Equity Rights from any of its or any of its or any Subsidiary's present or former officers, directors or employees (or permitted transferees, assigns, estates or heirs of the foregoing) upon the death, disability or termination of employment of such officer,
directors or employee, so long as the aggregate amount of payments under this clause (iii) ((i) excluding repayment of loans made by the Parent Guarantor or such Subsidiary pursuant to Section 6.04(viii) and repaid in connection with such purchase, redemption or other acquisition of such Equity Interests or Equity Rights and (ii) net of any proceeds received by the Parent Guarantor and contributed to the U.S. Borrower after the Effective Date in connection with resales of any Equity Interests or Equity Rights so purchased, redeemed or acquired) shall not exceed $3.0 million in any Fiscal Year and $10.0 million in the aggregate since the Effective Date;
(iv) the U.S. Borrower may pay cash dividends to the Parent Guarantor at the times and in the amounts necessary to enable the Parent Guarantor to pay its franchise tax obligations, provided that (x) the amount of cash dividends paid pursuant to this clause (iv) to enable the Parent Guarantor to pay such franchise taxes shall not exceed the amount of such franchise taxes actually owing by the Parent Guarantor at such time for the respective period and (y) any refunds received by the Parent Guarantor shall promptly be returned by the Parent Guarantor to the U.S. Borrower;
(v) Permitted Tax Distributions may be made by the U.S. Borrower to the Parent Guarantor, so long as the Parent Guarantor contemporaneously uses such distributions to pay the taxes in accordance with the definition of "Permitted Tax Distributions";
(vi) cashless exercises of options and warrants; and
(vii) U.S. Borrower may make Restricted Payments to the Parent Guarantor in an amount not to exceed $1.5 million during any Fiscal Year if the proceeds thereof are immediately used by the Parent Guarantor to pay customary out-of-pocket expenses for administrative, legal and accounting services and other fees required to maintain its legal existence.
SECTION 6.08. Transactions with Affiliates. Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of their Affiliates (each an "Affiliate Transaction"), unless such transactions are at prices and on terms and conditions taken as a whole not less favorable to the U.S. Loan Party or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, except:
(i) transactions between or among the U.S. Borrower and the Subsidiary Loan Parties not involving any other Affiliate and transactions among Subsidiaries of the U.S. Borrower not involving any U.S. Loan Party;
(ii) any Restricted Payment permitted by Section 6.07 and any
transaction permitted by Section 6.01(a)(iv) or 6.01(a)(v), Section 6.03,
Section 6.04(ii), 6.04(iii), 6.04(v), 6.04(vii), 6.04(viii) or 6.04(x);
(iii) fees and compensation, benefits and incentive arrangements paid or provided to, and any indemnity provided on behalf of, officers, directors or employees of the U.S. Borrower or any Subsidiary of the U.S. Borrower as determined in good faith by the Board of Directors of the U.S. Borrower and in the ordinary course of business;
(iv) payments pursuant to the Management Agreement not to exceed in the aggregate $3.0 million in any Fiscal Year so long as no Event of Default has occurred and is continuing or would result therefrom;
(v) payment to the Sponsors of their reasonable out-of-pocket expenses incurred in connection with services provided to the Loan Parties;
(vi) the issuance or sale of any Equity Interests of the Parent Guarantor (and the exercise of any options, warrants or other rights to acquire Equity Interests of the Parent Guarantor);
(vii) transactions constituting Term Transactions; and
(viii) the payment of a Closing Fee to Sponsor on the Effective Date of not more than $5.0 million.
SECTION 6.09. Restrictive Agreements. Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of any U.S. Loan Party or any of their respective Subsidiaries to create, incur or permit to exist any Lien upon any of its Property, revenues or assets, or (b) the ability of any Subsidiary of the Parent Guarantor or the U.S. Borrower to pay dividends or other distributions with respect to any of its Equity Interests or to make or repay loans or advances to the U.S. Borrower or any other Subsidiary of the U.S. Borrower or to Guarantee Indebtedness of the U.S. Borrower or any other Subsidiary of the U.S. Borrower or to transfer property to the U.S. Borrower or any of its Subsidiaries; provided that the foregoing shall not apply to:
(i) conditions imposed by law or by any Loan Document;
(ii) clause (a) shall not apply to assets encumbered by Permitted Liens as long as such restriction applies only to the asset encumbered by such Permitted Lien;
(iii) restrictions and conditions existing on the Effective Date not otherwise excepted from this Section 6.09 identified on Schedule 6.09 (but shall not apply to any amendment or modification expanding the scope of any such restriction or condition);
(iv) restrictions contained in the Seller Loan Documents as in effect on the Effective Date;
(v) any agreement in effect at the time any Person becomes a Subsidiary of the U.S. Borrower; provided that such agreement was not entered into in contemplation of such Person becoming a Subsidiary of the U.S. Borrower;
(vi) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary of the U.S. Borrower (or the assets of a Subsidiary of the U.S. Borrower) pending such sale, provided such restrictions and conditions apply only to the Subsidiary of the U.S. Borrower that is to be sold (or whose assets are to be sold) and such sale is permitted hereunder;
(vii) clause (a) shall not apply to customary provisions in leases and contracts in the ordinary course of business between the U.S. Borrower or any of its Subsidiaries and its customers and other contracts restricting the assignment thereof;
(viii) agreements governing Indebtedness to Remain Outstanding and Permitted Refinancings thereof and that are no more restrictive, taken as a whole, with respect to such restrictions than those contained in such agreements on the Effective Date;
(ix) customary provisions with respect to the disposition or distribution of assets or property in joint venture agreements, limited liability company operating agreements, partnership agreements, stockholders agreements, asset sale agreements, agreements in respect of sales of Equity Interests and other similar agreements entered into in connection with transactions not prohibited under this Agreement, provided that such encumbrance or restriction shall only be effective against the assets or property that are the subject of such agreements;
(x) clause (a) shall not apply to restrictions existing under the Boeing Agreements; and
(xi) restrictions imposed under a Permitted Kansas Bond Financing on any financing vehicle used primarily in connection with a Permitted Kansas Bond Financing.
SECTION 6.10. Amendments or Waivers of Certain Documents: Prepayments of Certain Indebtedness. (a) Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, amend or otherwise change, cancel, terminate or waive (i) the terms of any Seller Loan Document (including without limitation the Remarketing Agreement and including without limitation voluntarily terminating the Seller Loan Availability Period (other than by borrowing the full amount of the commitments under the Seller Loan Agreement)) or (ii) the terms of any Organizational Document of any such Persons, any Acquisition Document, any Boeing Agreement, any Boeing IRB Document, any IRB Agreement, the WLLC Subordination Agreement, any document governing any Indebtedness outstanding as of the Effective Date, any document governing Permitted Subordinated Indebtedness (including without limitation any subordination agreements relating thereto) incurred pursuant to Section 6.01(a)(xix), or the Management Agreement, or any document entered into after the Effective Date relating to any Permitted Kansas Bond Financing (including without limitation any subordination agreements and pledge agreements relating thereto), in each case in a manner materially adverse to the Lenders.
(b) Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any of their respective Subsidiaries to, make (or give any notice or offer in respect of) any voluntary or optional payment or mandatory prepayment or redemption or acquisition for value
of (including, without limitation, by way of depositing with any trustee with respect thereto money or securities before such Indebtedness is due for the purpose of paying such Indebtedness when due) or exchange of principal of any obligation under any Seller Loan Document or any Permitted Subordinated Indebtedness incurred pursuant to Section 6.01(a)(xix).
(c) The U.S. Borrower will not make any optional or voluntary principal repayment of the Subsequent WLLC Loan or otherwise amend or modify the terms of the Subsequent WLLC Loan.
(d) The U.S. Borrower will not make any optional or voluntary principal repayment of the Original WLLC Loan unless a corresponding amount of Term B Loans will be prepaid by the Additional Borrower substantially contemporaneously therewith as an optional prepayment of the Term B Loans pursuant to Section 2.05(a) or otherwise amend or modify the WLLC Loans.
SECTION 6.11. No Other "Senior Debt". The U.S. Borrower shall not designate, nor permit the designation of, any Indebtedness (other than under this Agreement or the other Loan Documents) as "Senior Debt" (or any equivalent term) under the Subordination and Intercreditor Agreement and the WLLC Subordination Agreement or any subordination agreement entered into in connection with a Permitted Kansas Bond Financing.
SECTION 6.12. Interest Expense Coverage Ratio. The U.S. Borrower will not permit the Interest Expense Coverage Ratio for any Test Period ending on a date set forth below to be less than the ratio set forth below opposite such date:
DATE RATIO ---- ------ December 31, 2005 3.25:1 March 31, 2006 3.25:1 June 30, 2006 3.25:1 September 30, 2006 3.25:I December 31, 2006 3.25:1 March 31, 2007 3.50:1 June 30, 2007 3.50:1 September 30, 2007 3.50:1 December 31, 2007 3.50:1 March 31, 2008 3.75:1 June 30, 2008 3.75:1 September 30, 2008 3.75:1 December 31, 2008 3.75:1 March 31, 2009 4.00:1 June 30, 2009 4.00:1 September 30, 2009 4.00:1 December 31, 2009 4.00:1 March 31, 2010 4.25:1 June 30, 2010 4.25:1 September 30, 2010 4.25:1 |
DATE RATIO ---- ------ December 31, 2010 4.25:1 March 31, 2011 4.25:1 June 30, 2011 4.25:1 September 30, 2011 4.25:1 |
SECTION 6.13. Total Leverage Ratio. The U.S. Borrower will not permit the Total Leverage Ratio at any date set forth below to exceed the ratio set forth opposite such date:
DATE RATIO ---- ------ December 31, 2005 4.50:1 March 31, 2006 4.25:1 June 30, 2006 4.25:1 September 30, 2006 4.25:1 December 31, 2006 4.25:1 March 31, 2007 4.00:1 June 30, 2007 4.00:1 September 30, 2007 4.00:1 December 31, 2007 4.00:1 March 31, 2008 3.50:1 June 30, 2008 3.50:1 September 30, 2008 3.50:1 December 31, 2008 3.50:1 March 31, 2009 3.00:1 June 30, 2009 3.00:1 September 30, 2009 3.00:1 December 31, 2009 3.00:1 March 31, 2010 2.50:1 June 30, 2010 2.50:1 September 30, 2010 2.50:1 December 31, 2010 2.50:1 March 31, 2011 2.25:1 June 30, 2011 2.25:1 September 30, 2011 2.25:1 |
SECTION 6.14. Capital Expenditures. Each of the Parent Guarantor and the U.S. Borrower will not, and will not permit any of their respective Subsidiaries to, make or commit to make any Capital Expenditures, except that the U.S. Borrower and its Subsidiaries may make or commit to make Capital Expenditures not exceeding the amount set forth below (the "Base Amount") for each of the Fiscal Years (or, in the case of the Fiscal Year ended December 31, 2005, from the Effective Date to December 31, 2005) of the U.S. Borrower set forth below:
FISCAL YEAR ENDED BASE AMOUNT ----------------- ------------ Effective Date -- December 31, 2005 $105 million |
FISCAL YEAR ENDED BASE AMOUNT ----------------- ------------ December 31, 2006 $150 million December 31, 2007 $140 million December 31, 2008 $140 million December 31, 2009 $150 million December 31, 2010 $160 million December 31, 2011 $145 million |
; provided that for any period set forth above, other than during the continuance of a Boeing Funded Capital Expenditures Shortfall Event, the Base Amount set forth above may be increased by a maximum of 50% of the Base Amount for any such period by carrying over to any such period up to 100% of the Base Amount (without giving effect to any increase) not spent in any preceding period, and that Capital Expenditures in any period shall be deemed first made from the Base Amount applicable to such period in any given period; and provided that, upon the occurrence and during the continuance of a Boeing Funded Capital Expenditures Shortfall Event, (x) in the case of Boeing Shortfall Amounts owed with respect to Boeing Funded Capital Expenditures made by Loan Parties during the first three Fiscal Quarters of any Fiscal Year, the Base Amount for such Fiscal Year set forth above shall be decreased by 125% of such Boeing Shortfall Amounts and (y) in the case of Boeing Shortfall Amounts owed with respect to Boeing Funded Capital Expenditures made by Loan Parties during the fourth Fiscal Quarter of any Fiscal Year, the Base Amount for the following Fiscal Year set forth above shall be decreased by 125% of such Boeing Shortfall Amounts (the Base Amount for any Fiscal Year as adjusted by clauses (x) and/or (y), the "Adjusted Base Amount"); and provided, further, that with respect to such Boeing Shortfall Amounts owed with respect to Boeing Funded Capital Expenditures made in the third Fiscal Quarter of any Fiscal Year, to the extent that Capital Expenditures made during such Fiscal Year exceed the Adjusted Base Amount for such Fiscal Year (the amount by which such Capital Expenditures exceed such Adjusted Base Amount, the "Excess Capital Expenditures"), (a) the Loan Parties shall be deemed to be in compliance with this Section 6.14 if (i) the U.S. Borrower delivers a notice to the Administrative Agent stating the Loan Parties will not make any additional Capital Expenditures (other than Capital Expenditures that the Loan Parties had prior to such time irrevocably committed to make) during such Fiscal Year and (ii) the Loan Parties do not make any additional Capital Expenditures (other than Capital Expenditures that the Loan Parties had prior to such time irrevocably committed to make) in such Fiscal Year and (b) the Base Amount (or the Adjusted Base Amount, if applicable) for the following Fiscal Year shall be decreased by the Excess Capital Expenditures. For the avoidance of doubt, to the extent that the Base Amount for any Fiscal Year was decreased as a result of a Boeing Funded Capital Expenditures Shortfall Event, upon the cure of the Boeing Funded Capital Expenditures Shortfall Event by the reimbursement by Seller in full of the Boeing Shortfall Amount, the Base Amount for such Fiscal Year shall be reinstated to the amount it would have been but for the Boeing Funded Capital Expenditures Shortfall Event.
SECTION 6.15. Limitation on Activities of Parent Guarantor. Notwithstanding anything to the contrary set forth herein, the Parent Guarantor shall not conduct any business or hold or acquire any assets and shall have no operations other than (i) the Equity Interests of the U.S. Borrower and any Subsidiary formed in connection with a Permitted Kansas Bond Financing, (ii) obligations under the Loan Documents, the Seller Loan Documents (including the
Remarketing Agreement) and the Boeing Agreements and (iii) activities incidental to the foregoing.
SECTION 6.16. IRB Agreements. The U.S. Borrower shall not consent to any matter requiring its consent under any IRB Agreement (including, without limitation, in its capacity as Special Agent under the TBC Trust Agreement and the Boeing Trust Agreement (to the extent the U.S. Borrower assumes such role under the IRB Agreements) and under the Assignment Agreement or Buyer Sublease) or agree to the modification, waiver or amendment of any IRB Agreement without the prior written consent of the Administrative Agent.
SECTION 6.17. Fiscal Year. Change its Fiscal Year-end to a date other than December 31.
SECTION 6.18. Anti-Terrorism Law. Each of the Parent Guarantor and the
U.S. Borrower shall not, and shall not permit each of its respective
Subsidiaries to, (i) conduct any business or engage in making or receiving any
contribution of funds, goods or services to or for the benefit of any Person
described in Section 3.23 above, (ii) deal in, or otherwise engage in any
transaction relating to, any property or interests in property blocked pursuant
to the Executive Order or any other Anti-Terrorism Law, or (iii) engage in or
conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any Anti-Terrorism Law (and each of the Parent Guarantor and the U.S.
Loan Party shall promptly deliver or cause to be delivered to the Lenders any
certification or other evidence requested from time to time by any Lender in its
reasonable discretion, confirming the U.S. Loan Parties' compliance with this
Section 6.18).
SECTION 6.19. Embargoed Person. At all times throughout the term of the Loans, (a) none of the funds or assets of the U.S. Loan Parties that are used to repay the Loans shall constitute property of, or shall be beneficially owned directly or, to the knowledge of each of the Parent Guarantor and the U.S. Borrower, indirectly by, any Person subject to sanctions or trade restrictions under United States law ("Embargoed Person" or "Embargoed Persons") that is identified on (1) the "List of Specially Designated Nationals and Blocked Persons" (the "SDN List") maintained by the Office of Foreign Assets Control (OFAC), U.S. Department of the Treasury, and/or to the knowledge of each of the Parent Guarantor and the U.S. Borrower, as of the date thereof, based upon reasonable inquiry by the Parent Guarantor and the U.S. Borrower, on any other similar list ("Other List") maintained by OFAC pursuant to any authorizing statute including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. Sections 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with the result that the investment in any of the U.S. Loan Parties (whether directly or indirectly) is prohibited by law, or the Loans made by the Lenders hereunder would be in violation of law, or (2) the Executive Order, any related enabling legislation or any other similar Executive Orders (collectively, "Executive Orders"), and (b) no Embargoed Person shall have any direct interest, and to the knowledge of each of the Parent Guarantor and the U.S. Borrower, as of the Effective Date, based upon reasonable inquiry by the Parent Guarantor and the U.S. Borrower, indirect interest, of any nature whatsoever in any of the U.S. Loan Parties, with the result that the investment in any of the U.S. Loan Parties (whether directly or indirectly) is prohibited by law or the Loans are in violation of law.
SECTION 6.20. Anti-Money Laundering. At all times throughout the term of the Loans, to the knowledge of each of the Parent Guarantor and the U.S. Borrower, as of the Effective Date, based upon reasonable inquiry by each of the Parent Guarantor and the U.S. Borrower, none of the funds of any of the U.S. Loan Parties that are used to repay the Loans shall be derived from any unlawful activity with the result that the investment in any of the U.S. Loan Parties (whether directly or indirectly), is prohibited by law or the Loans would be in violation of law.
ARTICLE VI-A
NEGATIVE COVENANTS OF THE ADDITIONAL BORROWER PARTIES
Until the Commitments have expired or terminated and the principal of and interest on each Loan and all Fees and other amounts payable hereunder or under any other Loan Document have been paid in full (other than contingent indemnification obligations that are not then due and payable) and all Letters of Credit have expired, terminated or been collateralized and all LC Disbursements shall have been reimbursed, the Additional Borrower hereby covenants and agrees with the Lenders that:
SECTION 6.01A. Limitations on Activities: The Additional Borrower will not, and will not permit any Additional Borrower Subsidiary to, directly or indirectly:
(i) conduct, transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or operations other than the Term Transaction and other transactions permitted under this Section 6.01A;
(ii) create, incur, assume or permit to exist (including by way of Guarantee) any Indebtedness or Lien on any Property or asset (including any income or revenues (including accounts receivable) and including any Equity Interests (including without limitation Equity Interests in NSULC)) now owned or hereafter acquired by them (except (a) non-consensual Permitted Liens and Liens created pursuant to the Loan Documents and Seller Loan Documents, other than Liens on Equity Interests in NSULC, and (b) Indebtedness incurred under the Loan Documents, the Seller Loan Documents and unsecured Indebtedness between or among the Additional Borrower Parties, including without limitation the Hedging Agreements between the Additional Borrower Subsidiaries that do not affect the ability of the Additional Borrower to make the payments required by this Agreement);
(iii) own, acquire, manage or otherwise operate any properties or assets (including cash, other than cash received in connection with the Term Transaction, Investments or otherwise), other than (a) the ownership of 100% of the Equity Interests of the Additional Borrower Subsidiaries in the manner owned as of the Effective Date, (b) Investments with the proceeds of the Loans and the Seller Loans by Additional Borrower in NSULC and by NSULC in WLLC, (c) unsecured Indebtedness and Hedging Agreements, in each case to the extent permitted by Section 6.01A(ii) and (d) Investments by the Additional Borrower in the Additional Borrower Subsidiaries with
proceeds of equity contributions by Sponsors in the Additional Borrower and Investments of any such proceeds in Permitted Investments;
(iv) merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with them, or liquidate or dissolve;
(v) sell, transfer, lease or otherwise dispose of any asset (or any interest therein) (including the WLLC Loans) other than cash;
(vi) make any Restricted Payment, other than dividends or distributions or returns of capital paid to the Additional Borrower or any Additional Borrower Subsidiary;
(vii) sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, other than the Term Transaction and other transactions among the Additional Borrower Parties;
(viii) enter into any contract or agreement other than in connection with, arising out of or reasonably related to the Term Transaction, the Loan Documents and the Seller Loan Documents and Hedging Agreements and other intercompany loan documentation permitted by Section 6.01(A)(ii);
(ix) amend, modify or otherwise change any Organizational Documents of any Additional Borrower Party or the WLLC Loans;
(x) directly or indirectly, amend or otherwise change, cancel, terminate or waive the terms of any Seller Loan Document (including without limitation the Remarketing Agreement and including without limitation voluntarily terminating the Seller Loan Availability Period (other than by borrowing the full amount of the commitments under the Seller Loan Agreement); and
(xi) waive, modify or amend any provision of the WLLC Subordination Agreement without the prior written consent of the Requisite Lenders.
SECTION 6.02A. Anti-Terrorism Law. The Additional Borrower will not,
and will not permit any of the Additional Borrower Subsidiaries to, (i) conduct
any business or engage in making or receiving any contribution of funds, goods
or services to or for the benefit of any Person described in Section 3.23 above,
(ii) deal in, or otherwise engage in any transaction relating to, any property
or interests in property blocked pursuant to the Executive Order or any other
Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law (and the
Additional Borrower will promptly deliver, or will cause to be delivered, to the
Lenders any certification or other evidence requested from time to time by any
Lender in its reasonable discretion, confirming the Additional Borrower Parties'
compliance with this Section 6.02A).
SECTION 6.03A. Embargoed Person. At all times throughout the term of the Loans, (a) none of the funds or assets of the Additional Borrower Parties that are used to repay the Loans shall constitute property of, or shall be beneficially owned directly or, to the knowledge of the Additional Borrower, indirectly by, any Person subject to sanctions or trade restrictions under United States law ("Embargoed Person" or "Embargoed Persons") that is identified on (1) the "List of Specially Designated Nationals and Blocked Persons" (the "SDN List") maintained by the Office of Foreign Assets Control (OFAC), U.S. Department of the Treasury, and/or to the knowledge of the Additional Borrower, as of the date thereof, based upon reasonable inquiry by the Additional Borrower, on any other similar list ("Other List") maintained by OFAC pursuant to any authorizing statute including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. Sections 1701 et seq. The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with the result that the investment in any of the Additional Borrower Parties (whether directly or indirectly) is prohibited by law, or the Loans made by the Lenders would be in violation of law, or (2) the Executive Order, any related enabling legislation or any other similar Executive Orders (collectively, "Executive Orders"), and (b) no Embargoed Person shall have any direct interest, and to the knowledge of the Additional Borrower, as of the Effective Date, based upon reasonable inquiry by the Additional Borrower, indirect interest, of any nature whatsoever in any of the Additional Borrower Parties, with the result that the investment in any of the Additional Borrower Parties (whether directly or indirectly) is prohibited by law or the Loans are in violation of law.
SECTION 6.04A. Anti-Money Laundering. At all times throughout the term of the Loans, to the knowledge of the Additional Borrower, as of the Effective Date, based upon reasonable inquiry by the Additional Borrower, none of the funds of any of the Additional Borrower Parties that are used to repay the Loans shall be derived from any unlawful activity with the result that the investment in any of the Additional Borrower Parties (whether directly or indirectly), is prohibited by law or the Loans would be in violation of law.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Listing of the U.S. Borrower Events of Default. Each of the following events or occurrences described in this Section 7.01 shall constitute (i) a "U.S. Borrower Event of Default", if any Loans, LC Disbursements or Letters of Credit are outstanding, and (ii) a "U.S. Borrower Event of Termination", if no Loans, LC Disbursements or Letters of Credit are outstanding:
(a) The U.S. Borrower shall default (i) in the payment when due of any principal of any Loan (including, without limitation, on any Installment Payment Date) or any reimbursement obligation in respect of any LC Disbursement, (ii) in the payment when due of any interest on any Loan (and such default shall continue unremedied for a period of three Business Days), or (iii) in the payment when due of any Fee described in Section 2.10 or of any other previously invoiced amount required to be paid under the Loan Documents (other than an amount described in clauses (i) and (ii) payable under
this Agreement or any other Loan Document (and such default shall continue unremedied for a period of five days).
(b) Any representation or warranty of the U.S. Borrower, the Parent Guarantor or any other U.S. Loan Party made or deemed to be made hereunder or in any other Loan Document or any other writing or certificate furnished by or on behalf of the U.S. Borrower, the Parent Guarantor or any other U.S. Loan Party to the Administrative Agent, the Issuing Bank or any Lender for the purposes of or in connection with this Agreement or any such other Loan Document is or shall be incorrect in any material respect when made or deemed made.
(c) The U.S. Borrower shall default in the due performance and
observance of any of its obligations under clause (f), (g), (h) or (l) of
Section 5.01, Section 5.08 (with respect to the maintenance and
preservation of the Parent Guarantor's or the U.S. Borrower's corporate
existence), Section 5.13, Section 5.21 or Article VI or the Fee Letter.
(d) The U.S. Borrower, the Parent Guarantor or any other U.S. Loan Party shall default in the due performance and observance of any agreement (other than those specified in paragraphs (a) through (c) above) contained herein or in any other Loan Document, and such default shall continue unremedied for a period of 30 days after the date of such default.
(e) A default shall occur (i) in the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of any Material Indebtedness or (ii) in the performance or observance of any obligation or condition with respect to any Material Indebtedness if the effect of such default referred to in this clause (ii) is (x) to accelerate the maturity of any such Material Indebtedness or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any such Material Indebtedness or any trustee or agent on its or their behalf to cause any such Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or (y) with respect to the Seller Loan Agreement, that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of Indebtedness under the Seller Loan Agreement to terminate its commitment to lend.
(f) Any judgment or order (or combination of judgments and orders) for the payment of money equal to or in excess of $15.0 million (other than amounts covered by (x) insurance for which the insurer thereof has been notified of such claim and has not challenged such coverage or (y) valid third party indemnifications for which the indemnifying party thereof has been notified of such claim and has not challenged such indemnification) individually or in the aggregate shall be rendered by a court or Governmental Authority against the U.S. Borrower, the Parent Guarantor or any of their Subsidiaries (or any combination thereof) and
(i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order and not stayed; or
(ii) there shall be any period (after any applicable statutory grace period) of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.
(g) Any of the following events shall occur with respect to any Pension Plan:
(i) the taking of any specific actions by a Loan Party, any ERISA Affiliate or any other Person to terminate a Pension Plan if, as a result of such termination, a Loan Party or any ERISA Affiliate could reasonably be expected to incur a liability or obligation to such Pension Plan which could reasonably be expected to have a Material Adverse Effect; or
(ii) an ERISA Event, or noncompliance with respect to Foreign Plans, shall have occurred that gives rise to a Lien on the assets of any Loan Party or a Subsidiary or, when taken together with all other ERISA Events and noncompliance with respect to Foreign Plans that have occurred, could reasonably be expected to have a Material Adverse Effect.
(h) Any Change in Control shall occur.
(i) The U.S. Borrower, the Parent Guarantor or any of their Significant Subsidiaries shall
(i) become insolvent or generally fail to pay debts as they become due;
(ii) apply for, consent to, or acquiesce in the appointment of a trustee, receiver, sequestrator or other custodian for the U.S. Borrower, the Parent Guarantor or any of such Significant Subsidiaries or substantially all of the property of any thereof, or make a general assignment for the benefit of creditors;
(iii) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the U.S. Borrower, the Parent Guarantor or any of such Significant Subsidiaries or for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged or stayed within 60 days, provided that the U.S. Borrower, the Parent Guarantor and each such Significant Subsidiary hereby expressly authorizes the Administrative Agent and each Lender to appear in any court conducting any relevant proceeding during such 60-day period to preserve, protect and defend their rights under the Loan Documents;
(iv) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the U.S. Borrower, the Parent Guarantor or any such Significant Subsidiary and, if any such case or proceeding is not commenced by
the U.S. Borrower, the Parent Guarantor or such Significant Subsidiary, such case or proceeding shall be consented to or acquiesced in by the U.S. Borrower, the Parent Guarantor such Significant Subsidiary or shall result in the entry of an order for relief or shall remain for 60 days undismissed and unstayed, provided that the U.S. Borrower, the Parent Guarantor and each such Significant Subsidiary hereby expressly authorizes the Administrative Agent and each Lender to appear in any court conducting any such case or proceeding during such 60-day period to preserve, protect and defend their rights under the Loan Documents; or
(v) take any corporate or partnership action (or comparable action, in the case of any other form of legal entity) authorizing any of the foregoing.
(j) The obligations of the Parent Guarantor under the Guarantee Agreement or of any Subsidiary Loan Party under the Guarantee Agreement shall cease to be in full force and effect or the Parent Guarantor or any such Subsidiary Loan Party shall repudiate its obligations thereunder.
(k) Any Lien purported to be created under any Security Document shall fail or cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any material portion of Collateral, with the priority required by the applicable Security Document.
(l) The subordination provisions in the Subordination and Intercreditor Agreement (or in any Permitted Kansas Bond Financing document, to the extent relating to the Obligations) or in the WLLC Subordination Agreement (the "Subordination Provisions") shall fail in any material respect to be enforceable by the Lenders (which have not effectively waived the benefits thereof) in accordance with the terms thereof or the U.S. Borrower, the Parent Guarantor or any Subsidiary Loan Party shall assert in writing the invalidity of the Subordination Provisions.
(m) The earlier of (a) 90 days after the discontinuance of the 787
Program such that less than 500 shipsets will be delivered to the Seller
pursuant to such program (such discontinuance, a "787 Discontinuance"),
which discontinuance is uncured during such 90 day period, and (b) the
first date on which (x) the U.S. Borrower or its Subsidiaries repays any
787 Program advance payments in cash (but excluding repayments that
continue to be made through delivery of 787 shipsets) or (y) the Seller
exercises any right of setoff after such 787 Discontinuance but before the
last shipset ordered by the Seller has been delivered, in each case,
pursuant to a 787 Discontinuance, whether or not the 90 day period
described in clause (a) above has elapsed; provided, however, for purposes
of the Events of Default described in clauses (a) and (b)(x) of this clause
(m), such events shall be Events of Default only if, either immediately
upon the occurrence, or as of any quarterly period during the continuation,
of such 787 Discontinuance, the U.S. Borrower is not in compliance with the
Total Leverage Ratio financial covenant, as recalculated for purposes of
Section 6.13.
(n) An Additional Borrower Event of Default.
(o) The payment of any rent by any Loan Party or Subsidiary of any Loan Party under the IRB Agreements for use of the IRB Assets shall be required, or title of ownership does not get transferred in accordance with the IRB Agreements to U.S. Borrower in respect of Non-Qualifying Assets free and clear of Liens as and to the extent required in the IRB Agreements.
(p) The Lien purported to be created under IRB Pledge Agreement shall fail or cease to be a valid and perfected Lien on the Transferred Asset Ownership Class of interests of the Boeing Trust.
(q) The IRB Assets or any material portion thereof are not transferred to the U.S. Borrower as, when and to the extent contemplated by the IRB Agreements.
(r) Onex Corporation shall have failed to pay when due any amounts owed by it under any Tax Indemnity Agreement and such breach shall continue unremedied for a period of 30 days.
(s) (x) There occurs an "Event of Default" within the meaning of
Section 13.1 of the GTA or Section 8.1 of the 787 GTA or (y) during any
Fiscal Year the U.S. Borrower and/or any Subsidiary Loan Party is required
to transfer Property to Seller in accordance with Section 14.0 (by
reference to Section 13.2E) of the GTA and/or Section 10.1 (by reference to
Section 8.2F) of the 787 GTA as in effect on the Effective Date with an
aggregate fair market value in excess of $35.0 million.
SECTION 7.02. Listing of Additional Borrower Events of Default. Each of the following events or occurrences described in this Section 7.02 shall constitute (i) a "Additional Borrower Event of Default" (and, together with a U.S. Borrower Event of Default, an "Event of Default"), if any Loans, LC Disbursements or Letters of Credit are outstanding, and (ii) a "Additional Borrower Event of Termination" (and, together with a U.S. Borrower Event of Termination, an "Event of Termination"), if no Loans, LC Disbursements or Letters of Credit are outstanding:
(a) The Additional Borrower shall default (i) in the payment when due
of any principal of any Loan (including, without limitation, on any
Installment Payment Date), (ii) in the payment when due of any interest on
any Loan (and such default shall continue unremedied for a period of three
Business Days), or (iii) in the payment when due of any Fee described in
Section 2.10 or of any other previously invoiced amount required to be paid
under the Loan Documents (other than an amount described in clauses (i) and
(ii)) payable under this Agreement or any other Loan Document (and such
default shall continue unremedied for a period of five days).
(b) Any representation or warranty of the Additional Borrower or any other Additional Borrower Party made or deemed to be made hereunder or in any other Loan Document or any other writing or certificate furnished by or on behalf of the Additional Borrower or any other Additional Borrower Party to the Administrative Agent, the Issuing Bank or any Lender for the purposes of or in connection with this Agreement or
any such other Loan Document is or shall be incorrect in any material respect when made or deemed made.
(c) The Additional Borrower shall default in the due performance and
observance of any of its obligations under Section 2.05A, Section 5.01A or
Section 5.05A (with respect to the Additional Borrower's limited
partnership existence) or Section 5.11A or Article VI-A.
(d) The Additional Borrower or any other Additional Borrower Party shall default in the due performance and observance of any agreement (other than those specified in paragraphs (a) through (c) above) contained herein or in any other Loan Document, and such default shall continue unremedied for a period of 30 days after the date of such default.
(e) A default shall occur (i) in the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of any Indebtedness of the Additional Borrower or any Additional Borrower Subsidiary (other than Indebtedness under the Loan Documents) or (ii) in the performance or observance of any obligation or condition with respect to any Indebtedness of the Additional Borrower or any Additional Borrower Subsidiary (other than Indebtedness under the Loan Documents) if the effect of such default referred to in this clause (ii) is to accelerate the maturity of any such Indebtedness or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any such Indebtedness or any trustee or agent on its or their behalf to cause any such Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity, and the aggregate amount of such Indebtedness referred to in clauses (i) and (ii) above exceeds $5.0 million.
(f) Any judgment or order (or combination of judgments and orders) for the payment of money equal to or in excess of $5.0 million (other than amounts covered by (x) insurance for which the insurer thereof has been notified of such claim and has not challenged such coverage or (y) valid third party indemnifications for which the indemnifying party thereof has been notified of such claim and has not challenged such indemnification) individually or in the aggregate shall be rendered by a court or Governmental Authority against the Additional Borrower or any of the Additional Borrower Subsidiaries (or any combination thereof) and
(i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order and not stayed; or
(ii) there shall be any period (after any applicable statutory grace period) of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.
(g) Any Change in Control shall occur.
(h) The Additional Borrower or any Additional Borrower Subsidiary shall
(i) become insolvent or generally fail to pay debts as they become due;
(ii) apply for, consent to, or acquiesce in the appointment of a trustee, receiver, sequestrator or other custodian for the Additional Borrower or any of such Additional Borrower Subsidiary or substantially all of the property of any thereof, or make a general assignment for the benefit of creditors;
(iii) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the Additional Borrower or any of such Additional Borrower Subsidiaries or for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged or stayed within 60 days, provided that the Additional Borrower and each such Additional Borrower Subsidiary hereby expressly authorizes the Administrative Agent and each Lender to appear in any court conducting any relevant proceeding during such 60-day period to preserve, protect and defend their rights under the Loan Documents;
(iv) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Additional Borrower or any Additional Borrower Subsidiary and, if any such case or proceeding is not commenced by the Additional Borrower or such Additional Borrower Subsidiary, such case or proceeding shall be consented to or acquiesced in by the Additional Borrower, such Additional Borrower Subsidiary or shall result in the entry of an order for relief or shall remain for 60 days undismissed and unstayed, provided that the Additional Borrower and each such Additional Borrower Subsidiary hereby expressly authorizes the Administrative Agent and each Lender to appear m any court conducting any such case or proceeding during such 60-day period to preserve, protect and defend their rights under the Loan Documents; or
(v) take any corporate or partnership action (or comparable action, in the case of any other form of legal entity) authorizing any of the foregoing.
(i) The obligations of any Additional Borrower Party under the Guarantee Agreement shall cease to be in full force and effect or any such Additional Borrower Party shall repudiate its obligations thereunder.
(j) Any Lien purported to be created under any Security Document shall fail or cease to be, or shall be asserted by any Additional Borrower Party not to be, a valid and perfected Lien on any material portion of Collateral, with the priority required by the applicable Security Document.
(k) A U.S. Borrower Event of Default.
SECTION 7.03. Action if Bankruptcy. If any Event of Default described in Section 7.01(i) or 7.02(h) or 7.01(n) by virtue of 7.02(h) or 7.02(k) by virtue of 7.01(i) shall occur, the Commitments (if not theretofore terminated) shall automatically terminate and the outstanding principal amount of all outstanding Loans and all other Obligations shall automatically be and become immediately due and payable, without notice or demand, all of which are hereby waived by the Borrowers.
SECTION 7.04. Action if Other Event of Default. If any Event of Default (other than any Event of Default described in Section 7.01(i) or 7.02(h) or 7.01(n) by virtue of 7.02(h) or 7.02(k) by virtue of 7.01(i)) shall occur for any reason, whether voluntary or involuntary, and be continuing, the Administrative Agent, upon the direction of the Requisite Lenders, shall by written notice to the Borrowers and each Lender declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable and/or the Commitments (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment and/or, as the case may be, the Commitments shall terminate.
SECTION 7.05. Action if Event of Termination. Upon the occurrence and continuation of any Event of Termination, the Requisite Lenders may, by notice from the Administrative Agent to the Borrowers and the Lenders (except if an Event of Termination described in Section 7.01(i) or 7.02(h) or 7.01(n) by virtue of 7.02(h) or 7.02(k) by virtue of 7.01(i) shall have occurred, in which case the Commitments (if not theretofore terminated) shall, without notice of any kind, automatically terminate) declare their Commitments terminated, and upon such declaration the Lenders shall have no further obligation to make any Loans hereunder. Upon such termination of the Commitments, all accrued fees and expenses shall be immediately due and payable.
SECTION 7.06. Application of Proceeds. The proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral pursuant to the exercise by the Collateral Agent of its remedies shall be applied, in full or in part, together with any other sums then held by the Collateral Agent pursuant to this Agreement, promptly by the Collateral Agent as follows:
(a) First, to the payment of all reasonable costs and expenses, fees, commissions and taxes of such sale, collection or other realization including compensation to the Collateral Agent and its agents and counsel, and all expenses, liabilities and advances made or incurred by the Collateral Agent in connection therewith and all amounts for which the Collateral Agent is entitled to indemnification pursuant to the provisions of any Loan Document, together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full;
(b) Second, to the payment of all other reasonable costs and expenses of such sale, collection or other realization including compensation to the other Secured Parties and their agents and counsel and all costs, liabilities and advances made or incurred by the other Secured Parties in connection therewith, together with interest on each such
amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full;
(c) Third, without duplication of amounts applied pursuant to clauses
(a) and (b) above, to the payment in full in cash, pro rata, of interest
and other amounts constituting Obligations (other than principal and
contingent indemnification obligations) under this Agreement and the other
Loan Documents in each case equally and ratably in accordance with the
respective amounts thereof then due and owing;
(d) Fourth, to the payment in full in cash, pro rata, of principal amount of the Obligations (including contingent indemnification obligations due or claimed with respect thereto); and
(e) Fifth, the balance, if any, to the person lawfully entitled thereto (including as may be required under the Subordination and Intercreditor Agreement or the applicable Loan Party or its successors or assigns) or as a court of competent jurisdiction may direct.
In the event that any such proceeds are insufficient to pay in full the items described in clauses (a) through (e) of this Section 7.06, the Loan Parties shall remain liable, jointly and severally, for any deficiency.
SECTION 7.07. Certain Cure Rights. Notwithstanding anything to the contrary contained in Section 7.01, in the event that the U.S. Borrower fails to comply with any Financial Covenant contained in Section 6.12 or 6.13, the Parent Guarantor shall have the right, no later than 15 Business Days after the delivery of a Notice of Intent to Cure, to issue Permitted Cure Securities to any Equity Investors only for cash in an aggregate amount not in excess of the minimum amount necessary to cure the relevant failure to comply with such Financial Covenant, the net cash proceeds of which shall be contributed to the common equity capital of the U.S. Borrower (collectively, the "Cure Right"), and upon the receipt by the U.S. Borrower of such cash (the "Cure Amount"), provided such Cure Amount is used to repay Loans under Section 2.05(a) within two Business Days of the issuance of the Permitted Cure Securities with respect thereto, such Financial Covenant shall be recalculated giving effect to the following pro forma adjustments:
(a) Consolidated EBITDA shall be increased, in accordance with the definition thereof, solely for the purpose of measuring such Financial Covenant and not for any other purpose under this Agreement, by an amount equal to the Cure Amount;
(b) if, after giving effect to the foregoing recalculations, the U.S. Borrower shall then be in compliance with the requirements of such Financial Covenant, the U.S. Borrower shall be deemed to have satisfied the requirements of such Financial Covenant as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of such Financial Covenant which had occurred shall be deemed cured for all purposes of this Agreement and the other Loan Documents;
(c) to the extent that the Cure Amount proceeds are used to repay Indebtedness, such Indebtedness shall not be deemed to have been repaid for purposes of calculating the Financial Covenants for the Test Period with respect to which such Cure Right was exercised; and
(d) to the extent a Fiscal Quarter ended for which such Financial Covenant is initially recalculated as a result of a Cure Right is included in the calculation of a Financial Covenant in a subsequent fiscal period, the Cure Amount shall be included in the amount of Consolidated EBITDA for such initial Fiscal Quarter;
provided that (x) the Cure Rights shall not be exercised more than once in any
twelve (12) month period nor more than three times since the Effective Date and
(y) the aggregate Cure Amount shall not exceed $100.0 million in the aggregate
since the Effective Date.
ARTICLE VIII
THE AGENTS
SECTION 8.01. The Agents. Each Lender hereby irrevocably designates and appoints the Agents as the agents of such Lender under this Agreement and the other Loan Documents, and each Lender irrevocably authorizes each Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Each Lender that holds Term B Loans or has Term B Commitments and each Qualified Counterparty (in each case, in its capacity as such) hereby irrevocably designates and appoints the Collateral Agent as an agent of such Person under this Agreement and each other Loan Document to which the Collateral Agent is a party. In addition, without hereby limiting any implied authority, each Lender hereby expressly authorizes and directs the Collateral Agent to enter into the Intercreditor and Subordination Agreement and each other Loan Document to which it is a party as its agent. Notwithstanding any provision to the contrary elsewhere in this Agreement, no Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against any Agent. The Administrative Agent is hereby expressly authorized by the Lenders, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders all payments of principal of and interest on the Loans, all payments and all other amounts due to the Lenders hereunder, and promptly to distribute to each Lender its proper share of each payment so received; (b) to give notice on behalf of each of the Lenders to any of the Borrowers of any Default specified in this Agreement of which such Agent has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Lender copies of all notices, financial statements and other materials delivered by the Borrowers pursuant to this Agreement as received by such Agent.
None of the Agents nor any of their Related Parties shall be liable to the Lenders as such for any action taken or omitted to be taken by any of them except to the extent finally judicially determined to have resulted from its or his or her own gross negligence or willful
misconduct, or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith, or be required to ascertain or to make any inquiry concerning the performance or observance by any Loan Party of any of the terms, conditions, covenants or agreements contained in any Loan Document. The Agents shall not be responsible to the Lenders for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or any other Loan Documents or other instruments or agreements. Each Agent shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Requisite Lenders (or, when expressly required hereby, all the Lenders) and, except as otherwise specifically provided herein, such instructions and any action or inaction pursuant thereto shall be binding on all the Lenders. Each Agent shall, in the absence of actual knowledge to the contrary, be entitled to rely on any instrument or document believed by it in good faith to be genuine and correct and to have been signed or sent by the proper person or persons. None of the Agents nor any of their Related Parties shall have any responsibility to the Loan Parties on account of the failure of or delay in performance or breach by any Lender of any of its obligations hereunder or to any Lender on account of the failure of or delay in performance or breach by any other Lender or the Loan Parties of any of their respective obligations hereunder or under any other Loan Document or in connection herewith or therewith. Each Agent may execute any and all duties hereunder by or through any of its Related Parties or any sub-agent appointed by it and shall be entitled to rely upon the advice of legal counsel selected by it with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that no Agent shall be under any duty to take any discretionary action permitted to be taken by it pursuant to the provisions of any Loan Document unless it shall be requested in writing to do so by the Requisite Lenders.
The Collateral Agent hereby agrees that it holds and will hold all of its right, title and interest in, to and under the Security Documents and the Collateral granted to the Collateral Agent thereunder whether now existing or hereafter arising (all such right, title and interest being hereinafter referred to as the "Collateral Estate") under and subject to the conditions set forth in this Agreement; and the Collateral Agent further agrees that it will hold such Collateral Estate for the benefit of the Secured Parties, for the enforcement of the payment of all Obligations (subject to the limitations and priorities set forth herein and in the respective Security Documents) and as security for the performance of and compliance with the covenants and conditions of this Agreement and each of the Security Documents.
All of the powers, remedies and rights of the Collateral Agent as set forth in this Agreement may be exercised by the Collateral Agent in respect of any Security Document as though set forth in full therein and all of the powers, remedies and rights of the Collateral Agent as set forth in any Security Document may be exercised from time to time as herein and therein provided.
Subject to the appointment and acceptance of a successor Agent as provided below and subject to the next succeeding paragraph with respect to the Collateral Agent, any Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrowers. Upon any such resignation, the Requisite Lenders shall have the right to appoint a successor. If
no successor shall have been so appointed by the Requisite Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Agent which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $500.0 million or an Affiliate of any such bank. Upon the acceptance of any appointment as an Agent hereunder by such a successor bank, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations hereunder. After an Agent's resignation hereunder, the provisions of this Article and Section 10.05 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as an Agent.
The Collateral Agent may resign as the Collateral Agent upon 30 days' notice to the Lenders and the Borrowers. If the Collateral Agent shall resign as the Collateral Agent under this Agreement and the other Loan Documents, then the Requisite Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default with respect to any Borrower shall have occurred and be continuing) be subject to approval by the U.S. Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Collateral Agent, and the term "Collateral Agent" means such successor agent effective upon such appointment and approval, and such former Collateral Agent's rights, powers and duties as the Collateral Agent shall be terminated, without any other or further act or deed on the part of such former Collateral Agent or any of the parties to this Agreement or any holders of the Loans. If no successor agent has accepted appointment as the Collateral Agent by the date that is 30 days following a retiring Collateral Agent's notice of resignation, the retiring Collateral Agent shall, in consultation with the U.S. Borrower, appoint a successor Collateral Agent (which successor agent shall be a financial institution of nationally-recognized standing that, in the ordinary course of business, performs functions equivalent to those of the Collateral Agent hereunder), and the retiring Collateral Agent's resignation shall become effective upon such appointment. After any retiring Collateral Agent's resignation as the Collateral Agent, the provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Collateral Agent under this Agreement and the other Loan Documents.
With respect to the Loans made by it hereunder, each Agent in its individual capacity and not as an Agent shall have the same rights and powers as any other Lender and may exercise the same as though it were not an Agent, and such Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the U.S. Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent.
Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based
upon this Agreement or any other Loan Document, any related agreement or any document furnished hereunder or thereunder.
The Lenders and the Issuing Bank irrevocably authorize the Administrative Agent and the Collateral Agent (and the Administrative Agent and the Collateral Agent hereby agree)
(a) to release any Lien on any property granted to or held by the Collateral Agent under any Loan Document (i) upon termination or expiration of the Commitments and payment in full of all Obligations (other than contingent indemnification obligations that are not then due and payable) and the expiration or termination of all Letters of Credit (other than Letters of Credit which have been collateralized in a manner reasonably acceptable to the Administrative Agent), (ii) that is sold or to be sold as part of or in connection with any sale or disposition permitted hereunder and under the Loan Documents, or (iii) subject to Section 10.08, if approved, authorized or ratified in writing by the Requisite Lenders; and
(b) to release any Guarantor from its obligations under the Guarantee if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.
Notwithstanding anything to the contrary in this Agreement, neither the Lead Arranger, any Co-Arranger, any Co-Syndication Agent nor the Co-Documentation Agents, in such respective capacities, shall have any obligations, duties or responsibilities, or shall incur any liabilities, under this Agreement or any other Loan Document.
ARTICLE IX
[RESERVED]
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. (a) Except as set forth in Section 10.17, notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail, sent by telecopy or electronic mail, as follows:
(i) if to any Borrower, to it at 3801 South Oliver Street, Wichita,
Kansas 67210; Attention: Mike C. Williams (telecopy: 316 526 8720) (e-mail:
mike.l.williams@boeing.com) with a copy to (A) Kaye Scholer LLP, 425 Park
Avenue, New York, NY 10022-3598, Attention: Edmond Gabbay, Esq. (telecopy:
(212) 836-6476), (email: egabbay@kayescholer.com) and (B) Onex American
Holdings II LLC, 421 Leader Street, Marion OH 43302, Attention: Donald F.
West (telecopy: (740) 223-7762) (email: dwest@onex.com);
(ii) if to the Administrative Agent, to it at Citicorp North America, Inc., 390 Greenwich St., New York, New York 10013, Attention: Sandra Munoz (telecopy: (212) 994-0961) (e-mail: sandra.m.munoz@citigroup.com);
(iii) if to the Lead Arranger, to it at Citigroup Global Markets Inc.,
390 Greenwich St., New York, New York 10013, Attention: Julie Persily
(telecopy: (212) 723-8691) (email: julie.persily@citigroup.com), with a
copy to Cahill Gordon & Reindel LLP, 80 Pine Street, New York, New York
10005, Attention: Adam Dworkin, Esq. (telecopy: (212) 269-5420) (email:
adworkin@cahill.com);
(iv) if to the Issuing Bank, to it at The Bank of Nova Scotia, One Liberty Plaza, New York, New York 10006, Attention: Michael Bradley (telecopy: (212) 225-5254) (email: Michael Bradley@scotiacapital.com); and
(v) if to a Lender, to it at its address (or telecopy number) set forth in Schedule 2.01 or its Administrative Questionnaire or in the Assignment and Acceptance pursuant to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy or electronic mail or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 10.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 10.01. Each Loan Party and Lender hereunder agrees to notify the Administrative Agent in writing promptly of any change to the notice information provided above or in Schedule 2.01.
(b) The Borrowers shall forthwith, jointly and severally, on demand indemnify each Lender against any loss or liability which that Lender incurs (and that Lender shall not be liable to any Borrower in any respect) as a consequence of:
(i) any Person to whom any notice or communication under or in connection with this Agreement is sent by any Borrower by telecopy failing to receive that notice or communication (unless directly caused by that Person's gross negligence or willful misconduct); or
(ii) any telecopy communication which reasonably appears to that Lender to have been sent by any Borrower having in fact been sent by a Person other than such Borrower.
SECTION 10.02. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by Lenders hereto and shall survive the making by the Lenders of the Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so
long as the Commitments have not been terminated. The provisions of Sections 2.16, 10.02, 10.05 and 10.16 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.
SECTION 10.03. Binding Effect. Subject to Sections 4.01 and 4.03, this Agreement shall become effective when it shall have been executed by the Borrowers and the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.
SECTION 10.04. Successors and Assigns. (a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party (including any Affiliate of the Issuing Bank that issues any Letter of Credit). All covenants, promises and agreements by or on behalf of the Borrowers, the Agents or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 10.04(f)(iii) and, solely to the extent expressly contemplated hereby, the Related Parties of each of the Agents, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided, however, that (i) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or in connection with the initial syndication of the Commitments and Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than, in the case of the Term B Loans, $1.0 million and increments of $1.0 million in excess thereof and, in the case of the Revolving Loans, $5.0 million and increments of $1.0 million in excess thereof (or (A) if the aggregate amount of the Commitment or Loans of the assigning Lender is a lesser amount, the entire amount of such Commitment or Loans, or (B) in any other case, such lesser amount as the U.S. Borrower and the Administrative Agent otherwise agree), (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement, except that this clause (ii) shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender's rights and obligations in respect of one Class of Commitments and Loans, (iii) except in the case of the assignment to an Affiliate of such Lender or an assignment required to be made pursuant to Section 2.20, the parties to each such assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 (it being understood that only one fee shall be required to be paid by a Lender in respect of concurrent assignments to two or more Approved Funds), and (iv) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire. Subject to acceptance and recording pursuant to Section 10.04(e), from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five Business Days after the execution thereof (unless otherwise determined by the Administrative Agent), (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.16 and 10.05 with respect to facts and circumstances occurring prior to the effective date of such assignment, as well as to any Fees accrued for its account and not yet paid). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.04(f).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Commitment, and the outstanding balances of its Loans and participations in
Swingline Loans, in each case without giving effect to assignments thereof which
have not become effective, are as set forth in such Assignment and Acceptance,
(ii) except as set forth in (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto, or the financial condition of
the Borrowers or any Subsidiary or the performance or observance by the
Borrowers or any Subsidiary of any of its obligations under this Agreement, any
other Loan Document or any other instrument or document furnished pursuant
hereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; (iv) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the most recent financial statements, if any, delivered pursuant to Section 5.01
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (v) such assignee will independently and without reliance upon
either Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (vi) such assignee appoints and authorizes each Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to such Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the terms of
this Agreement are required to be performed by it as a Lender; and (viii)
Schedule 2.01 shall be deemed to be amended to reflect the assigning Lender
thereunder and the assignee thereunder after giving effect thereto.
(d) The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements, and participations in Swingline Loans, owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). Except to the extent inconsistent with Section 2.07(d), the entries in the Register shall be conclusive and the Borrowers, the Agents, the Issuing Bank and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by any Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in Section
10.04(b) above and, if required, the written consent of the U.S. Borrower, the
Issuing Bank, the Swingline Lender and the Administrative Agent to such
assignment, the Administrative Agent shall (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Lenders. No assignment shall be
effective unless it has been recorded in the Register as provided in this
Section 10.04(e).
(f) Each Lender may without the consent of the Borrowers, the Swingline Lender, the Issuing Bank or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrowers or any of the Borrowers' respective Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) each Participant shall be entitled to the benefit of the cost protection provisions contained in Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.04(b) (provided that no Participant shall be entitled to receive any greater amount pursuant to such Section than the Lender would have been entitled to receive in respect of the interest transferred), and (iv) the Borrowers, the Agents, the Issuing Bank and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right (which each Lender agrees will not be limited by the terms of any participation agreement or other agreement with a participant) to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents (other than, without the consent of the Participant, amendments, modifications or waivers described in Section 10.08(c) that affect such Participant).
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 10.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers and their Subsidiaries
furnished to such Lender by or on behalf of any of the Loan
Parties; provided that, prior to any such disclosure of information, each such
assignee or participant or proposed assignee or participant shall execute a
confidentiality agreement in form and substance consistent with provisions of
Section 10.6.
(h) Any Lender may, without the consent of the Borrowers or the Administrative Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank and this Section 10.04 shall not apply to any such pledge or assignment of a security interest; provided that (x) no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto and (y) any foreclosure or similar action shall be subject to the provisions of Section 10.04(b) concerning assignments and shall not be effective to transfer any rights under this Agreement or in any Loan, Note or other instrument evidencing the rights of a Lender under this Agreement until the requirements of Section 10.04(b) concerning assignments are fully satisfied. In order to facilitate such a pledge or assignment, the Borrowers shall, at the request of the assigning Lender, duly execute and deliver to the assigning Lender a promissory note or notes evidencing the Loans made to the Borrowers by the assigning Lender hereunder.
(i) The Borrowers shall not assign or delegate any of their rights or duties hereunder without the prior written consent of the Administrative Agent and each Lender, and any attempted assignment without such consent shall be null and void.
SECTION 10.05. Expenses; Indemnity. (a) The Borrowers, jointly and
severally, agree to pay (i) all reasonable out-of-pocket expenses incurred by
the Administrative Agent, the Collateral Agent and CGMI, including the
reasonable fees, charges and disbursements of Cahill Gordon & Reindel LLP,
counsel for the Administrative Agent and the Arrangers, and local counsel, in
connection with the syndication of the credit facilities provided for herein,
the preparation and administration of this Agreement and the other Loan
Documents or in connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by the Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iii) all reasonable out-of-pocket expenses incurred by the Lead Arranger, the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender in
connection with the enforcement or protection of its rights in connection with
this Agreement (including its rights under this Section), the other Loan
Documents or the Loans made or Letters of Credit issued hereunder, including all
such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit, and, in connection
with any such enforcement or protection, the fees, charges and disbursements of
any other counsel for the Administrative Agent, the Collateral Agent, the Lead
Arranger, the Issuing Bank or any Lender; provided, however, that the Borrowers
shall not be obligated to pay for expenses incurred by a Lender in connection
with the assignment of Loans to an assignee Lender (except pursuant to Section
2.20) or the sale of Loans to a Participant pursuant to Section 10.04.
(b) Each of the Borrowers, jointly and severally, agrees to indemnify the Administrative Agent, the Collateral Agent, the Co-Documentation Agents, the Lead Arranger,
the Co-Arrangers, the Issuing Bank, each Lender, each Affiliate of any of the foregoing Persons and each of their respective Related Parties (each such Person being called an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related reasonable out-of-pocket expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the parties hereto or thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby, (ii) the use of the proceeds of the Loans or Letters of Credit (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged presence or Release of Hazardous Materials on any property owned or operated by the Borrowers or any of the Subsidiaries, or any Environmental Liability or Environmental Claim related in any way to the Borrowers or the Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related reasonable expenses are finally judicially determined to have arisen by reason of the Indemnitee's gross negligence or willful misconduct.
(c) To the extent that the Borrowers fail to promptly pay any amount to be paid by them to any Agent, the Lead Arranger, the Co-Arrangers, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to such Agent, the Issuing Bank or the Swingline Lender, as the case may be, such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (other than syndication expenses); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the applicable Agent, the Lead Arranger, the Issuing Bank or the Swingline Lender in its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be determined based upon its share of the sum of the total Revolving Credit Exposures, outstanding Term B Loans and unused Commitments at the time.
(d) To the extent permitted by applicable law, the Borrowers shall not assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
(e) The provisions of this Section 10.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent or any Lender. All amounts due under this Section 10.05 shall be payable on written demand therefor.
SECTION 10.06. Right of Setoff. If an Event of Default or Event of Termination shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of the Borrowers against any of and all the obligations of the Borrowers now or hereafter existing under this Agreement and other Loan Documents held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other Loan Document and although such obligations may be unmatured. In connection with exercising its rights pursuant to the previous sentence, a Lender may at any time use any of the Borrowers' credit balances with the Lender to purchase at the Lender's applicable spot rate of exchange any other currency or currencies which the Lender considers necessary to reduce or discharge any amount due by the Borrowers to the Lender, and may apply that currency or those currencies in or towards payment of those amounts. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. Each Lender agrees promptly to notify the Borrowers and the Administrative Agent after making any such setoff.
SECTION 10.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.08. Waivers: Amendment. (a) No failure or delay of any Agent, the Issuing Bank or any Lender in exercising any power or right hereunder or under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agents, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies which they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrowers therefrom shall in any event be effective unless the same shall be permitted by Section 10.08(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default or Event of Default regardless of whether an Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default or Event of Default at the time. No notice or demand on the Borrowers in any case shall entitle the Borrowers to any other or further notice or demand in similar or other circumstances.
(b) Subject to Sections 10.08(c), 10.08(d) and 10.08(e), no amendment, modification, termination or waiver of any provision of any Loan Document, or consent to any departure by any Loan Party therefrom, shall in any event be effective without the written concurrence of the Requisite Lenders.
(c) Subject to Section 10.08(e), without the written consent of each Lender that would be directly affected thereby (whose consent shall be sufficient therefor without the
consent of the Requisite Lenders), no amendment, modification, termination, waiver or consent shall be effective if the effect thereof would:
(i) extend the scheduled final maturity of any Loan or Note;
(ii) waive, reduce or postpone any scheduled repayment (but not prepayment or Offer to Repay);
(iii) extend the stated expiration date of any Letter of Credit beyond the Revolving Credit Maturity Date;
(iv) reduce the rate of interest on any Loan (other than any waiver of
any increase in the interest rate applicable to any Loan pursuant to
Section 2.08(c)) or any fee payable hereunder or any prepayment premium
payable hereunder, it being understood that any amendment or modification
to the financial definitions in this Agreement shall not constitute a
reduction in the rate of interest for purposes of this clause (iv);
(v) extend the time for payment of any such interest or fees or prepayment premium;
(vi) reduce or forgive the principal amount of any Loan or any reimbursement obligation in respect of any Letter of Credit;
(vii) amend, modify, terminate or waive any provision of Section 2.13(c), Section 2.19, Section 7.06, Section 10.08(b), this Section 10.08(c), Section 10.08(d) or Section 10.08(e) (except for technical amendments with respect to additional extensions of credit pursuant to this Agreement which affect the protections to such additional extensions of credit of the type provided to the Revolving Credit Commitments and the Term B Loans on the Effective Date);
(viii) amend the definition of "Requisite Lenders" or "Commitment Percentage"; provided, with the consent of Requisite Lenders, additional extensions of credit pursuant hereto may be included in the determination of "Requisite Lenders" or "Commitment Percentage" on substantially the same basis as the Revolving Credit Commitments, Revolving Loans, Term B Commitments and Term B Loans, are included on the Effective Date;
(ix) release all or substantially all of the Collateral or all or substantially all of the Guarantors from the Guarantee except as expressly provided in the Loan Documents or subordinate the Liens under any Security Document, it being understood that additional extensions of credit under this Agreement consented to by the Requisite Lenders may be equally and ratably secured by the Collateral with the then existing secured obligations under the Security Documents; or
(x) consent to the assignment or transfer by any Loan Party of any of its rights and obligations under any Loan Document.
(d) Subject to Section 10.08(e), no amendment, modification, termination, waiver or consent with respect to any provision of the Loan Documents, or consent to any departure by any Loan Party therefrom, shall:
(i) increase any Commitment of any Lender over the amount thereof then in effect without the consent of such Lender; provided no amendment, modification, termination, waiver or consent with respect to any condition precedent, covenant, Default or Event of Default shall constitute an increase in any Commitment of any Lender;
(ii) amend, modify, terminate or waive any provision hereof relating to the Swingline Sublimit or the Swingline Loans without the consent of Swingline Lender;
(iii) amend the definition of "Requisite Class Lenders" without the consent of Requisite Class Lenders of each Class; provided, with the consent of the Requisite Lenders, additional extensions of credit pursuant hereto may be included in the determination of such "Requisite Class Lenders" on substantially the same basis as the Revolving Credit Commitments, Revolving Loans, Term B Commitments and Term B Loans are included on the Effective Date;
(iv) alter the required application of any repayments or prepayments as between Classes pursuant to Section 2.05 without the consent of Requisite Class Lenders of each Class which is being allocated a lesser repayment or prepayment as a result thereof; provided the Requisite Lenders may waive, in whole or in part, any prepayment so long as the application, as between Classes, of any portion of such prepayment is still required to be made is not altered and, if additional extensions of term credit under this Agreement consented to by the Requisite Lenders are made, such new term loans may be included on a p rata basis in the various prepayments required pursuant to Section 2.05;
(v) amend, modify, terminate or waive any obligation of Lenders relating to the issuance of or purchase of participations in Letters of Credit without the written consent of Administrative Agent and of Issuing Bank;
(vi) amend, modify, terminate or waive any provision of Article VIII as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent;
(vii) amend, modify, terminate or waive any provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination to grant any consent thereunder without the written consent of each Lender (or each Lender of such Class, as the case may be);
(viii) amend, modify, terminate or waive the manner of application of any optional or mandatory prepayments of Loans to the remaining amortization payments of the Term B Loans without the written consent of Term B Lenders holding more than 50% of the outstanding Term B Loans;
(ix) expressly amend, modify, supplement or waive any condition precedent in Section 4.02 to any Revolving Credit Borrowing without the written consent of the Requisite Revolving Lenders; or
(x) increase the maximum duration of Interest Periods hereunder without the consent of all Lenders;
provided that (1) any waiver, amendment or modification of this Agreement that
by its terms affects the rights or duties under this Agreement of the Revolving
Lender (but not the Term B Lenders), or the Term B Lenders (but not the
Revolving Lenders) may be effected by an agreement or agreements in writing
entered into by the Borrowers and requisite percentage in interest of the
affected Class of Lenders that would be required to consent thereto under this
Section if such Class of Lenders were the only Class of Lenders hereunder at the
time and (2) any waiver, amendment or modification of the Intercreditor and
Subordination Agreement may be effected by an agreement or agreements in writing
entered into among the Collateral Agent, the Administrative Agent and the
Requisite Lenders (without the consent of any Loan Party, so long as such
amendment, waiver or modification does not impose any additional duties or
obligations on the Loan Parties or alter or impair any right of any Loan Party
under the Loan Documents).
(e) If, in connection with any proposed change, waiver, discharge or termination of or to any of the provisions of this Agreement (other than as contemplated by Sections 10.08(d)(i), 10.08(d)(ii), 10.08(d)(v) and 10.08(d)(vi)), the consent of the Requisite Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained (such Lender, a "Non-Consenting Lender"), then the Borrowers, at their sole cost and expense, shall have the right, so long as all Non-Consenting Lenders whose individual consent is required are treated as described below, to transfer or assign, without recourse, all of the rights, obligations and interests of each such Non-Consenting Lender or Lenders with respect to either this Agreement or the Class of Loans or Commitments that is subject to the related change, waiver, discharge or termination to one or more assignees (in accordance with and subject to the restrictions contained in Section 10.04) approved by the Administrative Agent (and with respect to any Commitments or Loans other than Term B Commitments and Term B Loans, the Issuing Bank and the Swingline Lender), which approval shall not be unreasonably withheld, so long as at the time of such transfer or assignment, each such assignee consents to the proposed change, waiver, discharge or termination; provided, however, that no Non-Consenting Lender shall be obligated to make any such assignment unless, (x) such assignment shall not conflict with any law or any rule, regulation or order of any Governmental Authority and (y) such assignee or the Borrowers shall pay to the affected Non-Consenting Lender in immediately available funds on the date of such assignment the principal of and interest accrued to the date of payment on the Loans made by such Non-Consenting Lender and participations in LC Disbursements and Swingline Loans held by such Non-Consenting Lender and all commitment fees and other fees owed to such Non-Consenting Lender hereunder and all other amounts accrued for such Non-Consenting Lender's account or owed to it hereunder (including, without limitation, any Commitment Fees).
SECTION 10.09. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges
and other amounts which are treated as interest on such Loan under applicable law (collectively the "Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan or participation in accordance with applicable law, the rate of interest payable in respect of such Loan or participation hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable m respect of such Loan or participation but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or participations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.
SECTION 10.10. Entire Agreement. This Agreement and the other Loan Documents constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents; provided that any letter agreement relating to the subject matter hereof between any Borrower and a Lender shall remain effective in accordance with its terms to the extent it expressly survives the effectiveness of this Agreement. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.
It is intended by the parties hereto that (a) all obligations of the parties under the Original Credit Agreement shall continue to exist under and be evidenced by this Amended and Restated Credit Agreement and the other Loan Documents; and (b) except as expressly stated herein or amended hereby, the Original Credit Agreement and the other Loan Documents are ratified and confirmed as remaining unmodified and in full force and effect with respect to all Obligations; it being understood that it is the intent of the parties hereto that this Amended and Restated Credit Agreement does not constitute a novation of rights, obligations and liabilities of the respective parties (including the Obligations) existing under the Original Credit Agreement or evidence payment of all or any of such obligations and liabilities and such rights, obligation and liabilities shall continue and remain outstanding, and that this Amended and Restated Credit Agreement amends and restates in its entirety the Original Credit Agreement.
SECTION 10.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.11.
SECTION 10.12. Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 10.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
10.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 10.14. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 10.15. Jurisdiction: Consent to Service of Process. (a) Each of the Borrowers hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against any of the Borrowers or their respective properties in the courts of any jurisdiction.
(b) Each of the Borrowers hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court referred to in paragraph
(a) of this Section. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
SECTION 10.16. Confidentiality. None of the Administrative Agent, any
Co-Syndication Agent nor any Lender may disclose to any Person any non-public
information of the Loan Parties furnished to the Administrative Agent, any
Co-Syndication Agent or the Lenders by the Loan Parties (such information being
referred to collectively herein as the "Loan Party Information"), except that
each of the Administrative Agent, the Co-Syndication Agents and the Lenders may
disclose Loan Party Information (i) to its and its affiliates' employees,
officers, directors, agents, accountants, attorneys and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Loan Party Information and instructed to keep
such Loan Party Information confidential on substantially the same terms as
provided herein), (ii) to the extent required by any regulatory authority with
jurisdiction over the Administrative Agent or such Lender, (iii) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process; provided, that unless specifically prohibited by applicable law,
reasonable efforts shall be made to notify the Borrowers of any such request,
(iv) to any other party to this Agreement, (v) in connection with the exercise
of any remedies hereunder or under any other Loan Document or any suit, action
or proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (vi) subject to an agreement
containing provisions substantially the same as those of this Section 10.16, to
any pledge referred to in Section 10.04(h) or any assignee of or Participant in,
or any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement and (vii) to the extent such Loan Party
Information (A) is or becomes generally available to the public on a
nonconfidential basis other than as a result of a breach of this Section 10.16
by the Administrative Agent, the Co-Syndication Agents or such Lender, or (B) is
or becomes available to the Administrative Agent, such Co-Syndication Agent or
such Lender on a nonconfidential basis from a source other than the Loan
Parties. Nothing in this provision shall imply that any party has waived any
privilege it may have with respect to advice it has received.
SECTION 10.17. Fixed Income Direct Website Communications.
(a) Delivery. (i) Each Loan Party hereby agrees that it will use commercially reasonable efforts to provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to this Agreement and any other Loan Document, including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (A) relates to a request for a new, or a conversion of an existing, Borrowing or other extension of credit (including any election of an interest rate or Interest Period relating thereto), (B) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (C) provides notice of any Default or Event of Default under this Agreement or (D) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any borrowing or other extension of credit hereunder (all such non-excluded communications collectively, the "Communications"), by transmitting the Communications in an electronic/soft medium and in a format acceptable to the Administrative Agent to oploanswebadmin@citigroup.com. In addition, each Loan Party agrees to continue to provide the Communications to the Administrative Agent in the manner specified in this Agreement but only to the extent requested by the Administrative Agent. The Administrative Agent agrees that receipt of the Communications by the Administrative Agent at the e-mail address set forth above shall constitute effective delivery of the Communications to
the Administrative Agent for purposes of this Agreement and any other Loan Documents. Nothing in this Section 10.17 shall prejudice the right of the Agents, the Co-Syndication Agents, the Lead Arranger, the Co-Documentation Agents, the Co-Arrangers or any Lender to give any notice or other communication pursuant to this Agreement or any other Loan Document in any other manner specified in this Agreement or any other Loan Document.
(ii) Each Lender agrees that receipt of e-mail notification that such Communications have been posted pursuant to paragraph (b) below at the e-mail address(es) set forth on Schedule 2.01 opposite such Lender's name or pursuant to the notice provisions of any assignment and acceptance agreement shall constitute effective delivery of the Communications to such Lender for purposes of this Agreement and any other Loan Document. Each Lender further agrees to notify the Administrative Agent in writing (including by electronic communication) promptly of any change in its e-mail address or any extended disruption in its internet delivery services.
(b) Each Loan Party and Lender further agrees that the Administrative Agent and/or the Loan Parties may make the Communications available to the Lenders by posting the Communications on Intralinks, Fixed Income Direct or a substantially similar electronic transmission systems (the "Platform") and that the posting of any document or Communication on such Platform shall be deemed to be delivery of such document or Communication to the Lenders. Each Loan Party acknowledges that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution.
(c) THE COMMUNICATIONS TRANSMITTED PURSUANT TO THIS SECTION 10.17 AND THE PLATFORM ARE PROVIDED "AS IS" AND "AS AVAILABLE." NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS RELATED PARTIES WARRANTS THE ACCURACY, ADEQUACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE PLATFORM AND EACH CITIGROUP PARTY EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS OR THE PLATFORM. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY CITIGROUP PARTY IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE RELATED PARTIES HAVE ANY LIABILITY TO THE LOAN PARTIES, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY'S OR THE ADMINISTRATIVE AGENT'S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(d) Termination. The provisions of this Section 10.17 shall automatically terminate on the date that CNAI or any of its Affiliates ceases to be the Administrative Agent under this Agreement.
SECTION 10.18. USA PATRIOT Act Notice. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies Borrower, which information includes the name, address and tax identification number of Borrower and other information regarding Borrower that will allow such Lender or the Administrative Agent, as applicable, to identify Borrower in accordance with the Act. This notice is given in accordance with the requirements of the Act and is effective as to the Lenders and the Administrative Agent.
SECTION 10.19. Assignment and Release of Additional Borrower Parties' Obligations. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, the Additional Borrower may at any time assign to the U.S. Borrower, and the U.S. Borrower may assume from the Additional Borrower by novation, all rights and obligations of the Additional Borrower under the Loan Documents pursuant to documentation reasonably satisfactory to the Administrative Agent so long as in connection with such assignment the WLLC Loans are or are deemed repaid and terminated in full (such assignment and assumption of all (but not less than all) such rights and obligations, an "Additional Borrower Assignment"). Effective immediately upon any such Additional Borrower Assignment, and receipt of legal opinions reasonably satisfactory to the Administrative Agent with respect to the validity and enforceability of such Additional Borrower Assignment, each of the Additional Borrower Parties shall be released from all obligations and liabilities under the Loan Documents and the initial investment in the Additional Borrower Parties made by the Sponsor on the Effective Date and proceeds earned thereon from the making of Permitted Investments of such amounts may be transferred to any Person (including Sponsor) free and clear of any Liens in favor of the Secured Parties. For the avoidance of doubt, all other Property of the Additional Borrower Parties, including any WLLC Spread and proceeds thereon, shall be either (i) transferred the U.S. Borrower and/or the Subsidiary Loan Parties or (ii) transferred to Onex Corporation or an affiliate thereof subject to the continuing Lien of the Collateral Agent and shall be held in a blocked collateral account securing the Obligations pursuant to documentation reasonably satisfactory to the Administrative Agent, in each case upon the occurrence of the Additional Borrower Assignment.
SECTION 10.20. No Recourse Against Limited Partners. For the avoidance of doubt, each Agent and each Lender hereby confirms that it has no recourse against any of the limited partners of the Additional Borrower with respect to any obligation arising out of this Agreement. For the avoidance of doubt, nothing contained herein shall limit any right of any Agent or Lender under any Tax Indemnity Agreement (including any right to recourse granted thereunder).
[Signature Pages Follow]
CITICORP NORTH AMERICA, INC.,
as Administrative Agent and Collateral
Agent, and as Lender
By: /s/ David Wirdnam ------------------------------------ Name: David J. Wirdnam Title: Vice President |
CITIGROUP GLOBAL MARKETS INC.,
as Sole Lead Arranger and Bookrunner
By: /s/ David Wirdnam ------------------------------------ Name: David J. Wirdnam Title: Director |
ROYAL BANK OF CANADA,
as Co-Arranger, Co-Syndication Agent
and Lender
By: /s/ James Disher ------------------------------------ Name: James F. Disher Title: Authorized Signatory |
THE BANK OF NOVA SCOTIA,
as Co-Arranger, Co-Syndication Agent
and Lender
By: /s/ Philip Adsetts ------------------------------------ Name: Philip Adsetts Title: Managing Director |
THE BANK OF NOVA SCOTIA,
as Issuing Bank
By: /s/ Philip Adsetts ------------------------------------ Name: Philip Adsetts Title: Managing Director |
EXPORT DEVELOPMENT CANADA,
as Co-Documentation Agent
By: /s/ Paul Hemsing ------------------------------------ Name: Paul Hemsing Title: Financial Services Manager By: /s/ Patrice Guindon ------------------------------------ Name: Patrice Guindon Title: Financial Services Manager |
CAISSE DE DEPOT ET PLACEMENT DU QUEBEC,
as Co-Documentation Agent
By: /s/ James McMullan ------------------------------------ Name: James B. McMullan Title: Director By: /s/ Diane C. Favreau ------------------------------------ Name: Diane C. Favreau Title: Vice President |
Exhibit 10.18
AMENDMENT NO. 1
TO
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDMENT NO. 1, dated as of December 11, 2005 (this
"Amendment"), amends the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July
20, 2005 (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among SPIRIT AEROSYSTEMS, INC.(f/k/a
MID-WESTERN AIRCRAFT SYSTEMS, INC.), a Delaware corporation (the "U.S.
Borrower"); SPIRIT AEROSYSTEMS HOLDINGS, INC. (f/k/a MID-WESTERN AIRCRAFT
SYSTEMS HOLDINGS, INC.), a Delaware corporation (the "Parent Guarantor"); ONEX
WIND FINANCE LP, a Delaware limited partnership (the "Additional Borrower"); the
financial institutions listed on Schedule 2.01 thereto, as such Schedule may
from time to time be supplemented and amended (the "Lenders"); CITICORP NORTH
AMERICA, INC. ("CNAI"), as administrative agent (in such capacity, the
"Administrative Agent") for the Lenders, and as collateral agent (in such
capacity, the "Collateral Agent"); CITIGROUP GLOBAL MARKETS INC. ("CGMI"), as
sole lead arranger and bookrunner (in such capacity, the "Lead Arranger"); THE
BANK OF NOVA SCOTIA and ROYAL BANK OF CANADA, as co-arrangers (the
"Co-Arrangers") and as co-syndication agents (the "Co-Syndication Agents"); THE
BANK OF NOVA SCOTIA, as Issuing Bank; and EXPORT DEVELOPMENT CANADA and CAISSE
DE DEPOT ET PLACEMENT DU QUEBEC, as co-documentation agents (the
"Co-Documentation Agents"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Credit Agreement.
Capitalized terms defined herein shall be deemed to be defined in the Credit
Agreement for all purposes.
WITNESSETH:
WHEREAS, Borrowers have requested that the Lenders amend the Credit Agreement to effect the changes described below;
WHEREAS, Section 10.08 of the Credit Agreement permits the Credit Agreement to be amended from time to time;
WHEREAS, Borrowers have requested that the Lenders consent to this Amendment for the purpose of (i) permitting certain Liens on property to secure Permitted IRB Lease Obligations and (ii) permitting certain transfers of property in connection with the incurrence of Permitted IRB Lease Obligations.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which hereby acknowledged), the parties hereto hereby agree as follows:
SECTION ONE Amendments. The Credit Agreement is, effective as of the Amendment Effective Date (as defined below), hereby amended as follows:
(a) Section 6.02 of the Credit Agreement is hereby amended by deleting the word "and" at the end of clause (xxii) thereof, inserting the word "and" at the end of clause (xxiii) thereof, and inserting the following provision immediately after such clause (xxiii):
"(xxiv) Liens to secure Permitted IRB Lease Obligations covering only the property leased from a City in connection with such Permitted IRB Lease Obligations;"
(b) Section 6.05 of the Credit Agreement is hereby amended by deleting the word "and" at the end of clause (xiii) thereof, inserting the word "and" at the end of clause (xiv) thereof, and inserting the following provision immediately after such clause (xiv):
"(xv) sales, transfers and/or other dispositions of property by one or more Loan Parties to a City (as described in the definition of Permitted IRB Lease Obligations) in connection with the incurrence of Permitted IRB Lease Obligations;"
SECTION TWO Conditions to Effectiveness. This Amendment shall become effective on and as of the first date (the "Amendment Effective Date") on which all of the following conditions precedent shall have been satisfied in full:
(a) The Administrative Agent shall have received (i) counterparts of
this Amendment executed by each of the Borrowers and the Parent Guarantor
and (ii) executed Amendment Addenda (in the form attached hereto as Exhibit
A) from a number of Lenders sufficient to constitute the Requisite Lenders.
(b) The representations and warranties set forth in Article III of the Credit Agreement and in the other Loan Documents shall be on and as of the Amendment Effective Date true and correct in all material respects (except that any representation or warranty that is qualified as to "materiality" or "Material Adverse Effect" shall be true and correct in all respects) with the same effect as if then made (unless expressly stated to relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that any representation or warranty that is qualified as to "materiality" or "Material Adverse Effect" shall be true and correct in all respects) as of such earlier date).
(c) As of the Amendment Effective Date, no Default or Event of Default shall have occurred and be continuing.
(d) All reasonable out-of-pocket expenses to the extent invoiced prior to the Amendment Effective Date (including reasonable fees, charges and disbursements of Cahill Gordon & Reindel LLP) of the Agents in connection with this Amendment shall have been reimbursed or paid by the Borrowers.
SECTION THREE Representations and Warranties; Covenants. In order to induce the Requisite Lenders to enter into this Amendment, the Borrowers and the Parent
Guarantor jointly and severally represent and warrant to each of the Lenders that both before and after giving effect to this Amendment: (a) no Default or Event of Default has occurred and is continuing and (b) all of the representations and warranties set forth in Article III of the Credit Agreement and in the other Loan Documents are true and correct in all material respects (except that any representation and warranty that is qualified as to "materiality" or "Material Adverse Effect" is true and correct in all respects) on and as of the date hereof as if made on the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
SECTION FOUR Reference to and Effect on the Credit Agreement. Other than as specifically provided in this Amendment, this Amendment shall not operate as a waiver or amendment of any right, power or privilege of the Lenders or the Secured Parties under the Credit Agreement or any other Loan Document or of any other term or condition of the Credit Agreement or any other Loan Document, nor shall the entering into of this Amendment preclude the Lenders from refusing to enter into any further waivers or amendments with respect to the Credit Agreement or any other Loan Document. All references to the Credit Agreement in any document, instrument, agreement, or writing shall from and after the Amendment Effective Date be deemed to refer to the Credit Agreement as amended by this Amendment and references in the Credit Agreement to "this Agreement," "hereunder," "herein," or words of like import shall mean and be a reference to the Credit Agreement, as affected and amended hereby.
SECTION FIVE Acknowledgements. Each of the Loan Parties hereby (i) expressly acknowledges the terms of this Amendment, (ii) ratifies and affirms its obligations under the Loan Documents to which it is a party (including without limitation the Guarantee Agreement and Security Documents and Liens and security interests granted thereunder) and (iii) acknowledges its continued liability under each Loan Document to which it is a party and agrees that such Loan Documents remain in full force and effect, including with respect to the Obligations.
SECTION SIX Amendment Addenda; Execution in Counterparts. Each Lender to become a party to this Amendment shall do so by delivering to the Administrative Agent an Amendment Addendum in the form attached hereto as Exhibit A (each, an "Amendment Addendum") duly executed by such Lender and the Administrative Agent. References in this Amendment to "this Amendment," "hereunder," "herein," or words of like import shall mean and be a reference to this Amendment and each such executed Lender Addendum.
This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.
SECTION SEVEN Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
SECTION EIGHT Headings. The various headings used herein are for convenience of reference only, are not part of this Amendment and are not to affect the construction of, or to be taken into consideration in interpreting, this Amendment.
[Signature Pages Follow]
IN WITNESS THEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers as of the day and year first above written.
SPIRIT AEROSYSTEMS, INC. (f/k/a
MID-WESTERN AIRCRAFT SYSTEMS, INC.),
as U.S. Borrower
By: /s/ Mike L. Williams ------------------------------------ Name: Mike L. Williams Title: Sr. Vice President - Finance |
SPIRIT AEROSYSTEMS HOLDINGS, INC. (f/k/a
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS,
INC.),
as Parent Guarantor
By: /s/ Seth Mersky ------------------------------------ Name: ---------------------------------- Title: --------------------------------- |
ONEX WIND FINANCE LP,
as Additional Borrower
By: 1648701 Ontario Inc., its General
Partner
By: /s/ Donald F. West ------------------------------------ Name: Donald F. West Title: Representative |
CITICORP NORTH AMERICA, INC.,
as Administrative Agent
By: /s/ Hector Guenther ------------------------------------ Name: Hector Guenther Title: Vice president |
EXHIBIT A
[Form of]
AMENDMENT ADDENDUM
Reference is made to AMENDMENT NO. 1 TO THE AMENDED AND RESTATED
CREDIT AGREEMENT dated as of December [___], 2005 (the "Amendment"), amending
the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 20, 2005 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among SPIRIT AEROSYSTEMS, INC. (f/k/a MID-WESTERN
AIRCRAFT SYSTEMS, INC.), a Delaware corporation (the "U.S. Borrower"); SPIRIT
AEROSYSTEMS HOLDINGS, INC. (f/k/a MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.),
a Delaware corporation (the "Parent Guarantor"); ONEX WIND FINANCE LP, a
Delaware limited partnership (the "Additional Borrower"); the financial
institutions listed on Schedule 2.01 thereto, as such Schedule may from time to
time be supplemented and amended (the "Lenders"); CITICORP NORTH AMERICA, INC.
("CNAI"), as administrative agent (in such capacity, the "Administrative Agent")
for the Lenders, and as collateral agent (in such capacity, the "Collateral
Agent"); CITIGROUP GLOBAL MARKETS INC. ("CGMI"), as sole lead arranger and
bookrunner (in such capacity, the "Lead Arranger"); THE BANK OF NOVA SCOTIA and
ROYAL BANK OF CANADA, as co-arrangers (the "Co-Arrangers") and as co-syndication
agents (the "Co-Syndication Agents"); THE BANK OF NOVA SCOTIA, as Issuing Bank;
and EXPORT DEVELOPMENT CANADA and CAISSE DE DEPOT ET PLACEMENT DU QUEBEC, as
co-documentation agents (the "Co-Documentation Agents").
Upon execution and delivery of this Amendment Addendum by the parties hereto and upon receipt of executed Amendment Addenda from the Requisite Lenders as provided in Section 10.08 of the Credit Agreement, the undersigned hereby becomes a party to the Amendment, effective as of the date hereof.
THIS AMENDMENT ADDENDUM SHALL BE CONSTRUED IN ACCORDANCE WITH, AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
This Amendment Addendum may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page hereof by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment Addendum to be duly executed and delivered by their proper and duly authorized officers as of the date of the Amendment first set forth above.
[If second signature is necessary:]
Exhibit 10.19
AMENDMENT NO. 2
TO
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDMENT NO. 2, dated as of March 31, 2006 (this "Amendment"),
amends the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 20, 2005 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among SPIRIT AEROSYSTEMS, INC. (f/k/a MID-WESTERN
AIRCRAFT SYSTEMS, INC.), a Delaware corporation (the "U.S. Borrower"); SPIRIT
AEROSYSTEMS HOLDINGS, INC. (f/k/a MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.),
a Delaware corporation (the "Parent Guarantor"); ONEX WIND FINANCE LP, a
Delaware limited partnership (the "Additional Borrower"); the financial
institutions listed on Schedule 2.01 thereto, as such Schedule may from time to
time be supplemented and amended (the "Lenders"); CITICORP NORTH AMERICA, INC.
("CNAI"), as administrative agent (in such capacity, the "Administrative Agent")
for the Lenders, and as collateral agent (in such capacity, the "Collateral
Agent"); CITIGROUP GLOBAL MARKETS INC. ("CGMI"), as sole lead arranger and
bookrunner (in such capacity, the "Lead Arranger"); THE BANK OF NOVA SCOTIA and
ROYAL BANK OF CANADA, as co-arrangers (the "Co-Arrangers") and as co-syndication
agents (the "Co-Syndication Agents"); THE BANK OF NOVA SCOTIA, as Issuing Bank;
and EXPORT DEVELOPMENT CANADA and CAISSE DE DEPOT ET PLACEMENT DU QUEBEC, as
co-documentation agents (the "Co-Documentation Agents"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to them
in the Credit Agreement. Capitalized terms defined herein shall be deemed to be
defined in the Credit Agreement for all purposes.
WITNESSETH:
WHEREAS, Borrowers have requested that the Lenders amend the Credit Agreement to effect the changes described below;
WHEREAS, Section 10.08 of the Credit Agreement permits the Credit Agreement to be amended from time to time;
WHEREAS, Borrowers have requested that the Lenders consent to this Amendment for the purposes set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which hereby acknowledged), the parties hereto hereby agree as follows:
SECTION ONE Amendments. The Credit Agreement is, effective as of the Amendment Effective Date (as defined below), hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is hereby amended by inserting the following prevision at the end of the definition of "Commitment":
", and any Commitment to make Revolving Loans extended by such Lender as provided in Section 2.21"
(b) Section 1.01 of the Credit Agreement is hereby amended by deleting the term "and" at the end of clause (j) of the definition of "Consolidated EBITDA" and inserting the following new clause (1) immediately after clause (k):
"(1) costs and expenses incurred in connection with the U.K. Acquisition paid or invoiced on or before December 31, 2006 (not to exceed $6.0 million); and"
(c) Section 1.01 of the Credit Agreement is hereby amended by inserting the following provision at the end of the definition of "Revolving Loans":
"(and shall include any Loans contemplated by Section 2.21)"
(d) Section 1.01 of the Credit Agreement is hereby amended by inserting the term "and any Subsidiaries of the U.S. Borrower" immediately after the term "the other Loan Parties" and deleting the term "relating to any Loans", in each case in clause (c) of the definition of "Obligations," and adding the term "or in respect of overdrafts and related liabilities owed to any Qualified Counterparty, arising from treasury, depositary and cash management services or in connection with any automated clearinghouse or Bank Automated Clearing System transfer of funds" at the end of such clause.
(e) Section 1.01 of the Credit Agreement is hereby amended by deleting the tern "relating to any Loans" and inserting the term "or other obligation described in clause (c) of the definition of `Obligations'" after each occurrence of the term "Hedging Agreement", in each case in the definition of "Qualified Counterparty."
(f) Section 1.01 of the Credit Agreement is hereby amended by inserting the following provision in the definition of "Revolving Credit Commitment" immediately following the term "Swingline Loans hereunder":
"(including without limitation by virtue of an Increase Joinder)"
(g) Section 1.01 of the Credit Agreement is hereby amended by adding the following definitions in alphabetical order:
"Increase Effective Date" shall have the meaning assigned to such term in Section 2.21(a).
"Increase Joinder" shall have the meaning assigned to such term in
Section 2.21(c).
"Post-Increase Revolving Lenders" shall have the meaning assigned to such term in Section 2.21(d).
"Pre-Increase Revolving Lenders" shall have the meaning assigned to such term in Section 2.21(d).
"U.K. Acquisition" shall mean the acquisition by the U.K. Subsidiary of the Aerostructures business of BAE Systems plc for an aggregate purchase price not to exceed (pound)80,000,000 plus the amount of any working capital adjustment payable pursuant to the acquisition documentation relating thereto and any normal utility and property tax adjustments associated with the purchase of real property.
"U.K. Subsidiary" shall mean Spirit Aerosystems (Europe) Limited, a corporation organized under the laws of the United Kingdom.
(h) Section 2.01(a) of the Credit Agreement is hereby amended by deleting the term "(B) the Aggregate Revolving Credit Exposure would exceed $50.0 million prior to the time that at least $50.0 million has been borrowed under the Seller Loan Agreement" and replacing it with the following:
"(B) the aggregate Available Revolving Credit Commitment is less than $50.0 million prior to the time that at least $50.0 million has been borrowed under the Seller Loan Agreement"
(i) Section 2.06(b) of the Credit Agreement is hereby amended by deleting the term "(iii) prior to the time that at least $50.0 million has been borrowed under the Seller Loan Agreement, the Aggregate Revolving Credit Exposure shall not exceed $50.0 million" and replacing it with the following:
"(iii) prior to the time that at least $50.0 million has been borrowed under the Seller Loan Agreement, the Available Revolving Credit Commitment shall not be less than $50.0 million"
(j) Section 2.21 shall be inserted immediately after Section 2.20 of the Credit Agreement as follows:
(a) Borrower Request. U.S. Borrower may by written notice to the Administrative Agent elect to request prior to the Revolving Credit Maturity Date, an increase to the existing Revolving Credit Commitment by an amount not in excess of $75,000,000 in the aggregate. Each such notice shall specify (i) the date (each, an "Increase Effective Date") on which U.S. Borrower proposes that the increased Revolving Credit Commitment shall be effective, which shall be a date not less than 10 Business Days after the date on which such notice is delivered to the Administrative Agent and (ii) the identity of each Eligible Assignee to whom U.S. Borrower proposes any portion of such increased Revolving Credit Commitment be allocated and the amounts of such allocations; provided that any existing Lender approached to provide all or a portion of the increased Revolving Credit Commitment may elect or decline, in its sole discretion, to provide such increased Revolving Credit Commitment.
(b) Conditions. The increased Revolving Credit Commitment shall become effective, as of such Increase Effective Date; provided that:
(1) each of the conditions set forth in Section 4.02 shall be satisfied;
(2) no Default shall have occurred and be continuing or would result from the borrowings made on the Increase Effective Date, if any;
(3) U.S. Borrower shall deliver or cause to be delivered any legal opinions or other documents reasonably requested by the Administrative Agent in connection with any such transaction; and
(4) U.S. Borrower shall deliver mortgage amendments sufficient to cover the full amount of the increase of the Revolving Credit Commitments, pursuant to documentation reasonably satisfactory to the Agents.
(c) Terms of New Loans and Commitments. The terms and provisions of Revolving Loans made pursuant to increased Revolving Credit Commitments shall be identical to the Revolving Loans.
The increased Revolving Credit Commitments shall be effected by a
joinder agreement (the "Increase Joinder") executed by U.S. Borrower,
the Administrative Agent and each Lender making such increased
Revolving Credit Commitment, in form and substance satisfactory to
each of them. The Increase Joinder may, without the consent of any
other Lenders, effect such amendments to this Agreement and the other
Loan Documents as may be necessary or appropriate, in the opinion of
the Administrative Agent, to effect the provisions of this Section
2.21. In addition, unless otherwise specifically provided herein, all
references in Loan Documents to Revolving Loans shall be deemed,
unless the context otherwise requires, to include references to
Revolving Loans made pursuant to increased Revolving Credit
Commitments made pursuant to this Agreement.
(d) Adjustment of Revolving Loans. Each of the Revolving Lenders having a Revolving Commitment prior to such Increase Effective Date (the "Pre-Increase Revolving Lenders") shall assign to any Revolving Lender which is acquiring a new or additional Revolving Commitment on the Increase Effective Date (the "Post-Increase Revolving Lenders"), and such Post-Increase Revolving Lenders shall purchase from each Pre-Increase Revolving Lender, at the principal amount thereof, such interests in the Revolving Loans and participation interests in LC Exposure and Swingline Loans outstanding on such Increase Effective Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Revolving Loans and participation interests in LC Exposure and Swingline Loans will be held by Pre-Increase Revolving Lenders and
Post-Increase Revolving Lenders ratably in accordance with their Revolving Commitments after giving effect to such increased Revolving Commitments.
(e) Equal and Ratable Benefit. The Revolving Credit Commitment established pursuant to this paragraph shall constitute Revolving Credit Commitments under, and shall be entitled to all the benefits afforded by, this Agreement and the other Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably from the Guarantees and security interests created by the Security Documents. The Loan Parties shall take any actions reasonably required by the Administrative Agent to ensure and/or demonstrate that the Lien and security interests granted by the Security Documents continue to be perfected under the UCC or otherwise after giving effect to the establishment of any such increased Revolving Credit Commitment.
(k) Section 6.03(d) of the Credit Agreement is hereby amended by adding the following provision at the end of such clause immediately after the term "Section 6.04(x)":
"or (xvi)".
(l) Section 6.04 of the Credit Agreement is hereby amended by deleting the word "and" at the end of clause (xiv) and replacing "." at the end of clause (xv) with "; and", and inserting new clause (xvi) immediately thereafter as follows:
"(xvi) the consummation of the U.K. Acquisition on or prior to April 30, 2006."
(m) Section 10.08(c)(ix) of the Credit Agreement is hereby amended by adding the following provision immediately after the term "this Agreement":
"pursuant to Section 2.21 or"
The Security Agreement is, effective as of the Amendment Effective Date (as defined below), hereby amended as follows:
(a) Recital D of the Security Agreement is hereby amended by deleting the term "relating to Loans."
SECTION TWO Consent. Pursuant to Section 10.3 of Subordination and Intercreditor Agreement, the Lenders party hereto hereby consent to the Collateral Agent's execution of an amendment to the Subordination and Intercreditor Agreement to conform the definition of "Senior Obligations" therein to the amendment to the definition of "Obligations" and to conform the definition of "Qualified Counterparty" therein to the amendment to the definition of the same term, in each case pursuant to Section I of this Amendment.
SECTION THREE Conditions to Effectiveness. This Amendment shall become effective on and as of the first date (the "Amendment Effective Date") on which all of the following conditions precedent shall have been satisfied in full:
(a) The Administrative Agent shall have received (i) counterparts of
this Amendment executed by each of the Borrowers and the Parent Guarantor
and (ii) executed Amendment Addenda (in the form attached hereto as Exhibit
A) from a number of Lenders sufficient to constitute the Requisite Lenders;
provided that Section 1(d) and Section 2 of this Amendment shall not be
effective until the Administrative Agent shall have received executed
Amendment Addenda from a number of Lenders sufficient to constitute the
Supermajority Senior Lenders (as defined in the Subordination and
Intercreditor Agreement) and the requisite Subordinated Lenders under the
Subordination and Intercreditor Agreement.
(b) The representations and warranties set forth in Article III of the Credit Agreement and in the other Loan Documents shall be on and as of the Amendment Effective Date true and correct in all material respects (except that any representation or warranty that is qualified as to "materiality" or "Material Adverse Effect" shall be true and correct in all respects) with the same effect as if then made (unless expressly stated to relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that any representation or warranty that is qualified as to "materiality" or "Material Adverse Effect" shall be true and correct in all respects) as of such earlier date).
(c) As of the Amendment Effective Date, no Default or Event of Default shall have occurred and be continuing.
SECTION FOUR Representations and Warranties; Covenants. In order to induce the Requisite Lenders to enter into this Amendment, the Borrowers and the Parent Guarantor jointly and severally represent and warrant to each of the Lenders that both before and after giving effect to this Amendment: (a) no Default or Event of Default has occurred and is continuing, (b) all of the representations and warranties set forth in Article III of the Credit Agreement and in the other Loan Documents are true and correct in all material respects (except that any representation and warranty that is qualified as to "materiality" or "Material Adverse Effect" is true and correct in all respects) on and as of the date hereof as if made on the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date) and (c) all reasonable out-of-pocket expenses (including reasonable fees, charges and disbursements of Cahill Gordon & Reindel LLP) of the Agents in connection with this Amendment, to the extent invoiced, will be promptly reimbursed or paid by the Borrowers.
SECTION FIVE Reference to and Effect on the Credit Agreement. Other than as specifically provided in thus Amendment, this Amendment shall not operate as a waiver or amendment of any right, power or privilege of the Lenders or the Secured Parties under the Credit Agreement or any other Loan Document or of any other term or condition of the Credit Agreement or any other Loan Document, nor shall the entering into of this Amendment preclude the Lenders from refusing to enter into any further waivers or amendments with respect to the Credit Agreement or any other Loan Document. All references to the Credit Agreement in any document, instrument, agreement, or writing shall from and after the Amendment Effective Date be deemed to refer to the Credit Agreement as amended by this Amendment and references in
the Credit Agreement to "this Agreement," "hereunder," "herein," or words of like import shall mean and be a reference to the Credit Agreement, as affected and amended hereby.
SECTION SIX Acknowledgements. Each of the Loan Parties hereby (i) expressly acknowledges the terms of this Amendment, (ii) ratifies and affirms its obligations under the Loan Documents to which it is a party (including without limitation the Guarantee Agreement and Security Documents and Liens and security interests granted thereunder) and (iii) acknowledges its continued liability under each Loan Document to which it is a party and agrees that such Loan Documents remain in full force and effect, including with respect to the Obligations.
SECTION SEVEN Amendment Addenda; Execution in Counterparts. Each Lender to become a party to this Amendment shall do so by delivering to the Administrative Agent an Amendment Addendum in the form attached hereto as Exhibit A (each, an "Amendment Addendum") duly executed by such Lender and the Administrative Agent. References in this Amendment to "this Amendment," "hereunder," "herein," or words of like import shall mean and be a reference to this Amendment and each such executed Lender Addendum.
This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.
SECTION EIGHT Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
SECTION NINE Headings. The various headings used herein are for convenience of reference only, are not part of this Amendment and are not to affect the construction of, or to be taken into consideration in interpreting, this Amendment.
[Signature Pages Follow]
IN WITNESS THEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers as of the day and year first above written.
SPIRIT AEROSYSTEMS, INC. (f/k/a
MID-WESTERN AIRCRAFT SYSTEMS, INC.), as
U.S. Borrower
By: /s/ Ulrich Schmidt ------------------------------------ Name: Ulrich Schmidt Title: Executive Vice President and Chief Financial Officer |
SPIRIT AEROSYSTEMS HOLDINGS, INC. (f/k/a
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS,
INC.),
as Parent Guarantor
By: /s/ Nigel Wright ------------------------------------ Name: ---------------------------------- Title: --------------------------------- |
ONEX WIND FINANCE LP, as Additional Borrower
By: 1648701 Ontario Inc., its General Partner
By: /s/ Nigel Wright ------------------------------------ Name: ---------------------------------- Title: --------------------------------- |
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above.
CITICORP NORTH AMERICA, INC., as Senior
Administrative Agent and Senior
Collateral Agent
By: /s/ Hector Guenther ------------------------------------ Name: Hector Guenther Title: Vice President |
Address:
390 Greenwich Street
New York, New York 10013
Attention: Sandra Munoz
Telecopy (212) 994-0961
E-mail: sandra.m.mumoz@citigroup.com
EXHIBIT A
[Form of]
AMENDMENT ADDENDUM
Reference is made to AMENDMENT NO. 2 TO THE AMENDED AND RESTATED
CREDIT AGREEMENT dated as of March 31, 2006 (the "Amendment"), amending the
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 20, 2005 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among SPIRIT AEROSYSTEMS, INC. (f/k/a MID-WESTERN AIRCRAFT
SYSTEMS, INC.), a Delaware corporation (the "U.S. Borrower"); SPIRIT AEROSYSTEMS
HOLDINGS, INC. (f/k/a MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.), a Delaware
corporation (the "Parent Guarantor"); ONEX WIND FINANCE LP, a Delaware limited
partnership (the "Additional Borrower"); the financial institutions listed on
Schedule 2.01 thereto, as such Schedule may from time to time be supplemented
and amended (the "Lenders"); CITICORP NORTH AMERICA, INC. ("CNAI"), as
administrative agent (in such capacity, the "Administrative Agent") for the
Lenders, and as collateral agent (in such capacity, the "Collateral Agent");
CITIGROUP GLOBAL MARKETS INC. ("CGMI"), as sole lead arranger and bookrunner (in
such capacity, the "Lead Arranger"); THE BANK OF NOVA SCOTIA and ROYAL BANK OF
CANADA, as co-arrangers (the "Co-Arrangers") and as co-syndication agents (the
"Co-Syndication Agents"); THE BANK OF NOVA SCOTIA, as Issuing Bank; and EXPORT
DEVELOPMENT CANADA and CAISSE DE DEPOT ET PLACEMENT DU QUEBEC, as
co-documentation agents (the "Co-Documentation Agents")
Upon execution and delivery of this Amendment Addendum by the parties hereto and upon receipt of executed Amendment Addenda from the Requisite Lenders as provided in Section 10.08 of the Credit Agreement, the undersigned hereby becomes a party to the Amendment, effective as of the date hereof.
THIS AMENDMENT ADDENDUM SHALL BE CONSTRUED IN ACCORDANCE WITH, AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
This Amendment Addendum may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page hereof by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment Addendum to be duly executed and delivered by their proper and duly authorized officers as of the date of the Amendment first set forth above.
[If second signature is necessary:]
Exhibit 10.20
EXECUTION COPY
SECURITY AGREEMENT
By
MID-WESTERN AIRCRAFT SYSTEMS, INC.,
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.,
ONEX WIND FINANCE LP,
THE SUBSIDIARIES PARTY HERETO,
as Grantors,
CITICORP NORTH AMERICA, INC.,
as Collateral Agent
Dated as of June 16, 2005
TABLE OF CONTENTS
Page ---- ARTICLE I Definitions.................................................... 2 SECTION 1.01. Uniform Commercial Code Defined Terms................... 2 SECTION 1.02. Credit Agreement Defined Terms.......................... 2 SECTION 1.03. Definition of Certain Terms Used Herein................. 2 SECTION 1.04. Rules of Construction................................... 8 ARTICLE II Authority of Collateral Agent................................. 8 SECTION 2.01 General Authority of the Collateral Agent over the Collateral.............................................. 8 SECTION 2.02. Exercise of Powers...................................... 8 SECTION 2.03. Remedies Not Exclusive.................................. 8 SECTION 2.04. Waiver and Estoppel..................................... 9 SECTION 2.05. Limitation by Law....................................... 9 SECTION 2.06. Rights of Secured Parties in Respect of Obligations..... 10 ARTICLE III Security Interest............................................ 10 SECTION 3.01. Security Interest....................................... 10 SECTION 3.02. No Assumption of Liability.............................. 10 ARTICLE IV Representations and Warranties................................ 11 SECTION 4.01. Title and Authority..................................... 11 SECTION 4.02. Validity of Security Interest and Filings............... 11 SECTION 4.03. Limitations on and Absence of Other Liens............... 12 SECTION 4.04. Other Actions........................................... 12 SECTION 4.05. No Conflicts, Consents, etc............................. 15 ARTICLE V Covenants...................................................... 15 SECTION 5.01. Protection of Security.................................. 15 SECTION 5.02. Further Assurances...................................... 15 SECTION 5.03. Taxes; Encumbrances..................................... 16 SECTION 5.04. Continuing Obligations of the Grantors.................. 16 SECTION 5.05. Use and Disposition of Collateral....................... 16 SECTION 5.06. Insurance............................................... 16 SECTION 5.07. Certain Covenants and Provisions Regarding Patent, Trademark and Copyright Collateral...................... 16 ARTICLE VI Remedies...................................................... 18 |
Page ---- SECTION 6.01. Remedies upon Default................................... 18 SECTION 6.02. Application of Proceeds................................. 19 SECTION 6.03. Grant of License to Use Intellectual Property........... 19 ARTICLE VII Collateral Account........................................... 20 SECTION 7.01. Establishment of Collateral Account..................... 20 ARTICLE VIII Miscellaneous............................................... 21 SECTION 8.01. Notices................................................. 21 SECTION 8.02. Survival of Agreement................................... 21 SECTION 8.03. Binding Effect.......................................... 21 SECTION 8.04. Successors and Assigns.................................. 21 SECTION 8.05. GOVERNING LAW........................................... 21 SECTION 8.06. Waivers; Amendment; Several Agreement................... 21 SECTION 8.07. WAIVER OF JURY TRIAL.................................... 22 SECTION 8.08. Severability............................................ 22 SECTION 8.09. Counterparts............................................ 22 SECTION 8.10. Headings................................................ 23 SECTION 8.11. Jurisdiction; Consent to Service of Process............. 23 SECTION 8.12. Termination............................................. 23 SECTION 8.13. Additional Grantors..................................... 24 SECTION 8.14. Financing Statements.................................... 24 SECTION 8.15. Collateral Agent Appointed Attorney-in-Fact............. 25 |
ANNEXES
Annex I Form of Supplement Annex II Form of Perfection Certificate Annex III Form of Securities Account Control Agreement Annex IV Form of Deposit Account Control Agreement Annex V-A Form of Copyright Security Agreement Annex V-B Form of Patent Security Agreement Annex V-C Form of Trademark Security Agreement |
SECURITY AGREEMENT
This SECURITY AGREEMENT (as amended, amended and restated, supplemented or otherwise modified from time to time, this "Agreement") dated as of June 16, 2005 among MID-WESTERN AIRCRAFT SYSTEMS, INC., a Delaware corporation ("U.S. Borrower"), ONEX WIND FINANCE LP, a Delaware limited partnership ("Additional Borrower" and, together with the U.S. Borrower, "Borrowers"), MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC., a Delaware corporation ("Parent"), each Subsidiary of the U.S. Borrower and each Additional Borrower Subsidiary listed on the signature pages hereto (collectively, together with each Subsidiary that becomes a party hereto pursuant to Section 8.13 of this Agreement and Parent, the "Guarantors" and, together with Borrowers, the "Grantors") and CITICORP NORTH AMERICA, INC. ("Citicorp"), as Collateral Agent (in such capacity, and together with any successors in such capacity, the "Collateral Agent") for the Secured Parties.
RECITALS
A. Borrowers, Parent, Citicorp, as Administrative Agent (in such capacity and together with any successors in such capacities, the "Administrative Agent"), the Collateral Agent, The Bank of Nova Scotia and Royal Bank of Canada, as Co-Syndication Agents, Citigroup Global Markets Inc., as Sole Lead Arranger and Bookrunner, (in such capacities, and together with any successors in such capacities, the "Lead Arranger"), The Bank of Nova Scotia and Royal Bank of Canada, as co-arrangers (in such capacity, and together with any successors in such capacity and the Lead Arranger, the "Arrangers") and the lenders party thereto (the "Lenders") have entered into that certain credit agreement, dated as of June 16, 2005 (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Credit Agreement"). The term "Credit Agreement" shall also include and refer to any increase in the amount of indebtedness under the Credit Agreement and any refinancing or replacement of the Credit Agreement (whether under a bank facility, securities offering or otherwise) or one or more successor or replacement facilities whether or not with a different group of agents or lenders.
B. Parent Guarantor and each Subsidiary Loan Party have, pursuant to the Guarantee Agreement, dated as of the date hereof, among other things, unconditionally guaranteed the obligations of the U.S. Borrower under the Credit Agreement, and Parent Guarantor, the U.S. Borrower, each Subsidiary Loan Party and each Additional Borrower Subsidiary have, pursuant to the Guarantee Agreement, dated as of the date hereof, among other things, unconditionally guaranteed the obligations of the Additional Borrower under the Credit Agreement.
C. Borrowers and each Guarantor will receive substantial benefits from the execution, delivery and performance of the obligations under the Credit Agreement and are, theretofore, willing to enter into this Agreement.
D. It is contemplated that, to the extent permitted by the Credit Agreement, one or more of the Grantors may enter with any Qualified Counterparty into one or more Hedging Agreements relating to Loans.
E. Contemporaneously with the execution and delivery of this Agreement, Borrowers and the Guarantors have executed and delivered to the Collateral Agent a Pledge Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Pledge Agreement").
F. This Agreement is given by each Grantor in favor of the Collateral Agent for the benefit of the Secured Parties to secure the payment and performance of all of the Obligations; provided that this Agreement is given by each Additional Borrower Party in favor of the Collateral Agent for the benefit of the Secured Parties to secure the payment and performance only of those Obligations of any and all of the Additional Borrower Parties.
NOW THEREFORE, in consideration of the foregoing and other benefits accruing each Grantor, the receipt and sufficiency of which are hereby acknowledged, each Grantor hereby makes the following representations and warranties to the Collateral Agent for the benefit of the Secured Parties (and each of their respective successors and assigns), as follows:
ARTICLE I
Definitions
SECTION 1.01. Uniform Commercial Code Defined Terms. Unless otherwise de-fined herein, terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC, including the following which are capitalized herein:
"Accounts"; "Bank"; "Certificates of Title"; "Chattel Paper"; "Commercial Tort Claim"; "Commodity Account"; "Commodity Contract"; "Commodity Customer"; "Commodity Intermediary"; "Deposit Accounts"; "Documents"; "Electronic Chattel Paper"; "Entitlement Holder"; "Entitlement Order"; "Equipment"; "Financial Asset"; "Fixtures"; "Goods"; "Instruments" (as defined in Article 9 rather than Article 3); "Inventory"; "Investment Property"; "Letter-of-Credit Rights"; "Letters of Credit"; "Securities"; "Securities Account"; "Securities Intermediary"; "Security Entitlement"; "Supporting Obligations"; and "Tangible Chattel Paper".
SECTION 1.02. Credit Agreement Defined Terms. Capitalized terms used but not otherwise defined herein that are defined in the Credit Agreement shall have the meanings given to them in the Credit Agreement.
SECTION 1.03. Definition of Certain Terms Used Herein. As used herein, the following terms shall have the following meanings:
"Account Debtor" shall mean any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.
"Accounts Receivable" shall mean all Accounts and all right, title and interest in any returned goods, together with all rights, titles, securities and guarantees with respect thereto, including any rights to stoppage in transit, replevin, reclamation and resales.
"Additional Borrower" shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
"Books and Records" shall mean all instruments, files, records, ledger sheets and documents evidencing, covering or relating to any of the Collateral.
"Borrowers" shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
"Charges" shall mean any and all property and other taxes, assessments and special assessments, levies, fees and all governmental charges imposed upon or assessed against, and all claims (including, without limitation, landlords', carriers', mechanics', maritime, workmen's, repairmen's, laborers', materialmen's, suppliers' and warehousemen's Liens and other claims arising by operation of law) against, all or any portion of the Collateral.
"Collateral" shall mean with respect to each of the Grantors all of the following, in each case, whether now owned or hereafter acquired:
(a) Accounts Receivable;
(b) Books and Records;
(c) cash and Deposit Accounts;
(d) Chattel Paper;
(e) Collateral Account and Collateral Account Funds;
(f) Commercial Tort Claims described on Schedule 13 to the Perfection Certificate;
(g) Documents;
(h) Equipment;
(i) Fixtures;
(j) General Intangibles;
(k) Goods;
(l) Instruments;
(m) Inventory;
(n) Investment Property;
(o) Letter-of-Credit Rights;
(p) Letters of Credit;
(q) Supporting Obligations;
(r) Intellectual Property;
(s) Motor Vehicles;
(t) to the extent not covered by clauses (a) through (s) of this definition, all other personal property, whether tangible or intangible; and
(u) Proceeds of any and all of the foregoing;
provided that, notwithstanding the foregoing, "Collateral" shall not include any
(i) Securities Collateral (as defined in the Pledge Agreement) or other
collateral for the Obligations pledged under the Pledge Agreement or (ii)
Excluded Property.
"Collateral Account" shall mean that collateral account established pursuant to Article VII of this Agreement.
"Collateral Account Funds" shall mean, collectively, the following from time to time on deposit in the Collateral Account: all funds, investments (including, without limitation, all Permitted Investments) and all certificates and instruments from time to time representing or evidencing such investments; all notes, certificates of deposit, checks and other instruments from time to time hereafter delivered to or otherwise possessed by the Collateral Agent for or on behalf of any Grantor in substitution for, or in addition to, any or all of the Collateral; and all interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the items constituting Collateral.
"Collateral Agent" shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
"Collateral Estate" shall have the meaning assigned to such term in Section 2.01.
"Commodity Account Control Agreement" shall mean a commodity account control agreement in a form that is reasonably satisfactory to the Administrative Agent.
"Control" shall mean (i) in the case of each Deposit Account, "control," as such term is defined in Section 9-104 of the UCC, (ii) in the case of any Security Entitlement, "control," as such term is defined in Section 8-106(d) of the UCC, and (iii) in the case of any Commodity Contract, "control," as such term is defined in Section 9-106(b) of the UCC.
"Control Agreement" shall mean, collectively, the Deposit Account Control Agreement, the Securities Account Control Agreement and the Commodity Account Control Agreement.
"Copyright License" shall mean each written agreement, now or hereafter in effect, granting any right to any third party under any Copyright now or hereafter owned by any Grantor
or which such Grantor otherwise has the right to license, or granting any right to such Grantor under any Copyright now or hereafter owned by any third party, and all rights of such Grantor under any such agreement.
"Copyrights" shall mean, collectively, with respect to each Grantor, all copyrights (whether statutory or common law, whether registered or unregistered and whether published or unpublished) and all copyright registrations and applications made by such Grantor in the United States, in each case, whether now owned or hereafter created or acquired by or assigned to such Grantor, including, without limitation, the copyrights, registrations and applications listed in Schedule 12(b) of the Perfection Certificate, together with any and all (i) rights and privileges arising under applicable law with respect to such Grantor's use of such copyrights, (ii) reissues, renewals, continuations and extensions thereof, (iii) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof and (iv) rights to sue for past, present or future infringements thereof.
"Credit Agreement" shall have the meaning assigned to such term in the Recitals of this Agreement.
"Deposit Account Control Agreement" shall mean an agreement substantially in the form annexed hereto as Annex IV or such other form that is reasonably satisfactory to the Collateral Agent.
"Excluded Equity" shall mean any Voting Stock in excess of 65% of the total outstanding Voting Stock of any Foreign Subsidiary held by any Grantor.
"Excluded Property" shall mean, collectively, (i) any permit, lease, license, contract, instrument or other agreement held by any Grantor that prohibits or requires the consent of any Person as a condition to the creation by such Grantor of a security interest or Lien thereon or that would be breached or give the other party the right to terminate it as a result thereof, or any permit, lease, license contract or other agreement held by any Grantor to the extent that any Requirement of Law, applicable thereto prohibits the creation of a security interest or Lien thereon or that would be breached or give the other party the right to terminate it as a result thereof, but only, in each case, to the extent, and for so long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the UCC (including Sections 9-406(a), 9-407(a), 9-408(a) and 9-409 of the UCC) or any other applicable Requirement of Law, (ii) Equipment owned by any Grantor that is subject to a purchase money Lien or a capital lease which is permitted by the Credit Agreement if the contract or other agreement in which such Lien is granted (or in the documentation providing for such capital lease) prohibits or requires the consent of any Person as a condition to the creation of any other Lien on such Equipment or that would be breached or give the other party the right to terminate it as a result thereof and (iii) Excluded Equity; provided, however, "Excluded Property" shall not include any Proceeds, substitutions or replacements of Excluded Property (unless such Proceeds, substitutions or replacements would constitute Excluded Property).
"General Intangibles" shall mean, collectively, all "general intangibles," as such term is defined in the UCC, and in any event shall include, without limitation, all choses in action and
causes of action and all other intangible personal property of any Grantor of every kind and nature now owned or hereafter acquired by any Grantor, including all rights and interests in partnerships, limited partnerships, limited liability companies and other unincorporated entities, corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Hedging Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises and tax refund claims. For avoidance of doubt, General Intangibles shall include all rights of Grantors (including, without limitation, any voting rights) under the IRB Agreements and the Acquisition Documents.
"Grantors" shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
"Guarantors" shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
"Intellectual Property" shall mean all Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing, now owned in the United States by a Grantor, or hereafter acquired by any Grantor.
"Lenders" shall have the meaning assigned to such term in the Recitals of this Agreement.
"License" shall mean any domestic Patent License, Trademark License or Copyright License including, without limitation, those listed on Schedules 12(a) and 12(b) of the Perfection Certificate.
"Patent License" shall mean any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention on which a Patent, now or hereafter owned by any Grantor or which any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a Patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement.
"Patents" shall mean all of the following now owned or hereafter acquired in the United States by a Grantor: (a) all letters patent, all registrations and recordings thereof, and all applications for letters patent, including registrations, recordings and pending applications in the United States Patent and Trademark Office, including those listed on Schedule 12(a) of the Perfection Certificate, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.
"Pledge Agreement" shall have the meaning assigned to such term in the Recitals of this Agreement.
"Pledged Securities" shall have the meaning assigned to such term in the Pledge Agreement.
"Proceeds" shall mean, collectively, all "proceeds," as such term is
defined in the UCC, and in any event shall include, without limitation, any
consideration received from the sale, exchange, license, lease or other
disposition of any asset or property that constitutes Collateral, any value
received as a consequence of the possession of any Collateral and any payment
received from any insurer or other Person or entity as a result of the
destruction, loss, theft, damage or other involuntary conversion of whatever
nature of any asset or property that constitutes Collateral, and shall include
(a) all cash and negotiable instruments received by or held on behalf of the
Collateral Agent, (b) any claim of any Grantor against any third party for (and
the right to sue and recover for and the rights to damages or profits due or
accrued arising out of or in connection with) (i) past, present or future
infringement of any Patent now or hereafter owned by any Grantor, or licensed
under a Patent License, (ii) past, present or future infringement or dilution of
any Trademark now or hereafter owned by any Grantor or licensed under a
Trademark License or injury to the goodwill associated with or symbolized by any
Trademark now or hereafter owned by any Grantor, (iii) past, present or future
breach of any License and (iv) past, present or future infringement of any
Copyright now or hereafter owned by any Grantor or licensed under a Copyright
License and (c) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Securities Account Control Agreement" shall mean an agreement substantially in the form annexed hereto as Annex III or such other form that is reasonably satisfactory to the Collateral Agent.
"Security Interest" shall have the meaning assigned to such term in Section 3.01(a).
"Trademark License" shall mean any written agreement, now or hereafter in effect, granting to any third party any right to use any Trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any Trademark now or hereafter owned by any third party, and all rights of any Grantor under any such agreement.
"Trademarks" shall mean all of the following now owned or hereafter acquired in the United States by a Grantor: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office or any State of the United States, and all extensions or renewals thereof, including those listed on Schedule 12(a) of the Perfection Certificate, (b) all goodwill associated therewith or symbolized thereby and (c) all other assets, rights and interests that uniquely reflect or embody such goodwill.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that if by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the Collateral Agent's and the Secured Parties'
security interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect on the date hereof in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions relating to such provisions.
"U.S. Borrower" shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
SECTION 1.04. Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include the singular;
(5) where the context requires, provisions relating to any Collateral, when used in relation to a Grantor, shall refer to such Grantor's Collateral or any relevant part thereof.
ARTICLE II
Authority of Collateral Agent
SECTION 2.01. General Authority of the Collateral Agent over the Collateral. The Collateral Agent hereby agrees that it holds and will hold all of its right, title and interest in, to and under the Security Documents and the Collateral granted to the Collateral Agent hereunder and thereunder whether now existing or hereafter arising (all such right, title and interest being hereinafter referred to as the "Collateral Estate") under and subject to the conditions set forth in this Agreement; and the Collateral Agent further agrees that it will hold such Collateral Estate for the benefit of the Secured Parties, for the enforcement of the payment of all Obligations (subject to the limitations and priorities set forth herein and in the respective Security Documents) and as security for the performance of and compliance with the covenants and conditions of this Agreement and each of the Security Documents.
SECTION 2.02. Exercise of Powers. All of the powers, remedies and rights of the Collateral Agent as set forth in this Agreement may be exercised by the Collateral Agent in respect of any Security Document as though set forth in full therein and all of the powers, remedies and rights of the Collateral Agent as set forth in any Security Document may be exercised by the Collateral Agent from time to time as herein and therein provided.
SECTION 2.03. Remedies Not Exclusive. No remedy conferred upon or reserved to the Collateral Agent herein or in the Security Documents is intended to be exclusive of any other
remedy or remedies, but every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or in any Security Document or now or hereafter existing at law or in equity or by statute.
No delay or omission by the Collateral Agent to exercise any right, remedy or power hereunder or under any Security Document shall impair any such right, remedy or power or shall be construed to be a waiver thereof, and every right, power and remedy given by this Agreement or any Security Document to the Collateral Agent may be exercised from time to time and as often as may be deemed expedient by the Collateral Agent.
If the Collateral Agent shall have proceeded to enforce any right, remedy or power under this Agreement or any Security Document and the proceeding for the enforcement thereof shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Agent, then the Grantors, the Collateral Agent and the other Secured Parties shall, subject to any determination in such proceeding, severally and respectively be restored to their former positions and rights hereunder or thereunder with respect to the Collateral Estate and in all other respects, and thereafter all rights, remedies and powers of the Collateral Agent shall continue as though no such proceeding had been taken.
SECTION 2.04. Waiver and Estoppel. Subject to the terms of the Security
Documents, each Grantor agrees, to the extent it may lawfully do so, that it
will not at any time in any manner whatsoever claim, or take the benefit or
advantage of, any appraisement, valuation, stay, extension, moratorium, turnover
or redemption law, or any law permitting it to direct the order in which the
Collateral shall be sold, now or at any time hereafter in force, which may
delay, prevent or otherwise affect the performance or enforcement of this
Agreement or any Security Document and hereby waives all benefit or advantage of
all such laws and covenants that it will not hinder, delay or impede the
execution of any power granted to the Collateral Agent in this Agreement or any
Security Document but will suffer and permit the execution of every such power
as though no such law were in force; provided that nothing contained in this
Section 2.04 shall be construed as a waiver of any rights of the Grantors under
any applicable federal bankruptcy law or state insolvency law.
Each Grantor, to the extent it may lawfully do so, on behalf of itself and all who may claim through or under it, including without limitation any and all subsequent creditors, vendees, assignees and licensors, waives and releases all rights to demand or to have any marshaling of the Collateral upon any sale, whether made under any power of sale granted herein or in any Security Document or pursuant to judicial proceedings or upon any foreclosure or any enforcement of this Agreement or any Security Document and consents and agrees that all the Collateral may at any such sale be offered and sold as an entirety.
Each Grantor waives, to the extent permitted by applicable law, presentment, demand, protest and any notice of any kind (except notices explicitly required hereunder or under any Security Document) in connection with this Agreement and the Security Documents and any action taken by the Collateral Agent with respect to the Collateral.
SECTION 2.05. Limitation by Law. All rights, remedies and powers provided in this Agreement or any Security Document may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the provisions hereof are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Agreement invalid, unenforceable in whole or in part or not entitled to be recorded, registered or filed under the provisions of any applicable law.
SECTION 2.06. Rights of Secured Parties in Respect of Obligations. Notwithstanding any other provision of this Agreement or any Security Document, the right of each Secured Party to receive payment of the Obligations held by such Secured Party when due (whether at the stated maturity thereof, by acceleration or otherwise), as expressed in the instruments evidencing or agreements governing such Obligations or to institute suit for the enforcement of such payment on or after such due date, shall not be impaired or affected without the consent of such Secured Party given in the manner prescribed by the instruments evidencing or agreements governing such Obligations.
ARTICLE III
Security Interest
SECTION 3.01. Security Interest. (a) As security for the payment and performance, as the case may be, in full of the Obligations, each Grantor hereby collaterally assigns, mortgages, pledges and hypothecates to the Collateral Agent, for the ratable benefit of the Secured Parties, and hereby grants to the Collateral Agent for the ratable benefit of the Secured Parties, a security interest in, all of such Grantor's right, title and interest in, to and under the Collateral of such Grantor; provided that such collateral assignment, mortgage, pledge and hypothecation by each Additional Borrower Party and such grant of a security interest in the Collateral by each Additional Borrower Party shall only secure the payment and performance, as the case may be, in full of the Obligations of the Additional Borrower Parties. The Liens granted in this clause (a) to secure the Obligations are referred to herein as the "Security Interest".
(b) Without limiting the foregoing, the Collateral Agent is hereby authorized to file one or more financing statements (including fixture filings), continuation statements, filings with the United States Patent and Trademark Office, United States Copyright Office or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Collateral Agent as secured party.
SECTION 3.02. No Assumption of Liability. The Security Interest is granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral.
ARTICLE IV
Representations and Warranties
The Grantors jointly and severally represent and warrant to the Collateral Agent and the Secured Parties that:
SECTION 4.01. Title and Authority. Each Grantor has good and valid rights in and title to the Collateral with respect to which it has purported to grant the Security Interest here-under and has full power and authority to grant to the Collateral Agent the Security Interest in such Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval which has been obtained.
SECTION 4.02. Validity of Security Interest and Filings.
(a) The Security Interest constitutes a legal and valid security interest in all the Collateral securing the payment and performance of the Obligations (or, in the case of the Security Interest granted by the Additional Borrower Parties, securing the payment and performance of only the Obligations of the Additional Borrower Parties). As of the date hereof, all information set forth herein and in the Perfection Certificate, including the Schedules annexed hereto and thereto is correct and complete in all material respects. Fully completed UCC financing statements (including fixture filings as applicable) containing a description of the Collateral have been delivered to the Collateral Agent for filing in each governmental, municipal or other office specified in Schedule 7 to the Perfection Certificate. Upon (i) the filing of such UCC financing statements with the appropriate filing offices of each jurisdiction specified in Schedule 7 to the Perfection Certificate and (ii) the taking of possession or control by the Collateral Agent of the Collateral to the extent possession or control by the Collateral Agent is required by this Agreement, the Collateral Agent for the benefit of the applicable Secured Parties will have a perfected security interest in respect of all Collateral, to the extent such security interest can be perfected under the UCC by such filings, taking possession or control. The Security Interest is and shall be prior to any other Lien on any of the Collateral, other than Permitted Liens.
(b) With respect to all Collateral consisting of United States registered Patents, United States registered Trademarks and United States registered Copyrights registered in the name of any Grantor as of the date hereof, fully executed security agreements in the form of Annex V-A, V-B and V-C hereto containing a description of all Collateral consisting of Intellectual Property with respect to United States registered Copyrights, United States registered Patents, and United States registered Trademarks (and Trademarks for which United States registration applications are pending), respectively, have been delivered to the Collateral Agent for registration with the United States Patent and Trademark Office and for recordation with the United States Copyright Office pursuant to 35 U.S.C. Section 261 or 17 U.S.C. Section 205 and the regulations thereunder, as applicable. Upon the recordation of such security agreements with the United States Patent and Trademark Office and United States Copyright Office, as applicable, and the filing of proper UCC financing statements with the appropriate filing offices of each jurisdiction specified in Schedule 7 to the Perfection Certificate, the Collateral Agent for the
benefit of the Secured Parties will have a perfected security interest in respect of all Collateral consisting of Patents, Trademarks and Copyrights registered in the name of any Grantor as of the date hereof.
SECTION 4.03. Limitations on and Absence of Other Liens. The Collateral is owned by the Grantors free and clear of any Lien, except for Permitted Liens. The Grantors have not filed or consented to the filing of (a) any financing statement or analogous document under the UCC or any other applicable laws covering any Collateral, (b) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with the United States Patent and Trademark Office and the United States Copyright Office or (c) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Permitted Liens and Liens which are no longer in effect.
SECTION 4.04. Other Actions. In order to further ensure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Collateral Agent's security interest in the Collateral, each Grantor agrees, in each case at such Grantor's own expense, to take the following actions with respect to the following Collateral:
(a) Instruments and Tangible Chattel Paper. As of the date hereof, each Instrument and each item of Tangible Chattel Paper specified in Schedule 11 to the Perfection Certificate has been properly endorsed, assigned and delivered to the Collateral Agent, and, if necessary, accompanied by instruments of transfer or assignment duly executed in blank. If any amount individually in excess of $250,000 or in the aggregate in excess of $1,000,000 payable under or in connection with any of the Collateral shall be evidenced by any Instrument or Tangible Chattel Paper, the Grantor acquiring such Instrument or Tangible Chattel Paper shall forthwith endorse, assign and deliver the same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably specify; provided, however, that so long as no Event of Default shall have occurred and be continuing, the Collateral Agent shall return such Instrument or Tangible Chattel Paper to such Grantor from time to time, to the extent necessary for collection in the ordinary course of such Grantor's business; provided, further, that the Collateral Agent shall return such Instrument or Tangible Chattel Paper to such Grantor if all amounts due pursuant such Instrument or Tangible Chattel Paper have been paid in full.
(b) Deposit Accounts and Investment Property. (i) Each Grantor hereby represents and warrants that as of the date hereof (1) it does not maintain any Deposit Accounts other than the Collateral Account established and maintained pursuant to this Agreement and the accounts listed in Schedule 14 of the Perfection Certificate, (2) it does not maintain any Securities Accounts or Commodity Accounts other than those listed in Schedule 14 of the Perfection Certificate and (3) it does not hold, own or have any interest in any certificated securities or uncertificated securities other than those constituting Securities Collateral or other collateral under the Pledge Agreement, those
maintained in Securities Accounts or Commodity Accounts listed in Schedule 14 of the Perfection Certificate and Excluded Equity.
(ii) In the event the Grantors have cash, Investment Property or other funds maintained in any Deposit Accounts (except for (A) Deposit Accounts used solely to make payroll payments and (B) Deposit Accounts having an average daily balance of less than $2,500,000 in the aggregate together with all such other Deposit Accounts under this clause (B) that are not subject to the Collateral Agent's Control) and/or Securities Accounts, Borrower shall promptly notify the Collateral Agent and the Grantors shall promptly enter into Control Agreements in favor of the Collateral Agent with the banks, Securities Intermediaries or Commodity Intermediaries with which such Deposit Accounts and Securities Accounts are maintained granting to the Collateral Agent Control over such accounts. The Collateral Agent agrees with each Grantor that, in the case of a Deposit Account subject to the Collateral Agent's Control, the Collateral Agent shall not give any instructions directing the disposition of funds from time to time credited to any Deposit Account or withhold any withdrawal rights from such Grantor with respect to funds from time to time credited to any Deposit Account or, in the case of a Securities Account or Commodity Account subject to the Collateral Agent's Control, the Collateral Agent shall not give any Entitlement Orders or instructions or directions to any Securities Intermediary or Commodity Intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by such Grantor, unless, in each case, an Event of Default has occurred and is continuing or, after giving effect to any withdrawal, would occur.
(iii) If any Grantor shall at any time hold or acquire any
certificated securities constituting Investment Property that are not
Pledged Securities under the Pledge Agreement, such Grantor shall
immediately endorse, assign and deliver the same to the Collateral Agent,
accompanied by such instruments of transfer or assignment duly executed in
blank, all in form and substance reasonably satisfactory to the Collateral
Agent; provided, that in no event shall Grantor be required to pledge any
Excluded Equity. If any securities now or hereafter acquired by any Grantor
constituting Investment Property that are not Pledged Securities under the
Pledge Agreement are uncertificated and are not held in accounts required
to be subject to a control agreement pursuant to clause (ii) of this
Section 4.04(b), such Grantor shall promptly notify the Collateral Agent
thereof and shall use commercially reasonable efforts to cause the issuer
to agree to comply with instructions from the Collateral Agent as to such
securities, without further consent of any Grantor pursuant to an issuer's
acknowledgement in form and substance reasonably acceptable to the
Collateral Agent.
(iv) As between the Collateral Agent and the Grantors, the Grantors shall bear the investment risk with respect to the Investment Property, and the risk of loss of, damage to or the destruction of the Investment Property, whether in the possession of, or maintained as a security entitlement or deposit by, or subject to the control of, the Collateral Agent, a Securities Intermediary, a Commodity Intermediary, any Grantor or any other Person; provided, however, that nothing contained in this Section 4.04(b) shall release or relieve any Securities Intermediary or Commodity Intermediary of its duties
and obligations to the Grantors or any other Person under any Control Agreement or under applicable law.
(v) Each Grantor shall promptly pay all Charges and fees with respect to the Investment Property pledged by it under this Agreement, except that no such Charge or fee need be paid if such Grantor is permitted under the Credit Agreement to not pay such Charge or fee or if the amount or validity thereof is currently being contested in good faith by appropriate proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books of such Grantor and such proceedings could not reasonably be expected to result in the sale, forfeiture or loss of any material portion of the Collateral or any interest therein. After the occurrence and during the continuance of an Event of Default, in the event any Grantor shall fail to make such payment contemplated in the immediately preceding sentence, the Collateral Agent may do so for the account of such Grantor and the Grantors shall promptly reimburse and indemnify the Collateral Agent from all costs and expenses incurred by the Collateral Agent under this Section 4.04(b)(v).
(c) Electronic Chattel Paper and Transferable Records. If any amount
individually in excess of $250,000 or in the aggregate in excess of
$1,000,000 payable under or in connection with any of the Collateral shall
be evidenced by any Electronic Chattel Paper or any "transferable record,"
as that term is defined in Section 201 of the Federal Electronic Signatures
in Global and National Commerce Act, or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction, the
Grantor acquiring such Electronic Chattel Paper or transferable record
shall promptly notify the Collateral Agent thereof and shall take such
action as the Collateral Agent may reasonably request to vest in the
Collateral Agent control under UCC Section 9-105 of such Electronic Chattel
Paper or control under Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, Section 16 of the
Uniform Electronic Transactions Act, as so in effect in such jurisdiction,
of such transferable record. The Collateral Agent agrees with such Grantor
that the Collateral Agent will arrange, pursuant to procedures reasonably
satisfactory to the Collateral Agent and so long as such procedures will
not result in the Collateral Agent's loss of control, for the Grantor to
make alterations to the Electronic Chattel Paper or transferable record
permitted under UCC Section 9-105 or, as the case may be, Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act of
Section 16 of the Uniform Electronic Transactions Act for a party in
control to allow without loss of control, unless an Event of Default has
occurred and is continuing or would occur after taking into account any
action by such Grantor with respect to such Electronic Chattel Paper or
transferable record.
(d) Letter-of-Credit Rights. If any Grantor is at any time a beneficiary under a Letter of Credit now or hereafter issued in favor of such Grantor in an amount individually in excess of $250,000 or in the aggregate in excess of $1,000,000, such Grantor shall promptly notify the Collateral Agent and such Grantor shall use commercially reasonable efforts to (unless the Collateral Agent requests otherwise) pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, either (i) arrange for the issuer and any confirmer of such Letter of Credit to
consent to an assignment to the Collateral Agent of the proceeds of any drawing under the Letter of Credit or (ii) arrange for the Collateral Agent to become the transferee beneficiary of such Letter of Credit.
(e) Commercial Tort Claims. As of the date hereof each Grantor hereby represents and warrants that as of the date hereof it holds no Commercial Tort Claims other than those listed on Schedule 13 to the Perfection Certificate. If any Grantor shall at any time hold or acquire a Commercial Tort Claim having a value individually in excess of $250,000 or in the aggregate in excess of $1,000,000 such Grantor shall promptly notify the Collateral Agent thereof and grant to the Collateral Agent in writing signed by such Grantor a security interest therein and in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Collateral Agent.
(f) Motor Vehicles. Upon the request of the Collateral Agent during the existence of an Event of Default, each Grantor shall deliver to the Collateral Agent originals of the certificates of title or ownership for the motor vehicles (and any other Equipment covered by Certificates of Title or ownership) owned by it with the Collateral Agent listed as a lienholder therein. Such requirement shall apply to the Grantors if any such motor vehicle (or any such other Equipment) has a fair market value over $50,000.
SECTION 4.05. No Conflicts, Consents, etc. In the event that an Event of Default has occurred and is continuing and the Collateral Agent desires to exercise any remedies, voting or consensual rights or attorney-in-fact powers set forth in this Agreement and determines it necessary to obtain any approvals or consents of any Governmental Authority or any other Person therefor, then, upon the reasonable request of the Collateral Agent, such Grantor agrees to use commercially reasonable efforts to assist and aid the Collateral Agent to obtain as soon as practicable any necessary approvals or consents for the exercise of any such remedies, rights and powers.
ARTICLE V
Covenants
SECTION 5.01. Protection of Security. Each Grantor shall, at its own cost and expense, take any and all actions reasonably necessary to protect the Security Interest of the Collateral Agent in the Collateral and the priority thereof against any Lien other than Permitted Liens.
SECTION 5.02. Further Assurances. Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements or other documents in connection herewith or therewith.
SECTION 5.03. Taxes; Encumbrances. During the continuance of an Event of Default at its option, the Collateral Agent may (i) discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Collateral except to the extent the same constitute Permitted Liens, and (ii) pay for the maintenance and preservation of the Collateral to the extent any Grantor fails to do so as required by this Agreement and each Grantor jointly and severally agrees to reimburse the Collateral Agent on demand for any payment made or any expense incurred by the Collateral Agent pursuant to the foregoing authorization; provided, however, that nothing in this Section 5.03 shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.
SECTION 5.04. Continuing Obligations of the Grantors. Each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the Secured Parties from and against any and all liability for the observance and performance (to the extent such performance by the Collateral Agent or the Secured Parties, as applicable, is permitted hereunder) by the Collateral Agent or any Secured Party of all conditions and obligations to be observed and performed by each Grantor under each contract, agreement or instrument relating to the Collateral, all in accordance with the terms and conditions thereof, except to the extent resulting from the gross negligence or willful misconduct of the Collateral Agent or the Secured Parties.
SECTION 5.05. Use and Disposition of Collateral. None of the Grantors shall grant any Lien in respect of the Collateral other than Liens securing the Obligations and Permitted Liens.
SECTION 5.06. Insurance. The Grantors, at their own expense, shall maintain or cause to be maintained insurance required under Section 5.04 of the Credit Agreement.
SECTION 5.07. Certain Covenants and Provisions Regarding Patent, Trademark and Copyright Collateral.
(a) Each Grantor agrees that it will not do any act, or knowingly omit to do any act, whereby any Patent that is in such Grantor's reasonable judgment material to the conduct of the Loan Parties' business, taken as a whole, may become invalidated or dedicated to the public.
(b) Each Grantor will, for each Trademark that is in such Grantor's reasonable judgment material to the conduct of the Loan Parties' business, taken as a whole, use its commercially reasonable efforts to (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for nonuse, (ii) maintain the quality of products and services offered under such Trademark, (iii) display such Trademark with notice of Federal or foreign registration to the extent necessary and sufficient to establish and preserve its rights under applicable law and (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights.
(c) Each Grantor will, for each work covered by a Copyright that is in such Grantor's reasonable judgment material to the conduct of the Loan Parties' business, taken as a whole, publish, reproduce, display, adopt and distribute such work with such appropriate copyright notice as necessary and sufficient to establish and preserve its maximum rights under applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent as soon as practicable if it knows or has reason to know that any Patent, Trademark or Copyright that is in such Grantor's reasonable judgment material to the conduct of the business of the Loan Parties, taken as a whole, may become abandoned, lost or dedicated to the public, or of any adverse determination or development including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office or United States Copyright Office regarding such Grantor's ownership of any Patent, Trademark or Copyright material to the conduct of its business, or its right to register the same, or to keep and maintain the same.
(e) In the event that any Grantor, either itself or through any agent, employee, licensee or designee, files an application for or, following the Effective Date, becomes the registered owner of, any Patent, Trademark or Copyright (or for the registration of any Trademark or Copyright) with the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States, such Grantor shall with the delivery of its quarterly financial statements notify the Collateral Agent thereof, and shall execute and deliver any and all agreements, instruments, documents and papers as the Collateral Agent may reasonably request to evidence the Collateral Agent's security interest in such Patent, Trademark or Copyright or application therefor, and each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute and file such writings solely for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable until this Agreement is terminated.
(f) Each Grantor will take all necessary steps that are consistent with its reasonable business judgment in any proceeding before the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States to maintain and pursue each material application relating to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks or Copyrights that in such Grantor's reasonable judgment is material to the conduct of the business of the Loan Parties, taken as a whole, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with its reasonable business judgment, to initiate opposition, interference and cancellation proceedings against third parties.
(g) To each Grantor's knowledge, on and as of the date hereof, such Grantor is not infringing upon any Patent, Trademark or Copyright of any other Person other than such infringement that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect and no proceedings have been instituted or are pending against such Grantor or, to such Grantor's knowledge, threatened, and no claim against such Grantor has been received by such Grantor, alleging any such violation.
(h) Upon and during the continuance of an Event of Default, each Grantor shall upon the written request of the Collateral Agent use its commercially reasonable efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License or Trademark License to effect the assignment of all of such Grantor's right, title and interest thereunder to the Collateral Agent or its designee.
Notwithstanding anything herein to the contrary, any Grantor may, for commercially reasonable cause, abandon, fail to maintain or allow to become lost or dedicated to the public any Patent, Trademark or Copyright if doing so would not violate Section 5.03 of the Credit Agreement.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. After the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver each item of Collateral to the Collateral Agent (or, to the extent delivery of such Collateral would be commercially impracticable, make such Collateral available), and it is agreed that the Collateral Agent shall have the right to take any of or all the following actions at the same or different times: (a) with respect to any Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Collateral by the applicable Grantors to the Collateral Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of applicable law or any then existing licensing arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Collateral and without liability for trespass to enter any premises where the Collateral may be located for the purpose of taking possession of or removing the Collateral and, generally, to exercise any and all rights afforded to a secured party under the UCC or other applicable law. Without limiting the generality of the foregoing, each Grantor agrees that the Collateral Agent shall have the right, subject to the requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral, at public or private sale or at any broker's board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give a Grantor ten (10) Business Days' prior written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the UCC) of the Collateral Agent's intention to make any sale or other disposition of such Grantor's Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker's board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice of such sale. At any such sale, the Col-lateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Section, any Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any Obligation then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section shall be deemed to conform to the commercially reasonable standards as provided in Section 9-611 of the UCC.
SECTION 6.02. Application of Proceeds. The proceeds of any sale of Collateral pursuant to Section 6.01, as well as any Collateral consisting of cash, shall be applied by the Collateral Agent as provided in Section 7.06 of the Credit Agreement.
SECTION 6.03. Grant of License to Use Intellectual Property. For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Article at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor
hereby grants to the Collateral Agent a nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors during the existence of an Event of Default) to use, license or sublicense any of the Collateral, except to the extent that such license may not be granted as a result of an exclusive license arrangement, consisting of Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof. The use of such license by the Collateral Agent shall be exercised, at the option of the Collateral Agent, after the occurrence and during the continuation of an Event of Default; provided that any license or sublicense entered into by the Collateral Agent with a Person other than an Agent, Lender or Arranger under the Loan Documents in accordance herewith shall be binding upon the Grantors notwithstanding any subsequent cure of an Event of Default.
ARTICLE VII
Collateral Account
SECTION 7.01. Establishment of Collateral Account. The Collateral Agent is hereby authorized to establish and maintain in the name of such Collateral Agent and pursuant to a Control Agreement, a restricted deposit account designated "Mid-Western Aircraft Systems, Inc. Collateral Account". Each Grantor shall deposit into the Collateral Account from time to time all amounts required to be deposited in the Collateral Account by the Credit Agreement and any amounts specifically required to be deposited therein by any other Loan Documents.
The balance from time to time in the Collateral Account shall constitute part of the Collateral and shall not constitute payment of the Obligations until applied as hereinafter provided. At any time following the occurrence and during the continuance of an Event of Default, the Collateral Agent may in its discretion apply or cause to be applied the balance from time to time outstanding to the credit of the Collateral Account to the payment of the Obligations in the manner specified in the Credit Agreement.
The Collateral Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over the Collateral Account. Each deposit in the Collateral Account shall be held during the existence of an Event of Default by the Collateral Agent as collateral for the payment and performance of the obligations of Grantors under the Loan Documents. If any Grantor is required hereunder to deposit an amount of cash collateral into the Collateral Account as a result of the occurrence of an Event of Default, such amount together with interest income (if any) (to the extent not applied as provided herein or in any other Loan Document) shall be returned to such Grantor within three Business Days after all Defaults or Events of Default have been cured or waived.
Other than any interest earned on the investment of such deposits, which investments shall be made at Grantors' risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 10.01 of the Credit Agreement. All communications and notices hereunder to any Guarantor shall be given to it at its address or telecopy number set forth on Schedule I, with a copy to Borrowers.
SECTION 8.02. Survival of Agreement. All covenants, agreements, representations and warranties made by any Grantor herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Collateral Agent and the other Secured Parties and shall survive the making by the Lenders of the Loans and the Lenders' issuance of and participations in Letters of Credit, regardless of any investigation made by the Secured Parties or on their behalf, and shall continue in full force and effect until this Agreement shall terminate.
SECTION 8.03. Binding Effect. This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Grantor and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of such Grantor, the Collateral Agent and the other Secured Parties and their respective successors and assigns, except that no Grantor shall have the right to assignor transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly permitted by any of the other Loan Documents.
SECTION 8.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.
SECTION 8.05. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.06. Waivers; Amendment; Several Agreement. (a) No failure or delay of the Collateral Agent in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent hereunder and of the other Secured Parties under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provisions of this Agreement or consent to any departure by any Grantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on any Grantor in any case shall entitle such Grantor or any other Grantor to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into among Borrowers, the Collateral Agent and the Grantors with respect to which such waiver, amendment or modification is to apply, subject to any consents required in accordance with Section 10.08 of the Credit Agreement.
(c) This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.
SECTION 8.07. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.07.
SECTION 8.08. Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. It is understood and agreed among the parties that this Agreement shall create separate security interests in the Collateral securing the Obligations (or in the case of the Additional Borrower Parties, the Obligations of the Additional Borrower Parties) as provided in Section 3.01, and that any determination by any court with jurisdiction that the security interest securing any Obligation or class of Obligations is invalid for any reason shall not in and of itself invalidate the security interest securing any other Obligations hereunder.
SECTION 8.09. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract and shall become effective as provided in Section 8.04. Delivery of
an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
SECTION 8.10. Headings. Article and Section headings used herein are for the purpose of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 8.11. Jurisdiction; Consent to Service of Process.
(a) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Collateral Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against any Grantor or its properties in the courts of any jurisdiction.
(b) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court referred to in paragraph (c) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for in Section 10.15 of the Credit Agreement. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
SECTION 8.12. Termination.
(a) This Agreement and the Security Interest (i) shall terminate when all
the Obligations (other than contingent indemnification obligations that are not
then due and payable) have been paid in full, the Lenders have no further
commitment to lend under the Credit Agreement or to issue or participate in
Letters of Credit and the LC Exposure has been reduced to zero or collateralized
(at which time the Collateral Agent shall execute and deliver to the Grantors,
at the Grantors' expense, all UCC termination statements and other documents
which the Grantors shall reasonably request to evidence such termination and
shall return to the Grantors any Collateral held by the Collateral Agent) and
(ii) shall continue to be effective or shall be reinstated, as the case may be,
if at any time any payment in respect of any Obligation is
rescinded or must otherwise be restored by any Secured Party upon any bankruptcy or reorganization of any Grantor or otherwise. Any execution and delivery of termination statements or documents pursuant to this Section 8.12(a) shall be without recourse to or warranty by the Collateral Agent. A Subsidiary Loan Party shall automatically be released from its obligations hereunder and the Security Interest in the Collateral of such Subsidiary Loan Party shall be automatically released in the event that the Equity Interests of such Subsidiary Loan Party shall be sold, transferred or otherwise disposed of such that such Person is no longer a Subsidiary in accordance with the terms of each Loan Document. The Additional Borrower Parties shall automatically be released from their obligations hereunder and the Security Interest in the Collateral of the Additional Borrower Parties shall be automatically released in the event the Additional Borrower assigns its obligations under the Credit Agreement to the U.S. Borrower in accordance with Section 10.19 of the Credit Agreement.
(b) Upon any sale or other transfer or disposition by any Grantor of any Collateral (other than to another Grantor) that is permitted under each Loan Document or, upon the effectiveness of any written consent to the release of the security interest granted hereby in any Collateral pursuant to Section 10.08 of the Credit Agreement, the Security Interest in such Collateral shall be automatically released. In connection with such release, the Collateral Agent shall execute and deliver to any Grantor, at such Grantor's expense, all UCC termination statements and other documents that such Grantor shall reasonably request to evidence such termination or release and shall return to such Grantor any Collateral owned by such Grantor that is in the Collateral Agent's possession. Any execution and delivery of UCC termination statements and similar documents pursuant to this Section 8.12(b) shall be without recourse to or warranty by the Collateral Agent.
SECTION 8.13. Additional Grantors. To the extent any Domestic Subsidiary shall be required to become a Grantor pursuant to the Credit Agreement, upon execution and delivery by the Collateral Agent and such Domestic Subsidiary of an instrument in the form of Annex I hereto, such Domestic Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. Each such Domestic Subsidiary shall at such time deliver to the Collateral Agent a completed Perfection Certificate. The execution and delivery of any such instrument shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.
SECTION 8.14. Financing Statements. Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements and amendments thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including (i) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor, (ii) any financing or continuation statements or other documents without the signature of such Grantor where permitted by law, including the filing of a financing statement describing the Collateral as "all assets now owned or hereafter acquired by the Grantor or in which Grantor otherwise has rights" and (iii) in the case of a financing statement filed as a fixture filing or covering Collateral constituting minerals or the like to be extracted or timber to be cut, a sufficient description of the real property to which such Collateral relates. Each Grantor
agrees to provide all information described in the immediately preceding sentence to the Collateral Agent promptly upon request. Copies of such financing statements, as filed, should be sent promptly to Borrowers at their address for notices pursuant to Section 8.01.
SECTION 8.15. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the Collateral Agent the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable until this Agreement is terminated and coupled with an interest. Without limiting the generality of the foregoing, the Collateral Agent shall have the right, after the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent's name or in the name of such Grantor, (a) to receive, endorse, assign or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due under and by virtue of any Collateral; (d) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (e) to send verifications of Accounts to any Account Debtor; (f) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (g) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (h) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent; and (i) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes; provided, that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for gross negligence or willful misconduct.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
MID-WESTERN AIRCRAFT SYSTEMS, INC.
By: /s/ Nigel Wright ------------------------------------------- Name: Nigel Wright Title: Chief Financial Officer, Vice President, Secretary and Treasurer |
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.
By:: /s/ Nigel Wright ------------------------------------------ Name: Nigel Wright Title: Chief Financial Officer, Vice President, Secretary and Treasurer |
ONEX WIND FINANCE LP
By: its general partner, 1648701 Ontario Inc.
By: /s/ Nigel Wright ------------------------------------------- Name: Nigel Wright Title: Representative |
ONEX WIND FINANCE LLC
By: /s/ Nigel Wright ------------------------------------------- Name: Nigel Wright Title: Director |
3101447 NOVA SCOTIA COMPANY
By: /s/ Nigel Wright ------------------------------------------- Name: Nigel Wright Title: President and Chief Financial Officer By: /s/ Seth Mersky ------------------------------------------- Name: Seth Mersky Title: Vice President |
[Security Agreement]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
MID-WESTERN AIRCRAFT SYSTEMS, INC.
MID-WESTERN AIRCRAFT SYSTEMS
HOLDINGS, INC.
ONEX WIND FINANCE LP
By: its general partner,
1648701 Ontario Inc.
ONEX WIND FINANCE LLC
By: /s/ Donald West ------------------------------------ Name: Donald F. West Title: Director |
3101447 NOVA SCOTIA COMPANY
[Security Agreement]
CITICORP NORTH AMERICA, INC.,
as Collateral Agent
By: /s/ David Wirdnam ------------------------------------ Name: David J. Wirdnam Title: Vice President |
Exhibit 10.21
EXECUTION COPY
CREDIT AGREEMENT
Dated as of June 16, 2005
Among
ONEX WIND FINANCE LP,
as the Borrower,
THE GUARANTORS NAMED HEREIN
as Guarantors,
THE LENDERS NAMED HEREIN
as the Lenders,
and
THE BOEING COMPANY,
as Agent
TABLE OF CONTENTS
Page ---- ARTICLE 1 LOANS.......................................................... 1 1.1. Loans........................................................ 1 ARTICLE 2 INTEREST AND FEES.............................................. 2 2.1. Interest..................................................... 2 2.2. Maximum Interest Rate........................................ 3 ARTICLE 3 PAYMENTS AND PREPAYMENTS....................................... 3 3.1. Termination of the Facility.................................. 3 3.2. Repayment and Voluntary Prepayment of the Loans.............. 3 3.3. Payments by the Borrower..................................... 4 3.4. Taxes........................................................ 4 3.5. Change of Lending Office..................................... 8 3.6. Assignment of Commitments Under Certain Circumstances........ 8 ARTICLE 4 GENERAL WARRANTIES AND REPRESENTATIONS......................... 9 4.1. Authorization, Validity, and Enforceability of this Agreement and the Loan Documents....................................... 9 4.2. Validity and Perfection of Security Interest................. 9 4.3. Organization and Qualification............................... 9 ARTICLE 5 AFFIRMATIVE COVENANTS OF THE MID-WESTERN LOAN PARTIES.......... 10 5.1. Financial Statements and other Information................... 10 5.2. Preservation of Existence.................................... 13 5.3. Additional Collateral; Additional Guarantors................. 13 5.4. Security Interests; Further Assurances....................... 14 5.5. Information Regarding Collateral............................. 14 ARTICLE 5-A AFFIRMATIVE COVENANTS OF BORROWER LOAN PARTIES............... 16 5.1A Reports and Other Information................................ 16 5.2A Preservation of Existence.................................... 17 5.3A Additional Collateral; Additional Guarantors................. 17 5.4A Security Interests; Further Assurances....................... 17 5.5A Information Regarding Collateral............................. 17 5.6A Use of Proceeds.............................................. 18 5.7A Tax Status................................................... 18 ARTICLE 6 NEGATIVE COVENANTS OF MID-WESTERN LOAN PARTIES................. 18 6.1. Prepayments of Subordinated Indebtedness..................... 18 |
6.2. Restricted Payments.......................................... 18 6.3. Sponsor Management Fees...................................... 19 6.4. Anti-Layering................................................ 19 6.5. Sponsor Indebtedness......................................... 19 ARTICLE 6-A NEGATIVE COVENANTS OF THE BORROWER LOAN PARTIES.............. 20 6.1A Limitations on Activities.................................... 20 ARTICLE 7 CONDITIONS PRECEDENT........................................... 21 7.1. Conditions Precedent to the Effectiveness of This Agreement.. 21 7.2. Condition Precedent to Borrowings............................ 23 ARTICLE 8 DEFAULT; REMEDIES.............................................. 24 8.1. Events of Default............................................ 24 8.2. Remedies..................................................... 25 ARTICLE 9 TERM AND TERMINATION........................................... 26 9.1. Term and Termination......................................... 26 ARTICLE 10 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS.. 26 10.1. Amendments and Waivers....................................... 26 10.2. Assignments.................................................. 27 ARTICLE 11 THE AGENT..................................................... 28 11.1. Appointment and Authorization................................ 28 11.2. Collateral Matters........................................... 28 11.3. Restrictions on Actions by Lenders........................... 28 11.4. Payments by Agent to Lenders................................. 29 11.5. Concerning the Collateral and the Related Loan Documents..... 29 ARTICLE 12 RESERVED...................................................... 29 ARTICLE 13 MISCELLANEOUS................................................. 29 13.1. Capitalized Terms, Rules of Construction, Annexes, Exhibits and Schedules................................................ 29 13.2. No Waivers; Cumulative Remedies.............................. 29 13.3. Severability................................................. 30 13.4. Governing Law; Choice of Forum; Service of Process........... 30 13.5. WAIVER OF JURY TRIAL......................................... 31 13.6. Notices...................................................... 31 13.7. Binding Effect............................................... 32 13.8. Final Agreement.............................................. 32 13.9. Counterparts................................................. 32 |
13.10. Captions..................................................... 32 13.11. Confidentiality.............................................. 32 13.12. Conflicts with Other Loan Documents.......................... 33 13.13. Intercreditor and Subordination Agreement.................... 33 13.14. Subordination of Obligations to all Senior Secured Debt...... 33 13.15. Assignment and Release of Borrower Loan Parties' Obligations. 34 13.16. Costs and Expenses........................................... 34 13.17. No Recourse Against Limited Partners......................... 34 |
ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A - DEFINED TERMS EXHIBIT A - FORM OF BORROWING NOTICE EXHIBIT B - FORM OF NOTE EXHIBIT C - FORM OF SECTION 3.4 CERTIFICATE EXHIBIT D - FORM OF GUARANTEE AGREEMENT EXHIBIT E FORM OF NSULC TAX INDEMNITY AGREEMENT EXHIBIT F - FORM OF ONEX GUARANTEE AGREEMENT EXHIBIT G-1 - FORM OF ONEX PLEDGE AGREEMENT (GP INTERESTS) EXHIBIT G-2 FORM OF ONEX PLEDGE AGREEMENT (LP INTERESTS) EXHIBIT H - FORM OF PLEDGE AGREEMENT EXHIBIT I - FORM OF REMARKETING AGREEMENT EXHIBIT J - FORM OF SECURITY AGREEMENT EXHIBIT K - FORM OF WLLC SUBORDINATION AGREEMENT |
SCHEDULE 1.2(a) - COMMITMENTS
SCHEDULE 1.2(b) - KANSAS BOND FINANCING TERM SHEET
CREDIT AGREEMENT
This Credit Agreement, dated as of June 16, 2005, among the lenders listed on the signature pages hereof (such lenders, together with their respective successors and assigns, are referred to hereinafter each individually as a "Lender" and collectively as the "Lenders"), The Boeing Company, as Agent for the Lenders (in its capacity as Agent, together with any successor Agent, the "Agent"), Onex Wind Finance LP, a Delaware limited partnership (the "Borrower") and the Guarantors (as defined herein).
WITNESSETH:
WHEREAS, the Borrower has requested that the Lenders provide a subordinated, secured non-revolving line of credit in an aggregate amount of up to $150,000,000; and
WHEREAS, as provided in Section 13.1, capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed thereto in Annex A which is attached hereto and incorporated herein; the rules of construction contained therein shall govern the interpretation of this Agreement, and all Annexes, Exhibits and Schedules attached hereto are incorporated herein by reference.
NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
LOANS
1.1. Loans.
(a) Amounts of Loans. Subject to the satisfaction of the condition precedent set forth in Section 7.2, each Lender agrees to make a loan (any such loan being referred to as a "Loan" and such loans being referred to collectively as the "Loans") to the Borrower from time to time, on any day during the Availability Period, in an amount not to exceed the amount of such Lender's unfunded Commitment at such time; provided, that not more than one (1) Borrowing may be made by the Borrower during any fiscal quarter of Mid-Western.
(b) Procedure for Borrowing.
(i) Each Borrowing by the Borrower shall be made upon the Borrower's written notice delivered to the Agent in the form attached as Exhibit A hereto (each a "Borrowing Notice"), which must be received by the Agent no later thirty (30) days prior to the requested Funding Date, specifying (x) the amount of the requested Borrowing, which shall be in a minimum aggregate principal amount of $25,000,000 and integral multiples of $5,000,000 in excess thereof (or the remaining amount of the aggregate Commitments, if less), (y) the requested Funding Date, which must be the first Business Day of a calendar quarter and (z) the account of the Borrower to which the Agent shall transfer the proceeds of the Loans being requested.
(ii) Following receipt of a Borrowing Notice, the Agent shall promptly notify each Lender of the amount of its Pro Rata Share of the requested Loans. Each Lender shall make the amount of its Loan available to the Agent in immediately available funds to the account designated by the Agent to the Lenders not later than 12:00 noon (New York time) on the day specified in the Borrowing Notice; provided, that if any Lender fails to make the amount of its Loan available to the Agent in immediately available funds on or prior to such time, Boeing shall make the amount of such Lender's Loan available to the Agent in immediately available funds at such time. Upon satisfaction of the condition set forth in Section 7.2, the Agent shall make all funds so received available to the Borrower by wire transfer of such funds to the account of the Borrower specified in the Borrowing Notice. For greater certainty, each Loan by a Lender shall constitute a separate Loan from any other Loan or Loans made to the Borrower by that Lender or any other Lender.
(c) Evidence of Loans. Upon the request of any Lender made through the Agent, the Borrower shall execute and deliver to such Lender (through the Agent) a promissory note substantially in the form of Exhibit B attached hereto and made a part hereof (such promissory notes being hereinafter referred to collectively as the "Notes" and each of such promissory notes being hereinafter referred to individually as a "Note") which shall evidence such Lender's Loans.
ARTICLE 2
INTEREST AND FEES
2.1. Interest.
(a) Interest Rate. The Unpaid Amount of each Loan shall bear interest from the date such Loan is made until the Unpaid Amount of such Loan is paid in full in cash at a fluctuating per annum rate equal to the Interest Rate. All interest charges shall be computed on the basis of a year of 360 days and actual days elapsed.
(b) Interest Payments. The Borrower shall pay to the Agent, for the ratable benefit of the Lenders, interest on the Unpaid Amount of each Loan in arrears for the immediately preceding Interest Period for such Loan on February 15, May 15, August 15 and November 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"); provided, that if a Payment Block Event shall exist on any Interest Payment Date, the Borrower shall not (and shall not be required to) pay the interest on the Unpaid Amount of any Loan due on such Interest Payment Date and such interest shall instead remain outstanding and be added to the Unpaid Amount of such Loan (any such interest on a Loan not permitted to be paid on an Interest Payment Date pursuant to this proviso being referred to herein as "Deferred Interest"); provided, further, that the Borrower may at its option (but shall not be required to) pay any Deferred Interest on any Loan resulting from a Payment Block Event at any time after such Payment Block Event ceases to exist.
(c) Default Rate. If an Event of Default under Section 8.1(a), (e) or
(f) or a Payment Block Event has occurred and is continuing, then, while any
such Event of Default or
Payment Block Event is continuing, the Unpaid Amount of each Loan shall bear interest at a per annum rate 2% greater than the rate which would otherwise be applicable.
2.2. Maximum Interest Rate. In no event shall any interest rate
provided for hereunder exceed the maximum rate legally chargeable by any Lender
under applicable law for such Lender with respect to loans of the type provided
for hereunder (the "Maximum Rate"). If, in any month, any interest rate for the
Unpaid Amount of any Loan, absent such limitation, would have exceeded the
Maximum Rate, then the interest rate for the Unpaid Amount of such Loan for that
month shall be the Maximum Rate, and, if in future months, that interest rate
would otherwise be less than the Maximum Rate, then that interest rate for the
Unpaid Amount of such Loan shall remain at a Maximum Rate until such time as the
amount of interest paid hereunder for the Unpaid Amount of such Loan equals the
amount of interest which would have been paid on the Unpaid Amount of such Loan
if the same had not been limited by the Maximum Rate. In the event that, upon
payment in full of the Unpaid Amount of each Loan, the total amount of interest
paid or accrued under the terms of this Agreement for the Unpaid Amount of any
Loan is less than the total amount of interest which would, but for this Section
2.2, have been paid or accrued for the Unpaid Amount of such Loan if the
interest rate otherwise set forth in this Agreement for the Unpaid Amount of
such Loan had at all times been in effect, then the Borrower shall, to the
extent permitted by applicable law, pay to the Agent, for the account of the
Lenders, an amount equal to the excess of (a) the lesser of (i) the amount of
interest which would have been charged for the Unpaid Amount of such Loan if the
Maximum Rate had, at all times, been in effect or (ii) the amount of interest
which would have accrued for the Unpaid Amount of such Loan had the interest
rate otherwise set forth in this Agreement, at all times, been in effect over
(b) the amount of interest actually paid or accrued under this Agreement for the
Unpaid Amount of such Loan.
ARTICLE 3
PAYMENTS AND PREPAYMENTS
3.1. Termination of the Facility. The Borrower may terminate this Agreement at any time by providing at least two (2) Business Days' written notice to the Agent and prepaying in full the Unpaid Amount of each Loan, together with accrued and unpaid interest thereon, and all other Obligations then outstanding.
3.2. Repayment and Voluntary Prepayment of the Loans.
(a) Subject to the terms of the Intercreditor and Subordination Agreement, the Borrower shall repay the Unpaid Amount of each Loan to the Agent, for the account of the Lenders, on the Termination Date; provided, that the Borrower shall not (and shall not be required to) make any such repayment unless at least 91 days have elapsed since the Discharge of Senior Obligations.
(b) Subject to the terms of the Intercreditor and Subordination Agreement, the Borrower may prepay the Unpaid Amount of any Loan in whole or in part without premium or penalty, at any time and from time to time. All voluntary prepayments of the Unpaid Amount of any Loan shall be accompanied by the payment of all accrued but unpaid interest on the amount
of the Unpaid Amount of such Loan being prepaid to the date of prepayment. Amounts prepaid in respect of the Unpaid Amount of any Loan may not be reborrowed.
3.3. Payments by the Borrower. All payments by the Borrower shall be made to the Agent for the account of the Lenders, at the account designated by the Agent, and shall be made in Dollars and in immediately available funds, no later than 5:00 p.m. (New York time) on the date specified herein. Any payment received by the Agent after such time shall be deemed (for purposes of calculating interest only) to have been received on the following day and any applicable interest shall continue to accrue.
3.4. Taxes.
(a) All payments by the Loan Parties of principal of, and interest on, the Loans and all other amounts (including fees) payable hereunder shall be made without setoff, counterclaim or other defense, free and clear of, and without deduction or withholding for, any and all present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, assessments, deductions, withholdings or other charges of any nature whatsoever imposed by any taxing authority on the Agent, any Lender, or any assignee of a Lender (a "Transferee"), including any interest, additions to tax or penalties applicable thereto ("Taxes"), except as required by applicable law. If any Indemnified Taxes (defined below) are required by applicable law, rule or regulation to be withheld or deducted from any payment by a Loan Party or required to be paid by a Loan Party on behalf of the Agent or a Lender or Transferee, then such Loan Party shall so withhold or deduct and remit or so pay such Taxes in accordance with such requirement. In the event that any withholding or deduction from any payment to be made by a Loan Party hereunder (or any payment by a Loan Party on behalf of the Agent or a Lender or Transferee as a result of the accrual or incurrence of any Obligation) is required in respect of any Indemnified Taxes pursuant to any applicable law, rule or regulation then such Loan Party will:
(i) timely pay directly to the relevant authority in accordance with applicable law the full amount required to be so withheld, deducted or paid;
(ii) promptly forward to the Agent an official receipt or other documentation (or copy thereof) reasonably satisfactory to the Agent evidencing such payment to such authority; and
(iii) pay to the Agent for the account of the Agent and the Lenders and Transferees, as the case may be, such additional amount or amounts as are necessary to ensure that the net amount actually received by the Agent and each Lender or Transferee, as the case may be, will equal the full amount the Agent or such Lender or Transferee, as the case may be, would have received had no such withholding, deduction or payment (including any withholding, deduction or payment applicable to additional amounts payable under this Section 3.4) been required.
For purposes hereof, "Indemnified Taxes" shall mean (i) any Taxes imposed under Part XIII of the Income Tax Act (Canada) (as the same may be amended, supplemented or replaced from time to time) and (ii) all Taxes other than Taxes imposed on or measured by the recipient's net income or taxable capital by a jurisdiction under the laws of which such Lender or Transferee is
organized or incorporated or in which its principal executive office or applicable lending office is located or in which it conducts a trade or business or has a permanent establishment (other than a trade, business or permanent establishment deemed to arise by virtue of the transactions contemplated by this Agreement) or is otherwise subject to such Taxes without regard to the transactions contemplated by this Agreement (provided, however, in the case of Boeing as Agent or Lender, or in the case of a Transferee that is an Affiliate of Boeing and is a United States person within the meaning of section 7701(a)(30) of the United States Internal Revenue Code of 1986, as amended (Boeing, in such capacity, and any such Transferee, are referred to herein as a "Boeing Lender"), Indemnified Taxes shall include any Taxes imposed on or measured by the recipient's net income or taxable capital by any jurisdiction other than the United States or a State or any political subdivision of the United States or a State (as the terms "United States" and "State" are defined in sections 7701(a)(9) and 7701(a)(10) of the United States Internal Revenue Code of 1986, as amended) to which Boeing or such Transferee would not have been subject but for the transactions contemplated by this Agreement (an "Indemnified Foreign Tax").
(b) The Loan Parties agree to timely pay any and all present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies (including interest, fines and penalties in addition to tax) arising from any payment made under any Loan Document or from the execution, delivery, registration or enforcement of, or otherwise with respect to, any Agent's Lien, Borrowing, Borrowing Notice, Commitment, Loan, Obligation, or Loan Document ("Other Taxes").
(c) If any Indemnified Taxes or Other Taxes are directly asserted against the Agent or any Lender or Transferee with respect to any payment received by the Agent or such Lender or Transferee hereunder, the Agent or such Lender or Transferee may pay such Indemnified Taxes or Other Taxes and the Borrower or other Loan Party will promptly pay to the Agent, Lender or Transferee an amount equal to such Indemnified Taxes or Other Taxes so paid by the Agent, Lender or Transferee plus such additional amounts (including any penalties, interest or expenses) as shall be necessary in order that the net amount received by such Person after the payment of such Indemnified Taxes (including any Indemnified Taxes on such additional amount) or Other Taxes shall equal the amount such Person would have received had such Indemnified Taxes or Other Taxes not been asserted. In addition, the Borrower or other Loan Party shall also reimburse the Agent and each Lender or Transferee, upon the written request of the Agent or such Lender or Transferee, for net additional Taxes imposed on or measured by the net income of such Person pursuant to the laws of the United States of America or any state or political subdivision thereof, or the jurisdiction in which such Person is organized or incorporated, or a jurisdiction in which the principal executive office or lending office of such Person is located or in which such Person conducts a trade or business or has a permanent establishment, or under the laws of any political subdivision or taxing authority of any such jurisdiction, as such Person shall determine are or were payable by such Person, in respect of amounts payable to such Person pursuant to this Section 3.4 in respect of Indemnified Taxes imposed as a consequence of payments by the Borrower or other Loan Party, taking into account the amount of Indemnified Taxes that are (x) allowed as a deduction in determining taxes imposed on or measured by the net income or allowed as a credit against any taxes imposed on or measured by net income and (y) payable to such Person pursuant to this Section 3.4.
(d) If the Borrower or other Loan Party fails to pay any Indemnified Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Agent, for the account of the Agent or the respective Lender or Transferee, the required receipts or other required documentary evidence, such Borrower or other Loan Party shall indemnify the Lenders and Transferees for any incremental Indemnified Taxes, Other Taxes, interest, penalties or other costs (including reasonable attorneys' fees and expenses) that may become payable by the Agent, any Lender or Transferee as a result of any such failure. For purposes of this Section 3.4, a distribution hereunder by the Agent to or for the account of the Agent or any Lender or Transferee shall be deemed a payment by the Borrower or other Loan Party.
(e) Each Lender or Transferee that is organized under the laws of a jurisdiction other than the United States of America or any state or political subdivision thereof shall, on or prior to the Closing Date (in the case of each Lender that is a party hereto on the Closing Date) or on or prior to the date of any assignment, participation or change in the designated lending office hereunder (in the case of a Transferee), execute and deliver, if legally able to do so, to the Borrower and the Agent (i) one or more (as the Borrower or the Agent may reasonably request) accurate and complete original signed copies of United States Internal Revenue Service Forms W 8ECI or W 8BEN or such other forms or documents (or successor forms or documents), appropriately completed, as may be applicable to establish the extent, if any, to which a payment to such Lender or Transferee is exempt from or entitled to a reduced rate of withholding or deduction of Taxes or (ii) if the Lender or Transferee is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service Form W 8ECI or Form W 8BEN (with respect to a complete exemption under an income tax treaty) pursuant to clause (i) above, (x) a certificate substantially in the form of Exhibit C (any such certificate, a "Section 3.4 Certificate") and (y) two accurate and complete original signed copies of Internal Revenue Service Form W 8BEN (with respect to the portfolio interest exemption) (or successor form) certifying to such Lender's or Transferee's entitlement as of such date to a complete exemption from United States withholding tax with respect to payments of interest to be made under this Agreement and under any Note. In addition, each such Lender and Transferee agrees that from time to time after the Closing Date, when a lapse in time or change in the Lender's or Transferee's circumstances renders the previous certification obsolete or inaccurate in any material respect, it will, to the extent legally able to do so, deliver to the Borrower or the Agent two new accurate and complete original signed copies of Internal Revenue Service Form W 8ECI, Form W 8BEN (with respect to the benefits of any income tax treaty), or Form W 8BEN (with respect to the portfolio interest exemption) and a Section 3.4 Certificate, as the case may be, and such other forms as may be required in order to confirm or establish the entitlement of such Lender to a continued exemption from or reduction in United States withholding tax with respect to payments under the Loan Documents. In addition, if legally able to do so, each Lender or Transferee that is organized under the laws of a jurisdiction other than Canada or any political subdivision thereof shall deliver on or prior to the Closing Date (in the case of each Lender that is a party hereto on the Closing Date) or on or prior to the date of any assignments or participations (in the case of a Transferee) to the Borrower and Agent, either written certification that it is not entitled to any exemption or reduction of withholding tax under the laws of Canada or, if it is so entitled, such properly completed and executed documentation as will permit such payments to be made without withholding or deduction of Taxes under the laws of Canada or at a reduced rate. In addition, each Lender and
Transferee agrees that from time to time after the Closing Date, when a lapse in time or change in the Lender's or Transferee's circumstances renders the previous certification obsolete or inaccurate in any material respect, it will, to the extent legally able to do so, deliver to the Borrower and the Agent such forms or certifications as may be required in order to confirm or establish the entitlement of such Lender, if it is so entitled, to a continued exemption from or reduction in Canadian withholding tax with respect to payments under the Loan Documents.
(f) The Borrower shall not be required to indemnify or to pay any
additional amounts to any Lender or Transferee with respect to any Indemnified
Taxes pursuant to this Section 3.4 to the extent that (i) any obligation of the
Borrower to withhold, deduct or pay amounts with respect to such Indemnified Tax
(other than a Tax imposed by Canada and other than an Indemnified Foreign Tax)
existed under generally accepted interpretation and application of the law on
the date such Lender or Transferee other than a Boeing Lender became a party to
this Agreement or otherwise becomes a Transferee, except to the extent that, at
the time such Lender or Transferee becomes a party to this Agreement or
otherwise becomes a Transferee, such Person's assignor was already entitled to
receive indemnification or additional amounts from a Loan Party with respect to
any such Indemnified Tax under the provisions hereunder; provided that this
clause (i) shall not apply to any Tax imposed on a Lender or Transferee in
connection with an interest or participation in any Loan or other obligation
that such Lender or Transferee was required to acquire pursuant to Section 3.6,
(ii) to the extent such Indemnified Taxes are imposed solely because any Lender
or Transferee fails to timely provide the forms or certificates required by the
provisions of the immediately preceding paragraph or (iii) in the case of a
payment of a U.S. source fee (other than a fee treated as interest for U.S.
federal income tax purposes) to a Lender or Transferee that is not a Boeing
Lender and that is described in clause (ii) of Section 3.4(e), to the extent
that such forms or certificates do not establish a complete exemption from U.S.
withholding taxes with respect to such payment. Notwithstanding anything to the
contrary, it is understood and agreed, for the avoidance of doubt, that the
obligation of the Loan Parties to indemnify for Indemnified Taxes withheld or
deducted from any payment (including, without limitation, fees) to be made by
the Loan Parties hereunder and to pay additional amounts under this Section 3.4
shall apply with respect to any and all Indemnified Taxes imposed on or with
respect to the Agent and each Lender and Transferee as a result of a change in
law or regulation or a change in the interpretation or application thereof by
any Governmental Authority having jurisdiction over such Person occurring after
the time such Person becomes a party to this Agreement.
(g) In the event that the Agent or any Lender or Transferee determines
that any event or circumstance that will lead to a claim by it under this
Section 3.4 has occurred, the Agent or such Lender or Transferee will use
commercially reasonable efforts to so notify each Borrower; provided that any
failure to provide such notice shall in no way impair the rights of the Agent or
any Lender or any Transferee to demand and receive compensation under this
Section 3.4.
(h) If the Borrower pays any additional amount under this Section 3.4 to a Lender and such Lender determines in its sole discretion that it has actually realized in connection therewith a refund or any reduction of, or credit against, its Tax liabilities (a "Tax Benefit") such Lender shall pay to such Borrower an amount that the Lender shall, in its sole
discretion, determine is equal to the after-tax net benefit obtained, if any, by
the Lender as consequence of such Tax Benefit net of all out-of-pocket expenses
of such Lender and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such Tax Benefit); provided,
however, that (i) any Lender may determine, in its sole discretion consistent
with the policies of such Lender, whether to seek a Tax Benefit; (ii) any Taxes
that are imposed on a Lender as a result of a disallowance or reduction
(including through the expiration of any tax credit carryover or carryback of
such Lender that otherwise would not have expired) of any Tax Benefit with
respect to which such Lender has made a payment to such Borrower pursuant to
this Section 3.4(h) shall be treated as Tax for which such Borrower is obligated
to indemnify such Lender pursuant to this Section 3.4; (iii) nothing in this
Section 3.4(h) shall require the Lender to disclose any confidential information
to any Loan Party (including, without limitation, its tax returns); and (iv)
notwithstanding anything to the contrary, in no event will any Lender be
required to pay any amount to such Borrower the payment of which would place
such Lender in a less favorable net after-tax position than such Lender would
have been in if the additional amounts giving rise to such Tax Benefits had
never been paid or if the applicable Borrowing had been made by Mid-Western
directly from such Lender.
3.5. Change of Lending Office. Each Lender (or Transferee) other than Boeing (or any Boeing Lender) agrees that, upon the occurrence of any event giving rise to the operation of Section 3.4 with respect to such Lender (or Transferee), it will, if requested by the Borrower, use commercially reasonable efforts (subject to overall policy considerations of such Lender (or Transferee)) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided that such designation is made on terms that, in the sole judgment of such Lender (or Transferee), cause such Lender (or Transferee) and its respective lending offices to suffer no material economic, legal or regulatory disadvantage; and provided, further, that nothing in this Section 3.5 shall affect or postpone any of the obligations of the Borrower or the rights of any Lender (or Transferee) pursuant to Section 3.4.
3.6. Assignment of Commitments Under Certain Circumstances. In the event that (a) the Borrower shall be required to make additional payments to any Lender under Section 3.4 (each, an "Increased Cost Lender") then, with respect to each such Increased Cost Lender (the "Terminated Lender"), the Borrower shall have the right, but not the obligation, at its own expense, upon notice to such Terminated Lender and the Agent, to replace such Terminated Lender with (x) another Lender or (y) an assignee (in accordance with and subject to the restrictions contained in Section 10.2), and such Terminated Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in Section 10.2) all its interests, rights and obligations under this Agreement to such other Lender or assignee; provided, however, that no Terminated Lender shall be obligated to make any such assignment unless (i) such assignment shall not conflict with any law or any rule, regulation or order of any Governmental Authority and (ii) the affected Terminated Lender shall have been paid in immediately available funds on the date of such assignment the principal of and interest accrued to the date of payment on the Loans made by such Terminated Lender and any other amounts required to be paid by any Loan Party to such Terminated Lender under this Agreement (including any amounts required to be paid under Section 3.4.with respect to the payments described in this clause (ii) or otherwise).
ARTICLE 4
GENERAL WARRANTIES AND REPRESENTATIONS
Each Loan Party warrants and represents to the Agent and the Lenders on the Closing Date that:
4.1. Authorization, Validity, and Enforceability of this Agreement and the Loan Documents. Such Loan Party has the power and authority to execute, deliver and perform it obligations under this Agreement and the other Loan Documents to which it is a party, to incur the indebtedness under the Loan Documents to which it is a party, and to grant to the Agent Liens upon and security interests in the Collateral in which it has an interest. Such Loan Party has taken all necessary action (including obtaining approval of its stockholders or other equityholders if necessary) to authorize its execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party. This Agreement and the other Loan Documents to which it is a party have been duly executed and delivered by such Loan Party, and constitute the legal, valid and binding obligations of such Loan Party, enforceable against it in accordance with their respective terms except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). Such Loan Party's execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party do not conflict with, or constitute a violation or breach of, the terms of (a) any contract, mortgage, lease, agreement, indenture or instrument to which such Loan Party is a party, (b) any Requirement of Law applicable to such Loan Party, or (c) the certificate or articles of incorporation or by-laws or other organizational documents of such Loan Party, except in the case of clause (a) or (b) as would not reasonably be expected to have a Material Adverse Effect.
4.2. Validity and Perfection of Security Interest. The provisions of this Agreement, the Mortgage(s), and the other Loan Documents to which such Loan Party is a party create legal and valid Liens on all the Collateral in which it has an interest in favor of the Agent, for the ratable benefit of the Agent and the Lenders, and upon the filing by the Agent of Uniform Commercial Code financing statements, Mortgages and security documents relating to intellectual property in the appropriate governmental filing offices, possession by the Agent (or the Senior Agent as bailee for the Agent under the Intercreditor and Subordination Agreement) of Collateral which can be perfected by possession only, and "control" by the Agent (or the Senior Agent as bailee for the Agent under the Intercreditor and Subordination Agreement) of any of Collateral which can be perfected by "control" only, such Liens constitute perfected and continuing Liens on all such Collateral. The provisions of each of the Onex Pledge Agreements create legal and valid Liens on all the Securities Collateral (as defined in each of the Onex Pledge Agreements) in favor of the Agent, and upon possession by the Agent (or the Senior Agent as bailee for the Agent under the Intercreditor and Subordination Agreement) of such Securities Collateral or upon the filing of appropriate financing statements, such Liens shall constitute perfected and continuing Liens on all such Securities Collateral.
4.3. Organization and Qualification. Such Loan Party (a) is duly organized and validly existing in good standing under the laws of the state of its organization, (b) is
qualified to do business and is in good standing in those jurisdictions in which qualification is necessary in order for it to own or lease its property and conduct its business, except to the extent the failure to be so qualified or in good standing would not reasonably be expected to have a Material Adverse Effect and (c) has all requisite power and authority to conduct its business and to own its property. The Borrower was formed on May 16, 2005 and the Borrower Subsidiaries were formed on May 26, 2005, in the case of NSULC, and May 24, 2005, in the case of WLLC Each of the Borrower and the Borrower Subsidiaries was formed for the primary purpose of effecting the Term Transaction and as of the Closing Date has no material assets (other than, in the case of the Borrower, its ownership of all the Equity Interests of NSULC, in the case of NSULC, its ownership of Equity Interests of WLLC and, in the case of WLLC, the loans payable to it by Mid-Western (made as a part of the Term Transaction)) or liabilities (other than its obligations under the Loan Documents and the Citigroup Credit Facilities).
ARTICLE 5
AFFIRMATIVE COVENANTS OF THE MID-WESTERN LOAN PARTIES
So long as any Lender shall have any Commitment hereunder or any Obligations (other than contingent indemnification Obligations for which no claim has been made) shall remain outstanding, each Mid-Western Loan Party shall:
5.1. Financial Statements and other Information. Furnish, or cause to be furnished, to the Agent copies of the following financial statements, reports, notices and information:
(a) as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of Mid-Western, a consolidated balance sheet of Mid-Western and its Subsidiaries as of the end of such Fiscal Quarter and consolidated statements of earnings and cash flow of Mid-Western and its Subsidiaries for such Fiscal Quarter and for the same period in the prior Fiscal Year and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter (including a note with a consolidating balance sheet and statements of earnings and cash flows for each less than wholly-owned Subsidiary of Mid-Western that is not a Guarantor), certified by a Financial Officer of Mid-Western as fairly presenting in all material respects the financial position, results of operations and cash flows of Mid-Western and its Subsidiaries in accordance with GAAP consistently applied and a narrative report and management's discussion and analysis, in the form provided to the Senior Agent, of the financial condition and results of operations for such Fiscal Quarter and the then elapsed portion of the Fiscal Year, as compared to the comparable periods in the previous Fiscal Year (it being understood that such information may be furnished in the form of a Form 10-Q)(provided that in each case for the first four Fiscal Quarters after the Closing Date, to the extent such data with respect to the same period of the prior Fiscal Year or an earlier period of the same Fiscal Year (as the case may be) is not available, such comparison shall be only to the amounts budgeted for the same period);
(b) as soon as available and in any event within 90 days after the end of each Fiscal Year of Mid-Western (other than with respect to the Fiscal Year ending December 31, 2005, for which reports must be provided within 105 days of such Fiscal Year end) a copy of the annual audit report for such Fiscal Year for Mid-Western and its Subsidiaries, including therein a consolidated balance sheet of Mid-Western and its Subsidiaries as of the end of such Fiscal Year and consolidated statements of earnings and cash flow of Mid-Western and its Subsidiaries for such Fiscal Year (including a note with a consolidating balance sheet and statements of earnings and cash flows for each less than wholly-owned Subsidiary of Mid-Western that is not a Guarantor), in each case certified in the same manner and by the same independent public accounting firm as is provided to the Senior Agent (provided, that following the Discharge of Senior Obligations, such financial statements shall be certified in the same manner and by the same independent public accounting firm that provided such certifications of the financial statements for the Fiscal Year ended immediately preceding the Discharge of Senior Obligations or in such other manner or by such other independent public accounting firm that is reasonably acceptable to the Agent), together with a narrative report and management's discussion and analysis, in the form provided to the Senior Agent, of the financial condition and results of operations of Mid-Western for such Fiscal Year, as compared to amounts for the previous Fiscal Year (it being understood that such information may be furnished in the form of a Form 10-K)(provided that in each case for the first Fiscal Year after the Closing Date, to the extent such data with respect the prior Fiscal Year is not available, such comparison shall be only to the amounts budgeted for the same period, provided that such comparison need not be covered by the certification of the independent public accounting firm referred to above);
(c) no later than January 15 of each Fiscal Year of Mid-Western, commencing with the Fiscal Year beginning January 1, 2006, a detailed consolidated budget by Fiscal Quarter for such Fiscal Year beginning January 1, 2006 (including a projected consolidated balance sheet and related statements of projected operations and cash flow as of the end of and for each Fiscal Quarter during such Fiscal Year beginning January 1, 2006) and for each such Fiscal Year thereafter through December 31, 2011(including a projected consolidated balance sheet and related statements of projected operations and cash flow as of the end of each such Fiscal Year) and, promptly when available, any significant revisions of such budgets;
(d) promptly upon receipt thereof, copies of all material written reports submitted to Mid-Western by independent certified public accountants in connection with each annual, interim or special audit of the books of Mid-Western or any of its Subsidiaries made by such accountants, including any management letters submitted by such accountants to management in connection with their annual audit;
(e) promptly and in any event within five days after becoming aware of the occurrence of any Default or Event of Default, a statement of a Financial Officer of Mid-Western setting forth details of such Default or Event of Default and the action which Mid-Western has taken and proposes to take with respect thereto;
(f) promptly and in any event within five Business Days after (i) the occurrence of any adverse development with respect to any litigation, action or proceeding against a Mid-Western Loan Party or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or (ii) the commencement of any litigation, action or proceeding against a Mid-Western Loan Party or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect or that purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document or the transactions contemplated hereby or thereby, notice thereof and, to the extent provided to the Senior Agent, copies of all documentation relating thereto;
(g) promptly after the sending or filing thereof, copies of all reports which Holdings sends to its security holders generally in their capacity as such, and all reports, registration statements (other than on Form S-8 or any successor form) or other materials (including affidavits with respect to reports) which Holdings or any of its Subsidiaries or any of their officers files with the SEC or any national securities exchange;
(h) promptly upon becoming aware of the taking of any specific actions by Holdings or any other Person to terminate any Pension Plan (other than a termination pursuant to Section 4041(b) of ERISA which can be completed without Holdings or any ERISA Affiliate having to provide more than $1.0 million in addition to the normal contribution required for the plan year in which termination occurs to make such Pension Plan sufficient), or the occurrence of an ERISA Event which could result in a Lien on the assets of any Mid-Western Loan Party or any of its Subsidiaries or in the incurrence by a Mid-Western Loan Party of any liability, fine or penalty which could reasonably be expected to have a Material Adverse Effect, or any increase in the contingent liability of a Mid-Western Loan Party with respect to any post-retirement Welfare Plan benefit if the increase in such contingent liability which could reasonably be expected to have a Material Adverse Effect, notice thereof and copies of all documentation relating thereto;
(i) upon request by the Agent, copies of: (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any Mid-Western Loan Party or ERISA Affiliate with the Internal Revenue Service with respect to each Pension Plan; (ii) to the extent available, the most recent actuarial valuation report for each Pension Plan; (iii) all notices received by any Mid-Western Loan Party or ERISA Affiliate from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event; and (iv) such other documents or governmental reports or filings relating to any Plan as the Agent shall reasonably request;
(j) promptly and in any event within five Business Days, notice of any other development that could reasonably be expected to have a Material Adverse Effect;
(k) promptly and in any event within five Business Days after becoming aware thereof, notice of any Payment Block Event; and
(l) promptly, from time to time, such other information respecting the condition or operations, financial or otherwise, of Holdings or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request.
5.2. Preservation of Existence. Do or cause to be done all things necessary to preserve, renew and maintain in full force and effect the legal existence of Mid-Western.
5.3. Additional Collateral; Additional Guarantors.
(a) (i) Prior to the Discharge of Senior Obligations and subject to the Intercreditor and Subordination Agreement, with respect to any property that is pledged to the Senior Agent as collateral under the Citigroup Credit Facilities, substantially concurrently with such collateral being granted to the secured parties under the Citigroup Credit Facilities (whether such collateral is acquired after the Closing Date or otherwise) (x) execute and deliver to the Agent such amendments or supplements to the Security Agreement, Pledge Agreement or such other documents (including, in the case of acquired Real Property, Mortgages and the items listed in Section 7.1(b) and (c) that are delivered to the Senior Agent) as the Agent shall reasonably deem necessary to grant to the Agent, for the benefit of the Secured Parties, a Lien on such property, and (y) take all actions necessary to cause such Lien to be duly perfected to the extent required by the applicable Security Document in accordance with all applicable Requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Agent, in each case subject to the Intercreditor and Subordination Agreement.
(ii) Following the Discharge of Senior Obligations, with respect to acquisitions of (x) property of the type that would have constituted Collateral pursuant to the Citigroup Credit Facilities as in effect immediately prior to the Discharge of Senior Obligations and/or (y) Real Estate that would have been required to be subject to a mortgage in favor of the Senior Agent under the Citigroup Credit Facilities as in effect immediately prior to the Discharge of Senior Obligations, within thirty (30) days after the acquisition of such property or Real Estate (x) execute and deliver to the Agent such amendments or supplements to the Security Agreement or Pledge Agreement or such Mortgages or other documents as the Agent shall reasonably deem necessary to grant to the Agent, for the benefit of the Secured Parties, a Lien on such property or Real Estate, and (y) take all actions necessary to cause such Lien to be duly perfected to the extent required by the applicable Security Document in accordance with all applicable Requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Agent.
(b) (i) Prior to the Discharge of Senior Obligations and subject to the Intercreditor and Subordination Agreement, if any Subsidiary (including any newly formed or newly acquired Subsidiary) of a Mid-Western Loan Party guarantees the obligations of the Borrower or Mid-Western under the Citigroup Credit Facilities, then substantially concurrently with such Subsidiary guaranteeing the obligations under the Citigroup Credit Facilities (i) deliver to the Agent (or the Senior Agent as bailee for the Agent under the Intercreditor and Subordination Agreement) the certificates, if any, representing all of the Equity Interests of such Subsidiary (provided, that with respect to any Foreign Subsidiary of Mid-Western, in no event shall more than 65% of the voting Equity Interests of such Foreign Subsidiary be subject to the
Agent's Lien or pledged under the Security Documents), together with undated stock powers or other appropriate instruments of transfer executed and delivered in blank by a duly authorized officer of the holder(s) of such Equity Interests and (ii) cause such Subsidiary (A) to execute a joinder agreement or such comparable documentation to become a Guarantor hereunder and a joinder agreement to the Guarantee Agreement, the Security Agreement and the Pledge Agreement, in each case in the form of Annex I to the Security Agreement and Annex I to the Guarantee Agreement or such other form that is reasonably satisfactory to the Agent, and (B) to take all actions reasonably requested by the Agent to cause the Lien created by the Security Agreement and Pledge Agreement to be duly perfected to the extent required by such agreements in accordance with all applicable Requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Agent.
(ii) Following the Discharge of Senior Obligations, in the event that any Person becomes a direct or indirect Subsidiary of Mid-Western that would have been required to become a Guarantor under the Citigroup Credit Facilities as in effect immediately prior to the Discharge of Senior Obligations, then promptly thereafter (x) deliver to the Agent the certificates, if any, representing all of the Equity Interests of such Subsidiary (provided, that with respect to any Foreign Subsidiary of Mid Western, in no event shall more than 65% of the voting Equity Interests of such Foreign Subsidiary be subject to the Agent's Lien or pledged under the Security Documents), together with undated stock powers or other appropriate instruments of transfer executed and delivered in blank by a duly authorized officer of the holder(s) of such Equity Interests and (y) cause such Subsidiary (A) to execute a joinder agreement or such comparable documentation to become a Guarantor hereunder and a joinder agreement to the Guarantee Agreement, the Security Agreement and the Pledge Agreement, in each case in the form of Annex I to the Security Agreement and Annex I to the Guarantee Agreement or such other form that is reasonably satisfactory to the Agent, and (B) to take all actions reasonably requested by the Agent to cause the Lien created by the Security Agreement and Pledge Agreement to be duly perfected to the extent required by such agreements in accordance with all applicable Requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Agent.
5.4. Security Interests; Further Assurances. Subject to the Intercreditor and Subordination Agreement, promptly, upon the reasonable request of the Agent, execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any document or instrument supplemental to or confirmatory of the Security Documents or otherwise reasonably deemed by the Agent necessary for the continued validity, perfection and priority of the Liens on the Collateral covered thereby. Deliver or cause to be delivered to the Agent from time to time such other documentation, consents, authorizations, approvals and orders in form and substance reasonably satisfactory to the Agent as the Agent shall reasonably deem necessary to perfect or maintain the Liens on the Collateral pursuant to the Security Documents.
5.5. Information Regarding Collateral.
(a) Furnish to the Agent prompt written notice of any change (i) in such Mid-Western Loan Party's legal name, (ii) in the location of any Mid-Western Loan Party's
chief executive office or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in any Mid-Western Loan Party's corporate structure, (iv) in any
Mid-Western Loan Party's Federal Taxpayer Identification Number or
organizational identification number or (v) in any Mid-Western Loan Party's
jurisdiction of organization. Holdings and Mid-Western will not, and will not
permit any other Mid-Western Loan Party to, effect or permit any change referred
to in the preceding sentence unless (i) it shall have given the Agent written
notice not later than 10 days after such change and (ii) all filings have been
made under the UCC or otherwise that are required in order for the Agent to
continue at all times following such change to have a valid, legal and perfected
security interests in all the Collateral. Holdings and Mid-Western will, and
will cause each other Mid-Western Loan Party to, promptly notify the Agent if
any material portion of the Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual financial statements with respect to the preceding Fiscal Year pursuant to clause (b) of Section 5.1, Mid-Western shall deliver to the Agent a certificate of a Financial Officer or the chief legal officer of Mid-Western (A) updating, to the extent necessary, to reflect (i) the list of owned and leased Real Estate, (ii) any changes to the names or locations of any Loan Party or (iii) any other information reasonably requested by the Agent with respect to the Collateral or (B) confirming that there has been no change in such information since the date of the Perfection Certificate or the latest supplement to the Perfection Certificate.
5.6 Insurance.
Following the Discharge of Senior Obligations, maintain with financially sound and responsible insurance companies insurance with respect to its properties material to the business of the Loan Parties and their Subsidiaries against such casualties and contingencies and of such types and in such amounts with such deductibles as is customary in the case of similar businesses operating in the same or similar locations (including, without limitation, (i) physical hazard insurance on an "all risk" basis including an industry standard Lenders Loss Payable Clause, (ii) commercial general liability against claims for bodily injury, death or property damage and including the Agent as an additional insured party or, in the case of property insurance, loss payee, (iii) boiler and machinery insurance covering all electrical and mechanical equipment and vessels under pressure constituting Collateral, (iv) business interruption insurance, (v) worker's compensation insurance as may be required by any Requirement of Law and (vi) such other insurance against risks as the Agent may from time to time reasonably require. Each such insurance policy shall provide that it may not be cancelled or otherwise terminated without at least thirty (30) days' prior written notice, and ten (10) days in the event of nonpayment of premium, to the Agent and to the extent any such policy is cancelled, adversely modified or renewed, the Mid-Western Loan Parties shall deliver a Certificate of Insurance to the Agent, together with evidence reasonably satisfactory to the Agent of the payment of the premium therefor.
Following the Discharge of Senior Obligations, each of Holdings and Mid-Western will, and will cause each other Mid-Western Loan Party to, with respect to each piece of Real Estate subject to a Mortgage, obtain flood insurance in such total amount as the Agent or the Majority Lenders may from time to time require, if at any time the area in which any improvements are
located on any such Real Estate is designated a "flood hazard area" in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as amended from time to time.
ARTICLE 5-A
AFFIRMATIVE COVENANTS OF BORROWER LOAN PARTIES
So long as any Lender shall have any Commitment hereunder or any Obligations (other than contingent indemnification Obligations for which no claim has been made) shall remain outstanding:
5.1A Reports and Other Information. Each Borrower Loan Party shall furnish, or cause to be furnished, to the Agent copies of the following financial statements, reports, notices and information:
(a) promptly and in any event within five days after becoming aware of the occurrence of any Default or Event of Default, a statement of an authorized representative of the general partner of the Borrower setting forth details of such Default or Event of Default and the action which the Borrower has taken and proposes to take with respect thereto;
(b) promptly and in any event within five Business Days after (i) the occurrence of any adverse development with respect to any litigation, action or proceeding against a Borrower Loan Party or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or (ii) the commencement of any litigation, action or proceeding against a Borrower Loan Party or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect or that purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document or the transactions contemplated hereby or thereby, notice thereof and, to the extent provided to the Senior Agent, copies of all documentation relating thereto;
(c) promptly after the sending or filing thereof, copies of all reports which the Borrower sends to its security holders generally in their capacity as such, and all reports, registration statements (other than on Form S-8 or any successor form) or other materials (including affidavits with respect to reports) which the Borrower or any of its Subsidiaries or any of their officers files with the SEC or any national securities exchange;
(d) promptly and in any event within five Business Days, notice of any other development that could reasonably be expected to have a Material Adverse Effect; and
(e) promptly, from time to time, such other information respecting the condition or operations, financial or otherwise, of the Borrower or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request.
5.2A Preservation of Existence. Each Borrower Loan Party shall do or cause to be done all things necessary to preserve, renew and maintain in full force and effect the legal existence of the Borrower and the Borrower Subsidiaries.
5.3A Additional Collateral; Additional Guarantors. Each Borrower Loan Party shall:
(a) (i) Prior to the Discharge of Senior Obligations and subject to the Intercreditor and Subordination Agreement, with respect to any property that is pledged to the Senior Agent as collateral under the Citigroup Credit Facilities, substantially concurrently with such collateral being granted to the secured parties under the Citigroup Credit Facilities (whether such collateral is acquired after the Closing Date or otherwise) (x) execute and deliver to the Agent such amendments or supplements to the Security Agreement, Pledge Agreement or such other documents (including, in the case of acquired Real Property, Mortgages and the items listed in Section 7.1(b) and (c) that are delivered to the Senior Agent) as the Agent shall reasonably deem necessary to grant to the Agent, for the benefit of the Secured Parties, a Lien on such property, and (y) take all actions necessary to cause such Lien to be duly perfected to the extent required by the applicable Security Document in accordance with all applicable Requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Agent, in each case subject to the Intercreditor and Subordination Agreement.
(ii) Following the Discharge of Senior Obligations, with respect to acquisitions of property of the type that would have constituted Collateral pursuant to the Citigroup Credit Facilities as in effect immediately prior to the Discharge of Senior Obligations, within thirty (30) days after the acquisition of such property (x) execute and deliver to the Agent such amendments or supplements to the Security Agreement or Pledge Agreement or such other documents as the Agent shall reasonably deem necessary to grant to the Agent, for the benefit of the Secured Parties, a Lien on such property, and (y) take all actions necessary to cause such Lien to be duly perfected to the extent required by the applicable Security Document in accordance with all applicable Requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Agent.
5.4A Security Interests; Further Assurances. Each Borrower Loan Party shall promptly, subject to the Intercreditor and Subordination Agreement, upon the reasonable request of the Agent, execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any document or instrument supplemental to or confirmatory of the Security Documents or otherwise reasonably deemed by the Agent necessary for the continued validity, perfection and priority of the Liens on the Collateral covered thereby. Deliver or cause to be delivered to the Agent from time to time such other documentation, consents, authorizations, approvals and orders in form and substance reasonably satisfactory to the Agent as the Agent shall reasonably deem necessary to perfect or maintain the Liens on the Collateral pursuant to the Security Documents.
5.5A Information Regarding Collateral. Each Borrower Loan Party shall furnish to the Agent prompt written notice of any change (i) in such Borrower Loan Party's legal
name, (ii) in the location of any Borrower Loan Party's chief executive office or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility), (iii) in any Borrower Loan Party's corporate structure, (iv) in any Borrower Loan Party's Federal Taxpayer Identification Number or organizational identification number or (v) in any Borrower Loan Party's jurisdiction of organization. Holdings and the Borrower will not, and will not permit any other Borrower Loan Party to, effect or permit any change referred to in the preceding sentence unless (i) it shall have given the Agent written notice not later than 10 days after any such change and (ii) all filings have been made under the UCC or otherwise that are required in order for the Agent to continue at all times following such change to have a valid, legal and perfected security interests in all the Collateral. The Borrower will, and will cause each other Borrower Loan Party to, promptly notify the Agent if any material portion of the Collateral is damaged or destroyed.
5.6A Use of Proceeds. The Borrower covenants and agrees that the proceeds of the Borrowings will be used in the manner set forth in the definition of Term Transaction.
5.7A Tax Status.(a) The Borrower shall maintain its status as a corporation for United States income tax purposes.
(b) NSULC shall maintain its status as a disregarded entity for United States income tax purposes.
(c) WLLC shall maintain its status as a disregarded entity for United States income tax purposes.
ARTICLE 6
NEGATIVE COVENANTS OF MID-WESTERN LOAN PARTIES
So long as any Lender shall have any Commitment hereunder or any Obligations (other than contingent indemnification Obligations for which no claim has been made) shall remain outstanding, each Mid-Western Loan Party shall not:
6.1. Prepayments of Subordinated Indebtedness. Make any voluntary or optional payment or prepayment on or redemption or acquisition for value of, any Subordinated Indebtedness (other than any Kansas Bond Indebtedness), if immediately after giving effect to such payment, prepayment, redemption or acquisition for value, Mid-Western would not be in compliance on a pro forma basis with the financial covenants set forth in Sections 6.12 and 6.13 of the Citigroup Credit Agreement (as in effect on the Closing Date) as of the last day of the then most recently ended Fiscal Quarter of Mid-Western.
6.2. Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, except that:
(a) Holdings may declare and make dividend payments or other distributions payable solely in its common stock or its other common Equity Interests;
(b) Holdings may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its Equity Interests or an issue of Subordinated Indebtedness;
(c) Holdings may purchase, redeem or otherwise acquire or retire for value Holdings' Equity Interests from present or former officers, directors or employees of Holdings or any of its Subsidiaries (or permitted transferees, assigns, estates or heirs of the foregoing) upon the death, disability or termination of employment of such officer, director or employee; and
(d) cashless exercises of options and warrants are permitted.
6.3. Sponsor Management Fees. Pay management fees to Sponsor in excess
of $3 million (plus any amounts accrued pursuant to the following proviso) in
the aggregate in any Fiscal Year; provided that (a) such management fees shall
accrue but shall not be paid during the existence of an Event of Default and (b)
the amount of such management fees paid by the Loan Parties to Sponsor shall not
exceed $375,000 in any Fiscal Quarter during the existence of any event that
results in interest on the Unpaid Amount of any Loan becoming Deferred Interest
pursuant to the first proviso to Section 2.1(b), and the portion of such
management fees not permitted to be paid pursuant to this clause (b) shall
instead accrue; provided, further, that (i) any management fees accrued during
the existence of an Event of Default may be paid by any of the Loan Parties to
Sponsor at any time after such Event of Default ceases to exist, (ii) any
management fees accrued during the existence of an event described in clause (b)
above (other than an Adjusted Interest Expense Coverage Ratio Shortfall) may be
paid by any of the Loan Parties to Sponsor at any time after such event ceases
to exist so long as the Lenders have been paid in cash all amounts that were due
and payable to the Lenders but not paid to the Lenders as a result of such event
(together with interest at the rate specified in Section 2.1(c), if applicable)
and (iii) any management fees accrued during the existence of an Adjusted
Interest Expense Coverage Ratio Shortfall (other than an Adjusted Interest
Expense Coverage Ratio Shortfall that exists during the same period in which an
event described in clause (b) above exists, in which case clause (ii) of this
proviso shall govern when management fees accrued during such period may be
paid) may be paid by any of the Loan Parties to Sponsor at any time on or after
the last day of the first Fiscal Quarter of Mid-Western to occur after such
Adjusted Interest Expense Coverage Ratio Shortfall ceases to exist and provided
that the Borrower is then permitted under Section 2.1(b) to pay the Lenders
interest in cash on the Unpaid Amount of each Loan; and provided, even further,
that the provisions of this Section 6.3 shall not apply to the closing fee in
the amount of $5 million that will be paid to Sponsor on the Closing Date.
6.4. Anti-Layering. Permit any Mid-Western Loan Party to incur any indebtedness that is both: (a) subordinate or junior in right of payment to the Senior Secured Debt of such Mid-Western Loan Party; and (b) senior in right of payment to the Obligations.
6.5. Sponsor Indebtedness. Permit any Mid-Western Loan Party to incur any indebtedness to Sponsor unless such indebtedness is subordinate in right of payment to the Obligations.
ARTICLE 6-A
NEGATIVE COVENANTS OF THE BORROWER LOAN PARTIES
So long as any Lender shall have any Commitment hereunder or any Obligations (other than contingent indemnification Obligations for which no claim has been made) shall remain outstanding, each Borrower Loan Party shall not:
6.1A Limitations on Activities.
(a) conduct, transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or operations other than the Term Transaction, other transactions permitted under this Section 6.1A and such other transactions as are permitted under the Citigroup Credit Facilities;
(b) create, incur, assume or permit to exist (including by way of guarantee) any indebtedness or Lien on any property or asset (including any income or revenues (including accounts receivable) and including any Equity Interests (including without limitation Equity Interests in NSULC)) now owned or hereafter acquired by them , except (a) Liens created pursuant to the Loan Documents, the Citigroup Credit Facilities and any other Liens permitted to be incurred by Borrower Loan Parties under the Citigroup Credit Facilities, other than Liens on Equity Interests in NSULC, and (b) and indebtedness incurred under the Loan Documents, the Citigroup Credit Facilities and unsecured indebtedness between or among the Borrower Loan Parties, including without limitation Hedging Agreements between the Borrower Loan Parties that do not affect the ability of the Borrower to make the payments required by this Agreement and any other indebtedness permitted under the Citigroup Credit Facilities as in effect on the date hereof;
(c) own, acquire, manage or otherwise operate any properties or assets (including cash, other than cash received in connection with the Term Transaction, investments or otherwise), other than (a) the ownership of 100% of the Equity Interests of the Borrower Subsidiaries in the manner owned as of the Closing Date, (b) investments with the proceeds of the Loans and loans made to the Borrower under the Citigroup Credit Facilities by the Borrower in NSULC and by NSULC in WLLC, (c) unsecured indebtedness and Hedging Agreements, in each case to the extent permitted by Section 6.1A(b),(d) such transactions that are permitted under the Citigroup Credit Facilities and (e) Investments by the Borrower in the Borrower Subsidiaries with proceeds of equity contributions by Sponsor in the Borrower and investments of any such proceeds in Permitted Investments (as defined in the Citigroup Credit Facilities as in effect on the date hereof);
(d) merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with them, or liquidate or dissolve, except as permitted under the Citigroup Credit Facilties;
(e) sell, transfer, lease or otherwise dispose of any asset (or any interest therein) (including the WLLC Loans) other than cash or as otherwise permitted under the Citigroup Credit Facilities;
(f) make any Restricted Payment (as defined in the Citigroup Credit Facilities), other than dividends or distributions or returns of capital paid to the Borrower or any Borrower Subsidiary or to the extent permitted under the Citigroup Credit Facilities;
(g) sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its affiliates, other than the Term Transaction, other transactions among the Borrower Loan Parties, and any other transactions permitted under the Citigroup Credit Facilities;
(h) enter into any contract or agreement other than in connection with, arising out of or reasonably related to the Term Transaction, the Citigroup Credit Facilities ,the Loan Documents, Hedging Agreements and other intercompany loan documentation permitted by Section 6.1(A)(ii) and as otherwise permitted under the Citigroup Credit Facilities as in effect on the date hereof;
(i) amend, modify or otherwise change any Organizational Documents of any Borrower Loan Party (except as permitted under the Citigroup Credit Facilities) or the WLLC Loan; and
(j) waive, modify or amend any provision of the WLLC Subordination Agreement without the prior written consent of the Agent.
ARTICLE 7
CONDITIONS PRECEDENT
7.1. Conditions Precedent to the Effectiveness of This Agreement. This Agreement shall become effective on such date as the following conditions shall have been satisfied:
(a) This Agreement and the other Loan Documents to be delivered on the Closing Date shall have been executed by each party thereto.
(b) The Agent shall have received counterparts of the Security Agreement and the Pledge Agreement signed by each Loan Party and the Agent shall have received the following in the form provided to the Senior Agent:
(i) appropriate financing statements or comparable documents authorized by (and executed by, to the extent applicable) the appropriate entities in proper form for filing under the provisions of the UCC and applicable domestic or local laws, rules or regulations in each of the offices where such filing is necessary or appropriate, in the Agent's reasonable discretion, to grant to the Agent a perfected Lien on such Collateral;
(ii) UCC, judgment and tax lien search reports listing all effective financing statements or comparable documents which name any applicable Loan Party as debtor and which are filed in those jurisdictions in which any Loan Party is organized,
any of such Collateral is located and the jurisdictions in which any applicable Loan Party's principal place of business is located in the United States, together with copies of such existing financing statements;
(iii) evidence of the preparation for recording or filing, as applicable, of all recordings and filings of each such Security Document, including, without limitation, with the United States Patent and Trademark Office and the United States Copyright Office;
(iv) evidence that all other actions reasonably necessary or, in the reasonable opinion of the Agent, desirable to perfect the security interest created by the Security Documents have been taken; and
(v) a completed Perfection Certificate dated the Closing Date and signed by an executive officer or Financial Officer of Mid-Western, together with all attachments contemplated thereby, including the results of a search of the UCC (or equivalent) filings made with respect to the Loan Parties in the jurisdictions contemplated by the Perfection Certificate.
(c) Except as set forth in the Post-Closing Agreement, the Agent shall have received the following documents and instruments to the extent provided to the Senior Agent:
(i) Mortgages in favor of the Agent encumbering Real Estate in which any Loan Party has granted a mortgage under the Citigroup Credit Facilities on the Closing Date, each duly executed and acknowledged by such Loan Party, and otherwise in form for recording in the recording office where each such Real Estate is situated, together with such certificates, affidavits, questionnaires or returns as shall be required in connection with the recording or filing thereof to create a Lien under applicable law, and such UCC-1 financing statements and other similar statements as are provided to the Senior Agent, all of which shall be in the form provided to the Senior Agent, and any other instruments necessary to grant a mortgage lien under the laws of any applicable jurisdiction, which Mortgages and financing statements and other instruments shall when recorded be effective to create a Lien on such Real Estate;
(ii) with respect to the Real Estate that will be subject to a Mortgage on the Closing Date, such consents, approvals, amendments, supplements, estoppels, tenant subordination agreements or other instruments, in form provided to the Senior Agent on the Closing Date;
(iii) with respect to each Mortgage, a policy (or commitment to issue a policy) of title insurance insuring (or committing to insure) the Lien of such Mortgage as a valid second mortgage lien on the real property and fixtures described therein in the amount provided to the Senior Agent, which policies (or commitments) shall be issued by the same title company and include such reinsurance provisions, endorsements and exceptions to title as are provided to the Senior Agent, with respect to each piece of Real Estate subject to Mortgage policies or certificates of insurance as required by the
Mortgage relating thereto, which policies or certificates shall comply with the insurance requirements contained in such Mortgage;
(iv) Surveys with respect to the owned Real Estate subject to a Mortgage on the Closing Date in form and to the extent provided to the Senior Agent;
(v) with respect to each piece of Real Estate subject to a Mortgage on the Closing Date, such affidavits, certificates, information (including financial data) and instruments of indemnification (including, without limitation, a so-called "gap" indemnification) as shall be provided to the Senior Agent;
(vi) with respect to each piece of Real Estate subject to a Mortgage on the Closing Date, copies of all leases or other agreements relating to possessory interests to which any Loan Party or Subsidiary thereof is a party that are provided to the Senior Agent;
(vii) with respect to each piece of Real Estate subject to a Mortgage on the Closing Date, copies of any evidence provided to the Senior Agent that (x) there has been issued and is in effect a valid and proper certificate of occupancy or other local equivalent, if any, for the use then being made of such Real Estate and that the Loan Parties have not received written notices of any outstanding citation, violation or similar notice indicating that such Real Estate contains conditions which are not in compliance with local codes or ordinances relating to building or fire safety or structural soundness, (y) there has not occurred any taking or destruction of any Real Estate and (z) to the best knowledge of the Loan Parties, are no disputes regarding boundary lines, location, encroachment or possession of any Real Estate and no state of facts existing which could give rise to any such claim; and
(viii) with respect to each piece of Real Estate subject to a Mortgage on the Closing Date, a completed Federal Emergency Management Agency Standard Flood Hazard Determination ; and
(d) The Agent shall have received a counterpart of the Onex Pledge Agreement (LP Interests) signed by Onex Corporation and a counterpart of the Onex Pledge Agreement (GP Interests) signed by 1648701 Ontario Inc., and the Agent shall have received evidence that all other actions reasonably necessary to perfect the security interest created by the Onex Pledge Agreements have been taken.
Execution and delivery to Mid-Western by the Agent of a counterpart of this Agreement shall be deemed confirmation by the Agent and Lenders that (i) all conditions precedent in this Section 7.1 have been fulfilled to the satisfaction of the Agent and the Lenders and (ii) all documents sent to the Agent and/or the Lenders for approval, consent or satisfaction were acceptable to the Agent and the Lenders.
7.2. Condition Precedent to Borrowings. The obligation of the Lenders to make each Loan shall be subject to the further condition precedent that on and as of the date of any such extension of credit, no event has occurred and is continuing, or would result from such extension of credit, which constitutes an Event of Default under Section 8.1(e), (f), (g)(ii) (to the
extent any challenge contemplated under Section 8.1(g)(ii) has not been revoked as of the date of such extension of credit) or (h).
ARTICLE 8
DEFAULT; REMEDIES
8.1. Events of Default. It shall constitute an event of default ("Event of Default") if any one or more of the following shall occur for any reason:
(a) any failure by the Borrower or any other Loan Party to pay (i) when and as required to be paid herein, any amount of principal of any Loan or (ii) within ten (10) days after the same becomes due, any interest on any Loan or any other amount payable hereunder or under any other Loan Document;
(b) any representation or warranty made or deemed made by any Loan Party in this Agreement or by any Loan Party in any of the other Loan Documents at any time to the Agent or any Lender shall prove to be untrue in any material respect as of the date on which made, deemed made, or furnished;
(c) (i) any default shall occur in the observance or performance of any of the covenants and agreements contained in Article 6 or Article 6-A of this Agreement or (ii) any default shall occur in the observance or performance of any of the other covenants or agreements contained in any other Section of this Agreement or any other Loan Document and such default shall continue for thirty (30) days or more;
(d) (i) any default shall occur with respect to any Senior Secured Debt of any Loan Party in an outstanding principal amount which exceeds $20 million, or under any agreement or instrument under or pursuant to which any such Senior Secured Debt may have been issued, created, assumed, or guaranteed by any Loan Party, and such default shall continue for more than the period of grace, if any, therein specified, if the effect thereof (with or without the giving of notice or further lapse of time or both) is to accelerate the maturity of any such Senior Secured Debt or (ii) any Loan Party shall fail to pay the outstanding principal amount of any Senior Secured Debt of such Loan Party having an outstanding principal amount at maturity in excess $20 million within fifteen (15) days after the scheduled maturity date of such Senior Secured Debt;
(e) any Loan Party shall (i) file a voluntary petition in bankruptcy or file a voluntary petition or an answer or file a proposal or a notice of intention to file a proposal or otherwise commence any action or proceeding seeking reorganization, arrangement, consolidation or readjustment of its debts or for any other relief under the federal Bankruptcy Code, as amended, or under any other bankruptcy, insolvency, liquidation, winding-up or similar act or law, state, provincial, federal or foreign, now or hereafter existing, or consent to, approve of, or acquiesce in, any such petition, proposal, action or proceeding; (ii) apply for or acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator, custodian, monitor, administrator, trustee or similar officer for it or for all or any material part of its property; (iii) make an assignment for the benefit of
creditors; or (iv) be unable generally to pay its debts as they become due or shall admit in writing its inability to pay its debts generally as they became due;
(f) (i) an involuntary petition or proposal shall be filed or an action or proceeding otherwise commenced seeking reorganization, arrangement, consolidation or readjustment of the debts of any Loan Party or for any other relief under the federal Bankruptcy Code, as amended, or under any other bankruptcy, insolvency, liquidation, winding-up or similar act or law, state, provincial, federal or foreign, now or hereafter existing and such petition or proceeding shall not be dismissed or stayed within sixty (60) days after the filing or commencement thereof or an order of relief shall be entered with respect thereto or (ii) a receiver, assignee, liquidator, sequestrator, custodian, monitor, administrator, trustee or similar officer for any Loan Party or for all or any material part of its property shall be appointed and the appointment shall not be discharged or stayed within sixty (60) days after the commencement thereof;
(g) (i) any Loan Document shall be terminated, revoked or declared void or invalid or unenforceable or (ii) the enforceability of any Loan Document shall be challenged by any Loan Party;
(h) any Change of Control shall occur; or
(i) Onex Corporation shall have failed to pay when due any amounts owed by it under the Onex Guarantee Agreement (and such default shall continue unremedied for a period of 30 days).
8.2. Remedies. Subject to the Intercreditor and Subordination
Agreement, if an Event of Default described in Section 8.1(h) exists, the Agent
may, in its discretion, and shall, at the direction of the Majority Lenders, do
one or more of the following, at any time or times and in any order, without
notice to or demand on the Loan Parties: (A) terminate the Commitments and the
Loan Documents, (B) declare any or all Loans to be immediately due and payable
and (C) pursue its other rights and remedies under the Loan Documents and
applicable law. Subject to the Intercreditor and Subordination Agreement, upon
the occurrence of any Event of Default described in Sections 8.1(e) and (f), the
Commitments shall automatically and immediately expire, all Loans shall
automatically become immediately due and payable without notice or demand of any
kind, and the Agent may pursue its other rights and remedies under the Loan
Documents and applicable law. Except as otherwise expressly provided in this
Agreement or in any other Loan Document and subject to the Intercreditor and
Subordination Agreement, no remedies shall be available to the Agent and the
Lenders as a result of the occurrence and/or continuance of any Event of Default
described in Section 8.1(a), (b), (c), (d), (g) or (i) until such time as both
(x) a Discharge of Senior Obligations has occurred and (y) the Availability
Period has expired or terminated (such occurrences listed in clauses (x) and (y)
are referred to herein collectively as the "Senior Discharge Events"). Subject
to the Intercreditor and Subordination Agreement, following the occurrence of
the Senior Discharge Events and during the existence of an Event of Default
described in Section 8.1(a), (b), (c), (d), (g) or (i), the Agent may, in its
discretion, and shall, at the direction of the Majority Lenders, do one or more
of the following, at any time or times and in any order, without notice to or
demand on the Loan Parties: (A) terminate the Loan Documents, (B) declare any or
all Loans to be immediately due and
payable and (C) pursue its other rights and remedies under the Loan Documents and applicable law.
8.3 Application of Proceeds. Subject to the terms of the Intercreditor and Subordination Agreement, proceeds received by the Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral pursuant to an exercise of rights or remedies shall be applied as follows:
(a) First, to the then outstanding Obligations owing to the Lenders (other than the Mid-Western Lenders) in such order and manner as the Agent shall elect,
(b) Second, to the then outstanding Obligations owing to the Mid-Western Lenders in such order and manner and they shall elect, and
(c) Third, the balance, if any, to the Loan Parties or as a court of competent jurisdiction may direct.
ARTICLE 9
TERM AND TERMINATION
9.1. Term and Termination. The term of this Agreement shall end on the Stated Termination Date unless sooner terminated in accordance with the terms hereof. Upon the effective date of termination of this Agreement for any reason whatsoever, all Obligations (including all unpaid principal, accrued and unpaid interest) shall become immediately due and payable, subject to the terms of the Intercreditor and Subordination Agreement.
ARTICLE 10
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
10.1. Amendments and Waivers.
(a) Subject to the Intercreditor and Subordination Agreement, no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by a Loan Party therefrom, shall be effective unless the same shall be in writing and signed by the Majority Lenders (or by the Agent at the written request of the Majority Lenders) and the Loan Parties party to such Loan Document and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; except that any waiver, amendment or consent which shall do any of the following shall be in writing and signed by all the Lenders and the Loan Parties party to such Loan Document and acknowledged by the Agent:
(i) change this Section or any provision of this Agreement providing for consent or other action by all Lenders (including, without limitation, Section 3.2(c)(ii));
(ii) release any Guaranties of the Obligations or release all or substantially all of the Collateral other than as permitted by Section 11.2 or the last paragraph of Article 12 or as required pursuant to the Intercreditor and Subordination Agreement;
(iii) change the definition of "Majority Lenders";
(iv) increase the Commitment of any Lender over the amount thereof then in effect;
(v) postpone or delay any scheduled payment of principal or interest due to the Lenders (or any of them) hereunder;
(vi) reduce the principal of, or the rate of interest specified herein on the Unpaid Amount of, any Loan or other amounts payable to any Lender hereunder or under any other Loan Document; or
(vii) change the percentage of the Commitments or of the aggregate unpaid principal amount of the which is required for the Lenders or any of them to take any action hereunder;
provided, however, that no amendment, waiver or consent shall, unless in writing and signed by the Agent, affect the rights or duties of the Agent under this Agreement or any other Loan Document and provided, further, that Schedule 1.2(a) hereto (Commitments) may be amended from time to time by the Agent alone to reflect assignments of Commitments in accordance herewith and any increase in the Commitment of any Lender made in accordance herewith (including, without limitation, in accordance with clause (iv)) and provided, even further, that this Agreement and the other Loan Documents may be amended from time to time by the Agent and the Borrower or Guarantors alone (i.e. without any Lender consent or approval) to add a Subsidiary of a Loan Party as a Guarantor hereunder or as a grantor under the Security Agreement, Pledge Agreement or other applicable Loan Documents or in order to comply with the Intercreditor and Subordination Agreement.
(b) Notwithstanding anything to the contrary contained herein or in any other Loan Document, for purposes of determining whether the Lenders or the Majority Lenders, as applicable, have consented to any waiver, amendment, consent or other action under this Agreement or any other Loan Document, the Mid-Western Lenders shall be disregarded.
10.2. Assignments.
(a) Prior to the termination or expiration of the Availability Period, no Lender may assign any part of its Loans or other rights or obligations hereunder or under any other Loan Document to any Person, other than to an Affiliate of Boeing. On and after the termination or expiration of the Availability Period, any Lender may assign to one or more Eligible Assignees all, or any ratable part of all, of the Loans and the other rights and obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount of $5,000,000 or, if less, all of the Loans of such Lender (except such minimum shall not apply to an Affiliate of a Lender); provided that, unless an assignor Lender has assigned all of its Loans, no such
assignment shall be permitted unless, after giving effect thereto, such assignor Lender retains a portion of the Loans in a minimum amount of $25,000,000; provided, however, that the Loan Parties and the Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an assignee until (i) written notice of such assignment, together with payment instructions, addresses and related information with respect to the assignee, shall have been given to the Borrower and the Agent by such Lender and the assignee and (ii) such Lender and its assignee shall have delivered to the Borrower and the Agent an executed assignment (an "Assignment Agreement") in a form reasonably satisfactory to the Agent.
(b) Notwithstanding any other provision in this Agreement, any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement and the other Loan Documents to secure obligations of such Lender to one or more financial institutions that extend secured financing to such Lender or any of its Affiliates; provided, that no such pledge or assignment of a security interest shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto or to any other Loan Document.
ARTICLE 11
THE AGENT
11.1. Appointment and Authorization. Each Lender hereby designates and appoints Boeing as its Agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. The Agent agrees to act as such. Notwithstanding the foregoing, each Lender also acknowledges that the Lien and security interest granted to the Agent pursuant to the Security Documents and the exercise of any right or remedy thereunder are subject to the provisions of the Intercreditor and Subordination Agreement.
11.2. Collateral Matters. Subject to the Intercreditor and
Subordination Agreement, the Lenders hereby irrevocably authorize the Agent to,
and upon request of the Borrower, the Agent shall, release any of its Liens upon
any Collateral (i) upon payment in full by the Borrower of all Obligations
(other than contingent indemnification Obligations for which no claim has been
made); (ii) constituting property being sold or disposed of or property of a
Subsidiary all of the Equity Interests of which are being sold or disposed of;
(iii) constituting property in which each of the Loan Parties certifies that no
Loan Party owned an interest in such property at the time the Lien was granted
or at any time thereafter; (iii) in which the Liens in favor of the Senior Agent
have been released, or (v) constituting property leased to a Loan Party under a
lease which has expired or been terminated. The Agent hereby agrees to execute
and deliver to the Borrower any and all releases and to take such other actions
as may be reasonably requested by the Borrower to evidence any such release of
its Liens.
11.3. Restrictions on Actions by Lenders. Each of the Lenders agrees that it shall not, unless specifically requested to do so by the Agent and subject to the Intercreditor and
Subordination Agreement, take or cause to be taken any action to enforce its rights under this Agreement or against the Loan Parties, including the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.
11.4. Payments by Agent to Lenders. All payments to be made by the Agent to the Lenders shall be made by bank wire transfer or internal transfer of immediately available funds to each Lender pursuant to wire transfer instructions delivered in writing to the Agent. Concurrently with each such payment, the Agent shall identify whether such payment (or any portion thereof) represents principal or interest on the Loans or otherwise. Unless the Agent receives notice from the Borrower prior to the date on which any payment is due to the Lenders from the Borrower that the Borrower will not make such payment in full as and when required, the Agent may assume that the Borrower has made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, distribute to each applicable Lender on such due date an amount equal to the amount then due such Lender from the Borrower. If and to the extent the Borrower has not made such payment in full to the Agent, each applicable Lender shall repay to the Agent on demand such amount distributed to such Lender, together with interest at the Base Rate for each day from the date such amount is distributed to such Lender until the date repaid.
11.5. Concerning the Collateral and the Related Loan Documents. Each Lender authorizes and directs the Agent to enter into the other Loan Documents, for the ratable benefit and obligation of the Agent and the Lenders. Each Lender agrees that any action taken by the Agent or the Majority Lenders, as applicable, in accordance with the terms of this Agreement or the other Loan Documents, and the exercise by the Agent or the Majority Lenders, as applicable, of their respective powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders. The Lenders acknowledge that the Loans, and all interest and other amounts hereunder constitute one debt, secured pari passu by all of the Collateral.
ARTICLE 12
RESERVED
ARTICLE 13
MISCELLANEOUS
13.1. Capitalized Terms, Rules of Construction, Annexes, Exhibits and Schedules. Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed thereto in Annex A which is attached hereto and incorporated herein; the rules of construction contained therein shall govern the interpretation of this Agreement, and all Annexes, Exhibits and Schedules attached hereto are incorporated herein by reference.
13.2. No Waivers; Cumulative Remedies. No failure by the Agent or any Lender to exercise any right, remedy or option under this Agreement or any present or future
supplement thereto, or in any other agreement between or among any Loan Party and the Agent and/or any Lender, or delay by the Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by the Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by the Agent or the Lenders on any occasion shall affect or diminish the Agent's and each Lender's rights thereafter to require strict performance by the Loan Parties of any provision of this Agreement. The Agent and the Lenders may proceed directly to collect the Obligations when due without any prior recourse to the Collateral. The Agent's and each Lender's rights under this Agreement will be cumulative and not exclusive of any other right or remedy which the Agent or any Lender may have.
13.3. Severability. The illegality or unenforceability of any provision of this Agreement or any other Loan Document or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement, any other Loan Document or any instrument or agreement required hereunder.
13.4. Governing Law; Choice of Forum; Service of Process.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF DELAWARE OR OF THE UNITED STATES FOR THE DISTRICT OF DELAWARE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE LOAN PARTIES, THE AGENT AND EACH OF THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE LOAN PARTIES, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY LOAN PARTY OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) EACH LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO SUCH LOAN PARTY AT ITS ADDRESS SET FORTH IN SECTION 14.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
13.5. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.5.
13.6. Notices. Except as otherwise provided herein, notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail, sent by telecopy or electronic mail, as follows:
(i) if to the Borrower or any Guarantor, to it at 3801 South
Oliver Street, Wichita, KS 67210, attention: Mike L. Williams (telecopy:
316 526 8720) (e-mail: mike.l.williams@boeing.com) with a copy to (A) Kaye
Scholer LLP, 425 Park Avenue, New York, NY 10022-3598, attention: Edmond
Gabbay, Esq. (telecopy: (212) 836-6476), (email: egabbay@kayescholer.com)
and (B) Onex American Holdings II LLC, 421 Leader Street, Marion OH 43302,
Attention: Donald F. West (telecopy: (740) 223-7762) (email:
dwest@onex.com); and
(ii) if to the Agent, to it at if to the Agent, to it at Corporate Headquarters, M/C 5003-3648, 100 North Riverside, Chicago, Illinois 60606-1596, attention: Office of the Treasurer, (telecopy: 312 544 2399), (e-mail: thomas.f.dillon@boeing.com) with a copy to: The Boeing Company, Office of the General Counsel, M/C 5003-1001, 100 North Riverside, Chicago, Illinois 60606-1596, attention: Office of the General Counsel, (telecopy: 312 544 2829), (e-mail: deborah.telman@boeing.com).
All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy or electronic mail or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 13.6 or in accordance with the latest unrevoked direction from such party given in accordance with this
Section 13.6. Each Loan Party and the Agent hereunder agrees to notify the other party in writing promptly of any change to the notice information provided above.
13.7. Binding Effect. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective representatives, successors, and assigns of the parties hereto; provided, however, that no interest herein may be assigned by any Loan Party without prior written consent of the Agent and each Lender. The rights and benefits of the Agent and the Lenders hereunder shall, if such Persons so agree, inure to any party acquiring any interest in the Obligations or any part thereof.
13.8. Final Agreement. This Agreement and the other Loan Documents are intended by each Loan Party, the Agent and the Lenders to be the final, complete and exclusive expression of the agreement among them. This Agreement and the other Loan Documents supersede any and all prior oral or written agreements relating to the subject matter hereof.
13.9. Counterparts. This Agreement may be executed in any number of counterparts, and by the Agent, each Lender and each Loan Party in separate counterparts, each of which shall be an original, but all of which shall together constitute one and the same agreement; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.
13.10. Captions. The captions contained in this Agreement are for convenience of reference only, are without substantive meaning and should not be construed to modify, enlarge, or restrict any provision.
13.11. Confidentiality. Each of the Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates' respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; provided, unless specifically prohibited by applicable law or court order, the Agent or such Lender, as applicable, shall make reasonable efforts to notify the Borrower of any request thereof, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder or (f) to any assignee or any prospective assignee of any of its rights or obligations under this Agreement, provided such assignee or prospective assignee agrees to be bound by the provisions of this Section.
"Information" means information concerning any Loan Party or any of its direct or indirect equityholders, or any of their respective employees, directors, or Subsidiaries, or Affiliates received by the Agent or any Lender on a confidential basis from the Borrower or any other Person under or pursuant to this Agreement or any other Loan Document, including without limitation financial terms and financial and organizational information contained in any
documents, statements, certificates, materials or information furnished, or to be furnished, by or on behalf of any Loan Party or any other Person on a confidential basis in connection with this Agreement and the Loan Documents, but does not include any such information that (i) is publicly available at the time of disclosure or becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Agent or any Lender on a nonconfidential basis from a source other than the Loan Parties or any of their direct or indirect equityholders, or any of their respective employees, directors, Subsidiaries or Affiliates or any of their respective agents or representatives.
13.12. Conflicts with Other Loan Documents. Unless otherwise expressly provided in this Agreement (or in another Loan Document by specific reference to the applicable provision contained in this Agreement), if any provision contained in this Agreement conflicts with any provision of any other Loan Document, the provision contained in this Agreement shall govern and control.
13.13. Intercreditor and Subordination Agreement.
(a) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, ALL LIENS AND SECURITY INTERESTS GRANTED TO THE AGENT PURSUANT TO OR CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, ALL OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE AGENT OR ANY OTHER PARTY HEREUNDER OR THEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AND SUBORDINATION AGREEMENT AND THE OBLIGATIONS HEREUNDER AND THEREUNDER AND THE LIENS AND SECURITY INTERESTS GRANTED OR CONTEMPLATED HEREBY OR THEREBY ARE SUBORDINATED TO THE EXTENT SET FORTH IN THE INTERCREDITOR AND SUBORDINATION AGREEMENT. IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AND SUBORDINATION AGREEMENT AND THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, THE TERMS OF THE INTERCREDITOR AND SUBORDINATION AGREEMENT SHALL GOVERN AND CONTROL.
(b) EACH LENDER HEREBY GRANTS TO THE AGENT ALL REQUISITE AUTHORITY TO ENTER INTO OR OTHERWISE BECOME BOUND BY THE INTERCREDITOR AND SUBORDINATION AGREEMENT AND TO BIND THE LENDERS THERETO BY THE AGENT'S ENTERING INTO OR OTHERWISE BECOMING BOUND THEREBY, AND NO FURTHER CONSENT OR APPROVAL ON THE PART OF THE LENDERS IS OR WILL BE REQUIRED IN CONNECTION WITH THE PERFORMANCE OF THE INTERCREDITOR AND SUBORDINATION AGREEMENT.
13.14. Subordination of Obligations to all Senior Secured Debt . The Agent and the Lenders hereby confirm that all liens and security interests granted to the Agent pursuant to or contemplated by this Agreement or any other Loan Document and all Obligations under this Agreement and the other Loan Documents are subordinated to all Senior Secured Debt of the Loan Parties, and the Agent and the Lenders hereby agree that, if requested by Mid-Western, they will promptly enter into such subordination and intercreditor agreements with Senior
Lenders not party to the Intercreditor and Subordination Agreement, on terms substantially similar to the Intercreditor and Subordination Agreement, confirming such subordination.
13.15. Assignment and Release of Borrower Loan Parties' Obligations. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, the Borrower may at any time assign to Mid-Western, and Mid-Western may assume from the Borrower by novation, all rights and obligations of the Borrower under the Loan Documents pursuant to documentation reasonably satisfactory to the Agent so long as in connection with such assignment the WLLC Loans are or are deemed repaid and terminated in full (such assignment and assumption of all (but not less than all) such rights and obligations, a "Borrower Assignment"). Effective immediately upon any such Borrower Assignment, and receipt of legal opinions reasonably satisfactory to the Agent with respect to the validity and enforceability of such Borrower Assignment, each of the Borrower Parties shall be released from all obligations and liabilities under the Loan Documents and the initial investment in the Borrower Loan Parties made by the Sponsor on the Closing Date and proceeds earned thereon from the making of Permitted Investments (as defined in the Citigroup Credit Facilities) of such amounts may be transferred to any Person (including Sponsor) free and clear of any Liens in favor of the Secured Parties (as defined in the Security Agreement). For the avoidance of doubt, all other property of the Borrower Loan Parties, including any WLLC Spread and proceeds thereon, shall be either (i) transferred to Mid-Western and/or the Mid-Western Loan Parties or (ii) transferred to Onex Corporation or an affiliate thereof subject to the continuing Lien of the Agent and shall be held in a blocked collateral account securing the Obligations pursuant to documentation reasonably satisfactory to the Agent, in each case upon the occurrence of the Borrower Assignment.
13.16. Costs and Expenses. Mid-Western agrees to pay (a) to the Agent all reasonable out-of-pocket costs and expenses incurred by the Agent (including the reasonable fees and expenses of counsel to the Agent) in respect of title insurance and taxes, fees and other charges for recording the Mortgages, filing financing statements and continuations, and other actions to perfect and continue the Agent's Liens and to add Persons as guarantors, pledgors or grantors, as applicable, in accordance with the terms of the Loan Documents, (b) to the Agent and the Lenders all reasonable out-of-pocket expenses incurred by the Agent and the Lenders (including the reasonable fees and expenses of counsel to the Agent and each Lender) in connection with the enforcement or protection of its rights in connection with this Agreement, the other Loan Documents or the Loans, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans and (c) all reasonable out-of-pocket costs and expenses incurred by the Agent (including the reasonable fees and expenses of counsel to the Agent) in connection with the termination of any Loan Document or the release of any Loan Party from its obligations under any Loan Document, including, without limitation, filing fees and other charges incurred by the Agent in terminating financing statements and mortgages.
13.17. No Recourse Against Limited Partners. For the avoidance of doubt, the Agent and each Lender hereby confirms that it has no recourse against any of the limited partners of the Borrower with respect to any obligation arising out of this Agreement. For the avoidance of doubt, nothing contained herein shall limit any right of the Agent or any Lender under the
Onex Guarantee Agreement and the NSULC Tax Indemnity Agreement (including any right to recourse granted thereunder).
IN WITNESS WHEREOF, the parties have entered into this Agreement on the date first above written.
"LOAN PARTIES"
ONEX WIND FINANCE LP,
By: its general partner,
1648701 ONTARIO INC.
By: /s/ Nigel Wright ------------------------------------ Name: Nigel Wright Title: Representative |
MID-WESTERN AIRCRAFT SYSTEMS, INC.
By: /s/ Seth Mersky ------------------------------------ Name: Seth Mersky Title: President |
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS,
INC.
By: /s/ Seth Mersky ------------------------------------ Name: Seth Mersky Title: President |
MID-WESTERN AIRCRAFT FINANCE, INC.
By: /s/ Nigel Wright ------------------------------------ Name: Nigel Wright Title: Chief Financial Officer and President |
3101447 NOVA SCOTIA COMPANY
By: /s/ Nigel Wright ------------------------------------ Name: Nigel Wright Title: Chief Financial Officer and President By: /s/ Seth Mersky ------------------------------------ Name: Seth Mersky Title: Vice President |
[Boeing Credit Agreement]
ONEX WIND FINANCE LLC
By: /s/ Donald West ------------------------------------ Name: Donald F. West Title: Director |
[Boeing Credit Agreement]
"AGENT"
THE BOEING COMPANY, as the Agent
By: /s/ Bryan Gerard ------------------------------------ Title: --------------------------------- |
"LENDERS"
THE BOEING COMPANY
By: /s/ X ------------------------------------ Title: --------------------------------- |
[Boeing Credit Agreement]
ANNEX A
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have the following respective meanings (unless otherwise defined therein), and all section references in the following definitions shall refer to sections of the Agreement:
"Adjusted Interest Expense Coverage Ratio Shortfall" has the meaning specified for such term in the Intercreditor and Subordination Agreement.
"Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise.
"Agent" means The Boeing Company, solely in its capacity as Agent for the Lenders.
"Agent's Liens" means the Liens in the Collateral granted to the Agent, for the benefit of the Lenders and the Agent, pursuant to this Agreement and the other Loan Documents.
"Agreement" means the Credit Agreement to which this Annex A is attached, as from time to time amended, modified, restated or otherwise modified.
"Assignment Agreement" has the meaning specified in Section 10.2(a).
"Availability Period" means the period commencing on the Closing Date and ending on the earliest of (i) December 31, 2008, (ii) the date on which the aggregate principal amount of the Loans made by the Lenders to the Borrower equals $150,000,000 and (iii) the date specified in a written notice delivered by the Borrower to the Agent stating that the Borrower will no longer request any Borrowings on and after such specified date.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.).
"Base Rate" means, for any day, the rate of interest in effect for such day as publicly announced from time to time by Citicorp North America, Inc. as its "prime rate". Any change in the prime rate announced by the Senior Agent shall take effect at the opening of business on the day specified in the public announcement of such change. Each Interest Rate based upon the Base Rate shall be adjusted simultaneously with any change in the Base Rate.
"Boeing" means the The Boeing Company, a Delaware corporation.
"Boeing Lender" has the meaning specified in Section 3.4(a).
"Borrower" has the meaning specified in the introductory paragraph hereof.
"Borrower Assignment" has the meaning specified in Section 13.15.
"Borrower Loan Parties" means, collectively, the Borrower and the Borrower Subsidiaries.
"Borrower Subsidiaries" means each of (i) NSULC and (ii) WLLC.
"Borrowing" means a borrowing hereunder consisting of Loans made by the Lenders to the Borrower.
"Borrowing Notice" has the meaning specified in Section 1.1(b).
"Business Day" means (a) any day that is not a Saturday, Sunday, or a day on which banks in New York, New York are required or permitted to be closed and (b) with respect to determinations of the LIBOR Rate, any day that is a Business Day pursuant to clause (a) above and that is also a day on which trading in Dollars is carried on by and between banks in the London interbank market.
"Capital Lease Obligations" means all monetary or financial obligations of Mid-Western and its Subsidiaries under any leasing or similar arrangement conveying the right to use real or personal property, or a combination thereof, which, in accordance with GAAP, would or should be classified and accounted for as capital leases, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date on which such lease may be terminated by the lessee without payment of a penalty.
"Change of Control" means:
(a) prior to such time as there shall have been consummated an Initial Public Offering of Holdings, the occurrence of any of the following: (i) the Permitted Holders (collectively) cease to own, or to have the power to vote or direct the voting of, Voting Stock of Holdings representing a majority of the voting power of the total outstanding Voting Stock of Holdings or (ii) the Permitted Holders cease to own Equity Interests representing a majority of the total economic interests of the Equity Interests of Holdings;
(b) from and after the time that there shall have been consummated an Initial Public Offering of Holdings, the occurrence of any of the following: (i) the Permitted Holders (collectively) shall fail to own, or to have the power to vote or direct the voting of, Voting Stock of Holdings representing at least 35% of the voting power of the total outstanding Voting Stock of Holdings, (ii) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause such person or group shall be
deemed to have "beneficial ownership" of all securities that such person or
group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
Voting Stock of Holdings representing voting power that is greater than the
voting power represented by the Voting Stock of Holdings beneficially
owned, directly or indirectly, by the Permitted Holders (collectively) or
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the board of directors of Holdings
(together with any new directors who were nominated for election by a
Permitted Holder or whose election to such board of directors or whose
nomination for election was approved by a vote of a majority of the
directors of Holdings then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute at least a
majority of the board of directors of Holdings; provided that a Change of
Control under this clause (b)(iii) shall not be deemed to have occurred if
and for so long as the Permitted Holders have the power to elect a majority
of the board of directors of Holdings;
(c) at any time, Holdings ceases to own 100% of the Equity Interests of Mid-Western;
(d) at any time prior to a Borrower Assignment permitted by Section 13.15, (x) the Sponsors shall cease to own, directly or indirectly, 100% of the Equity Interests of the Borrower or (y) the Borrower shall cease to own, directly or indirectly, 100% of the Equity Interests of any of the Borrower Subsidiaries; or
(e) at any time, a "Change of Control" (or equivalent term) has occurred under the Citigroup Credit Facilities.
"Citigroup Credit Agreement" means the Credit Agreement, dated as of the date hereof, among Holdings, Mid-Western, the Borrower, Citicorp North America, Inc., as administrative agent and collateral agent and documentation agent, Citigroup Global Markets Inc., as sole lead arranger and book runner, The Bank of Nova Scotia and Royal Bank of Canada, as co-arrangers, and the lenders from time to time party thereto, as amended, restated, modified, renewed, refunded, replaced (whether upon termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time.
"Citigroup Credit Facilities" means the secured revolving and term loan facilities provided to the Borrower and Mid-Western on the Closing Date by Citicorp North America, Inc. and/or one or more of its affiliates and other banks and institutional lenders, including any credit agreement and related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time.
"Closing Date" means June 16, 2005.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Collateral" means all of each Loan Party's real and personal property and all other assets of any Person, in each case from time to time subject to the Agent's Liens securing payment or performance of any of the Obligations.
"Commitment" means, as to any Lender, the obligation of such Lender, if any, to make Loans in an aggregate principal not to exceed the amount set forth under the heading "Commitment" opposite such Lender's name on Schedule 1.2(a) or in the Assignment Agreement pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof.
"Default" means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
"Deferred Interest" has the meaning specified in Section 2.1(b).
"Discharge of Senior Obligations" means the earliest date upon which all of the following have occurred: (i) termination of all commitments to extend credit under all Senior Secured Facilities, (ii) payment in full in cash of all indebtedness, obligations and liabilities outstanding under all Senior Secured Facilities (other than contingent indemnification obligations not then claimed or due) and (iii) termination, cancellation or cash collateralization of all outstanding letters of credit under all Senior Secured Facilities.
"Dollar" and "$" mean dollars in the lawful currency of the United States.
"Eligible Assignee" means (a) a commercial bank, commercial finance company, insurance company, investment fund or other lender that (i) has total assets in excess of $2,000,000,000 and (ii) in the ordinary course of business regularly invests in bank loans and similar extensions of credit, (b) any Lender listed on the signature page of this Agreement and (c) any Affiliate of Boeing.
"Equity Interest" means, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, whether outstanding on the date hereof or issued after the Closing Date, but excluding debt securities convertible or exchangeable into such equity.
"Equity Investors" means collectively, the Permitted Holders and officers, employees and directors of Holdings or any of its Subsidiaries that own Equity Interests of Holdings.
"ERISA" means the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with any Loan Party, is treated as a single
employer under Sections 414(b) or (c) of the Code, and for the purpose of
Section 302 of ERISA and/or Section 412, 4971, 4977, 4980D,
4980E and/or each "applicable section" under Section 414(t)(2) of the Code, within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"ERISA Event" means (a) any "reportable event," as defined in Section
4043(c) of ERISA or the regulations issued thereunder, with respect to
a Pension Plan (other than an event for which the 30-day notice period is waived
by regulation); (b) the existence with respect to any Pension Plan of an
"accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived, the failure to make by its due
date a required installment under Section 412(m) of the Code with respect to any
Pension Plan or the failure to make any required contribution to a Multiemployer
Plan; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Pension Plan; (d) the incurrence by any Loan Party or ERISA
Affiliate of any liability under Title IV of ERISA with respect to any Pension
Plan; (e) the receipt by any Loan Party or ERISA Affiliate from the PBGC or a
plan administrator of any notice relating to an intention to terminate any
Pension Plan, to appoint a trustee to administer any Pension Plan, or to take
any other action with respect to a Pension Plan that could result in material
liability to a Loan Party or a Subsidiary, or the occurrence of any event or
condition which could reasonably be expected to constitute grounds under ERISA
for the termination of or the appointment of a trustee to administer, any
Pension Plan; (f) the incurrence by any Loan Party or ERISA Affiliate of any
liability with respect to the withdrawal or partial withdrawal from any Pension
Plan or Multiemployer Plan; (g) the receipt by a Loan Party or ERISA Affiliate
of any notice concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA; (h) the "substantial
cessation of operations" within the meaning of Section 4062(e) of ERISA with
respect to a Pension Plan; (i) the making of any amendment to any Pension Plan
which could result in the imposition of a Lien or the posting of a bond or other
security; or (j) the occurrence of a nonexempt prohibited transaction (within
the meaning of Section 4975 of the Code or Section 406 of ERISA) which could
result in liability to a Loan Party or any of the Subsidiaries.
"Event of Default" has the meaning specified in Section 8.1.
"Financial Officer" of any corporation, partnership or other entity means the chief financial officer, the principal accounting officer, Treasurer or Controller of such corporation, partnership or other entity.
"Fiscal Quarter" means any period of 13 or 14 weeks ending on the Thursday nearest to the last day of each calendar quarter in each calendar year.
"Fiscal Year" means any period of 52 or 53 consecutive weeks ending on the Thursday nearest to December 31 of each calendar year; references to a Fiscal Year with a number corresponding to any calendar year (e.g., the "2005 Fiscal Year") refer to the Fiscal Year ending on or about December 31 occurring during such calendar year.
"Foreign Subsidiary" means any direct or indirect Subsidiary of the Borrower which is not organized under the laws of the United States, any state thereof or the District of Columbia.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles in the United States applied on a consistent basis.
"Governmental Authority" means any nation or government, any state, locality, province or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing and any department, agency, board, commission, tribunal, committee or instrumentality of any of the foregoing.
"Guarantee Agreement" means the Guarantee Agreement, substantially in the form of Exhibit D, made by the Guarantors in favor of the Agent for the benefit of the Secured Parties.
"Guarantors" means, collectively, (a) Holdings, (b) Mid-Western and each of the other present and future Subsidiaries of Holdings that guarantees any obligations of the Borrower under the Citigroup Credit Facilities (or, following the Discharge of Senior Obligations, that would have been required to guarantee any obligations of the Borrower under the Citigroup Credit Facilities as in effect immediately prior to the Discharge of Senior Obligations) and (c) the Borrower Subsidiaries.
"Hedging Agreement" means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement and all other similar agreements or arrangements designed to alter the risks of any Person arising from fluctuations in interest rate, currency values or commodity prices.
"Holdings" means Mid-Western Aircraft Systems Holdings, Inc., a Delaware corporation.
"Indemnified Foreign Tax" has the meaning assigned thereto in Section 3.4.
"Indemnified Taxes" has the meaning assigned thereto in Section 3.4.
"Initial Public Offering" means a primary underwritten public offering of common stock of the Parent Guarantor.
"Intercreditor and Subordination Agreement" means, collectively, (i)
that certain Subordination and Intercreditor Agreement, dated as of the date
hereof (as amended, restated, supplemental or otherwise modified from time to
time), among Citicorp North America, Inc., as collateral agent and
administrative agent under the Citigroup Credit Facilities, and the Agent and
(ii) all other agreements required to be executed by the Agent and Lenders under
Section 13.14.
"Interest Payment Date" has the meaning specified in Section 2.1(b).
"Interest Period" means, as to any Loan, (i) initially, the period commencing on the Funding Date of such Loan and ending on the date three months thereafter and (ii) thereafter, each period commencing on the day following the last day of the immediately preceding Interest Period and ending three months thereafter; provided, that any Interest Period that would otherwise extend beyond the Stated Termination Date shall end on the Stated Termination Date.
"Interest Rate" means, with respect to the Unpaid Amount of any Loan for any Interest Period, a per annum rate equal to the LIBOR Rate for such Interest Period plus six percent (6.0%); provided, that if the Agent and the Borrower determine that for any reason adequate and reasonable means do not exist for determining the LIBOR Rate for any Interest Period with respect to the Unpaid Amount of any Loan, the Interest Rate shall be a fluctuating per annum rate equal to the Base Rate in effect from time to time plus four and three-fourths percent (4.75%).
"IRB Lease Obligations" means Capital Lease Obligations of Mid-Western or any of its Subsidiaries owed to the City of Wichita or the City of Tulsa (each a "City") in connection with the leasing of property that is purchased by such City and financed with the proceeds of an issuance of industrial revenue bonds issued by such City to Mid-Western or such Subsidiary.
"Kansas Bond Indebtedness" means Subordinated Indebtedness in respect of bond financings entered into for the purpose of obtaining a credit against Kansas payroll taxes paid with respect to wages of employees of Mid-Western and its Subsidiaries on terms and conditions consistent in all material respects with the description of such bond financings set forth in the Term Sheet attached hereto as Schedule 1.2(b).
"Lender" and "Lenders" have the meaning specified in the introductory paragraph hereof.
"LIBOR Rate" means, for any Interest Period with respect to a Loan, the rate per annum equal to the British Bankers Association LIBOR Rate ("BBA LIBOR"), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for deposits in the relevant currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest of any kind or nature whatsoever.
"Loan Documents" means this Agreement, the Guarantee Agreement, the Notes, the WLLC Subordination Agreement, the Intercreditor and Subordination Agreement, the Onex Guarantee Agreement, the NSULC Tax Indemnity Agreement, the Remarketing Agreement, the Post-Closing Agreement, the Undertaking Agreement and the Security Documents.
"Loan Party" means the Borrower and each Guarantor.
"Loans" has the meaning specified in Section 1.1(a).
"Majority Lenders" means at any time Lenders whose Pro Rata Shares aggregate more than 50%.
"Material Adverse Effect" means a materially adverse effect on (a) the business, financial condition, affairs or results of operations of Holdings and its Subsidiaries, taken as a whole, or the Borrower Loan Parties or (b) the ability of any Loan Party to perform its respective obligations under the Loan Documents, (c) the rights of or benefits available to the Lenders under any Loan Document or (d) the validity, enforceability, perfection or priority of the Liens granted to the Agent on the Collateral (taken as a whole) pursuant to the Security Documents.
"Maximum Rate" has the meaning specified in Section 2.2.
"Mid-Western" means Mid-Western Aircraft Systems, Inc., a Delaware corporation.
"Mid-Western Lenders" means, collectively, Holdings or any affiliate of Holdings that becomes a Lender pursuant to the Remarketing Agreement, in each case solely in its capacity as a Lender.
"Mid-Western Loan Parties" means, collectively, Holdings, Mid-Western and the direct and indirect Subsidiaries of Holdings that are Guarantors.
"Mortgages" means and includes any and all of the mortgages, hypothecations, charges/mortgages of land, deeds of trust, deeds to secure debt, assignments and other instruments executed and delivered by any Loan Party to or for the benefit of the Agent by which the Agent, on behalf of the Lenders, acquires a Lien on Real Estate or a collateral assignment of any Loan Party's interest under leases of Real Estate, and all amendments, modifications and supplements thereto.
"Multiemployer Plan" means a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA (i) to which any Loan Party or ERISA Affiliate is
then making or accruing an obligation to make contributions, (ii) to which any
Loan Party or ERISA Affiliate has within the preceding six plan years made
contributions, including any Person which ceased to be an ERISA Affiliate during
such six year period, or (iii) with respect to which Loan Party or any
Subsidiary could incur liability.
"Note" has the meaning set forth in Section 1.1(c).
"NSULC" has the meaning set forth in the definition of "Term Transaction."
"NSULC Tax Indemnity Agreement" means the NSULC Tax Indemnity Agreement, substantially in the form of Exhibit E, between Onex Corporation and NSULC (as the same may be amended, supplemented or amended and restated from time to time).
"Obligations" means all present and future loans, advances, liabilities, obligations, covenants, duties, and debts owing by the Loan Parties to the Agent and/or any Lender, arising under or pursuant to this Agreement or any of the other Loan Documents, whether or not evidenced by any note, or other instrument or document, whether arising from
loan, guaranty or otherwise, whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, as principal or guarantor, and including all principal, interest and any other sums chargeable to any of the Loan Parties hereunder or under any of the other Loan Documents.
"Onex Guarantee Agreement" means the Guarantee Agreement, substantially in the form of Exhibit F, among Onex Corporation, the Lenders and the Agent.
"Onex Pledge Agreement (GP Interests)" means the Canadian Pledge Agreement, substantially in the form of Exhibit G-1, among 1648701 Ontario Inc. and the Agent.
"Onex Pledge Agreement (LP Interests)" means the Onex Pledge Agreement, substantially in the form of Exhibit G-2, among Onex Corporation, the Agent and Citicorp North America, Inc., as collateral agent under the Citigroup Credit Agreement.
"Onex Pledge Agreements" means, collectively, the Onex Pledge Agreement (GP Interests) and the Onex Pledge Agreement (LP Interests).
"Organizational Document" means (i) relative to each Person that is a corporation, its charter and its by-laws (or similar documents), (ii) relative to each Person that is a limited liability company, its certificate of formation and its operating agreement (or similar documents), (iii) relative to each Person that is a limited partnership, its certificate of formation and its limited partnership agreement (or similar documents), (iv) relative to each Person that is a general partnership, its partnership agreement (or similar document) and (v) relative to any Person that is any other type of entity, such documents as shall be comparable to the foregoing.
"Other Taxes" has the meaning assigned thereto in Section 3.4.
"Payment Block Event" means a Blockage Event (as defined the Intercreditor and Subordination Agreement).
"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA.
"Pension Plan" means a "pension plan," as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
Multiemployer Plan) and to which any Loan Party or any ERISA Affiliate may have
liability, including any liability by reason of having been a substantial
employer within the meaning of Section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing sponsor
under Section 4069 of ERISA.
"Perfection Certificate" means a certificate in the form of Annex 2 to the Security Agreement or such other form that is provided to the Senior Agent.
"Permitted Holders" means Onex Partners L.P., Onex Corporation and their respective affiliates that are Equity Investors as of the Closing Date and are identified as such on Schedule 1.01(d).
"Person" means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, Governmental Authority or any other entity.
"Pledge Agreement" means the Pledge Agreement, substantially in the form of Exhibit H, among the Loan Parties and the Agent for the benefit of the Secured Parties (as the same may be amended, supplemented or amended and restated from time to time).
"Post-Closing Agreement" means the Post-Closing Agreement, dated as of the date hereof, between Mid-Western and the Agent.
"Prepayment Notice" has the meaning specified in Section 3.2(c)(ii).
"Pro Rata Share" means, with respect to a Lender at any time, a fraction (expressed as a percentage), the numerator of which is the amount of such Lender's Commitment at such time and the denominator of which is the amounts of all of the Lenders' Commitments at such time (or if no Commitments are outstanding at such time, a fraction (expressed as a percentage), the numerator of which is the amount of the Loans owed to such Lender at such time and the denominator of which is the aggregate amount of the Loans owed to all Lenders at such time).
"Real Estate" means all of each Loan Party's now or hereafter owned or leased estates in real property, including, without limitation, all fees, leaseholds and future interests, together with all of each Loan Party's now or hereafter owned or leased interests in the improvements thereon, the fixtures attached thereto and the easements appurtenant thereto.
"Remarketing Agreement" means the Remarketing Agreement, substantially in the form of Exhibit I, among Holdings, the Lenders and the Agent.
"Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or commissioner or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject.
"Restricted Payment" means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of Holdings, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to Holdings' stockholders.
"Section 3.4 Certificate" has the meaning assigned to such term in
Section 3.4.
"Secured Parties" means, collectively, the Agent and the Lenders.
"Security Agreement" means the Security Agreement, substantially in the form of Exhibit J, among the Loan Parties and the Agent for the benefit of the Secured Parties (as the same may be amended, supplemented or amended and restated from time to time).
"Security Documents" means the Security Agreement, the Pledge Agreement, the Perfection Certificate, any cash management agreements (as defined in the Security Agreement), the Mortgages, the Onex Pledge Agreements and each other security agreement or other instrument or document executed and delivered pursuant to Section 5.4 or 5.5 to secure any of the Obligations.
"Senior Agent" means Citicorp North America, Inc., in its capacity as administrative agent and/or collateral agent under the Citigroup Credit Facilities, together with its successors and assigns.
"Senior Discharge Events" has the meaning specified in Section 8.2.
"Senior Secured Debt" means all obligations to the Senior Lenders in connection with the Senior Secured Facilities (including post-petition interest whether or not an allowed claim), provided that no indebtedness shall constitute Senior Secured Debt to the extent that its incurrence would cause the aggregate principal amount of the Senior Secured Debt at the time of incurrence to exceed the Senior Secured Debt Cap. For the avoidance of doubt, any indebtedness that constitutes Senior Secured Debt at the time incurred shall at all times thereafter constitute Senior Secured Debt.
"Senior Secured Debt Cap" means $1,075,000,000; provided, that for purposes of calculating the Senior Secured Debt Cap, Senior Secured Debt shall not include (i) obligations incurred by Mid-Western or any other Loan Party as a result of a 787 Discontinuance, (ii) any Kansas Bond Indebtedness, (iii) any IRB Lease Obligations and (iv) and obligations under Hedging Agreements.
"Senior Secured Facilities" means one or more debt facilities or commercial paper facilities (including without limitation the Citigroup Credit Facilities) or other debt securities, in each case, secured and with banks, other institutional lenders or institutional investors providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time; provided, that Senior Secured Facilities shall not include the debt facilities provided under the Loan Documents.
"Senior Lenders" means the lenders from time to time party to the Senior Secured Facilities.
"787 Agreement" means the 787 GTA and the 787 SPB.
"787 Discontinuance" means 90 days after the discontinuance of the 787 Program such that less than 500 shipsets will be delivered to the Seller pursuant to such program.
"787 GTA" means the General Terms Agreement, BCA-65520-0032, dated as of the date hereof, between Mid-Western and Boeing, relating to the 787 Program.
"787 Program" means the 787 Program within the meaning of the 787 Agreement.
"787 SBP" means the Special Business Provisions, BCA-MS-65530-0019, dated as of the date hereof, between Mid-Western and Boeing, relating to the 787 Program.
"Sponsor" means Onex Partners LP, Onex Corporation and their respective affiliates.
"Stated Termination Date" means June 16, 2013.
"Subordinated Indebtedness" means indebtedness of any Loan Party that is by its terms subordinated in right of payment to the Obligations of such Loan.
"Subsidiary" of a Person means any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than fifty percent (50%) of the voting stock or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a "Subsidiary" refer to a Subsidiary of Holdings.
"Tax Benefit" has the meaning assigned to such term in Section 3.4.
"Taxes" has the meaning assigned to such term in Section 3.4.
"Termination Date" means the earliest to occur of (i) the Stated Termination Date, (ii) the date this Agreement is terminated either by the Borrower pursuant to Section 3.1 or by the Majority Lenders pursuant to Section 8.2, and (iii) the date this Agreement is otherwise terminated for any reason whatsoever pursuant to the terms of this Agreement.
"Term Transaction" means the Borrowings by the Borrower of the Loans from time to time under this Agreement, all the proceeds of which will be invested substantially concurrently with such Borrowings in either (i) Equity Interests of or loans to 3101447 Nova Scotia Company, a Nova Scotia unlimited liability company ("NSULC"), with all the proceeds of such investment being invested by NSULC in Equity Interests of or loans to Onex Wind Finance LLC, a Wyoming limited liability company ("WLLC") wholly owned by NSULC or (ii) Equity Interests of or loans to WLLC that substantially concurrently with the applicable Borrowing are contributed to NSULC for Equity Interests of or loans to NSULC. Upon each Borrowing under this Agreement, WLLC will lend to Mid-Western (each a "WLLC Loan") pursuant to the WLLC Delayed-Draw Term Loan Credit Agreement dated as of the date hereof between Mid-Western and WLLC (the "WLLC Delayed-Draw Term Loan Agreement") the entire amount invested in it by NSULC or the Borrower with respect to such Borrowing on economic terms and conditions identical to those applicable to the Loan (except that the rate of interest payable thereon will exceed (but by no more than 0.10% per annum) the rate of interest payable on the Unpaid Amount of the Loans). The obligations of Mid-Western in respect of each WLLC Loan shall be subordinated pursuant to the WLLC Subordination Agreement to the obligations of Mid-Western in respect of the Obligations pursuant to the WLLC Subordination Agreement and no payment will be made by Mid-Western in respect of such loans from WLLC
unless, substantially contemporaneously therewith, a payment in an equal amount is made by the Borrower in respect of the Loans and such payment is permitted under the WLLC Subordination Agreement, provided that, so long as no Default or Event of Default exists, the payment of interest to WLLC may be at a rate of interest that exceeds (but by no more than 0.10% per annum) the rate of interest payable on the Unpaid Amount of the Loans, and provided further that during the continuance of any Default or Event of Default such additional 0.10% per annum interest may continue to accrue and may be paid to WLLC when the condition resulting in the prohibition on payment thereof no longer exists and such payment is permitted to be made by the Borrower and Mid-Western under the WLLC Subordination Agreement. The additional 0.10% per annum interest payable on any WLLC Loan is referred to herein as the "WLLC Spread."
"Transferee" has the meaning assigned to such term in Section 2.16.
"UCC" means the Uniform Commercial Code, as in effect from time to time, of the State of New York or of any other state the laws of which are required as a result thereof to be applied in connection with the issue of perfection of security interests, provided, that to the extent that the UCC is used to define any term herein or in any other documents and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern.
"Undertaking Agreement" means the Agreement, dated as of the date hereof, among the Lenders, the Agent and the Borrower regarding undertakings required by the parties thereto to incorporate certain mandatory prepayment and offer to prepay provisions following a Discharge of Senior Obligations, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.
"Unpaid Amount" means with respect to any Loan at any time, the sum of
(x) the outstanding principal amount of such Loan at such time plus (y) the
aggregate outstanding amount of Deferred Interest, if any, on such Loan at such
time.
"Welfare Plan" means a "welfare plan," as such term is defined in
Section 3(1) of ERISA, that is maintained or contributed to by a Loan Party or
any Subsidiary or with respect to which a Loan Party or any Subsidiary could
incur liability.
"WLLC" has the meaning set forth in the definition of "Term Transaction."
"WLLC Loan" has the meaning assigned to such term in the definition of "Term Transaction".
"WLLC Spread" has the meaning assigned to such term in the definition of "Term Transaction."
"WLLC Subordination Agreement" means the WLLC Subordination Agreement, to be entered into among the Borrower and each Borrower Subsidiary, Mid-Western, the Agent and Citicorp North America, Inc., as administrative agent under the Citigroup Credit Facilities, as amended, restated, supplemented or otherwise modified from time to time, substantially in the form of Exhibit K.
"WLLC Delayed-Draw Term Loan Agreement" has the meaning set forth in the definition of "Term Transaction."
Accounting Terms. Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations in this Agreement shall be computed, unless otherwise specifically provided therein, in accordance with GAAP.
Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and Subsection, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced.
(ii) The term "including" is not limiting and means "including without limitation."
(iii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including," the words "to" and "until" each mean "to but excluding" and the word "through" means "to and including."
(iv) The word "or" is not exclusive.
(d) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement and the other Loan Documents are for convenience of reference only and shall not affect the interpretation of this Agreement.
NOTE
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, ALL LIENS AND SECURITY INTERESTS GRANTED TO THE AGENT PURSUANT TO OR CONTEMPLATED BY THIS NOTE OR ANY OTHER LOAN DOCUMENT, ALL OBLIGATIONS UNDER THIS NOTE AND THE OTHER LOAN DOCUMENTS AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE AGENT OR ANY OTHER PARTY HEREUNDER OR THEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AND SUBORDINATION AGREEMENT AND THE OBLIGATIONS HEREUNDER AND THEREUNDER AND THE LIENS AND SECURITY INTERESTS GRANTED OR CONTEMPLATED HEREBY OR THEREBY ARE SUBORDINATED TO THE EXTENT SET FORTH IN THE INTERCREDITOR AND SUBORDINATION AGREEMENT. IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AND SUBORDINATION AGREEMENT AND THIS NOTE OR ANY OTHER LOAN DOCUMENT, THE TERMS OF THE INTERCREDITOR AND SUBORDINATION AGREEMENT SHALL GOVERN AND CONTROL.
FOR VALUE RECEIVED, the undersigned (the "Borrower") hereby promises to pay to
[__________] (the "Lender"), in accordance with the provisions of the Credit
Agreement (as hereinafter defined), the Unpaid Amount of each Loan from time to
time made by the Lender to the Borrower under that certain Credit Agreement,
dated as of June 16, 2005 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the "Credit Agreement," the
terms defined therein being used herein as therein defined), among Onex Wind
Finance LP, as Borrower, the Guarantors party thereto, the Lenders from time to
time party thereto, and The Boeing Company, as Agent.
The Borrower promises to pay interest on the Unpaid Amount of each Loan made by the Lender to the Borrower from the date of such Loan until such Unpaid Amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement.
This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein and is secured by the Collateral. Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.
The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.
The Borrower hereby agrees to pay the Lender all reasonable out-of-pocket expenses incurred by the Lender (including the reasonable fees and expenses of counsel to the Lender) in connection with the enforcement or protection of its rights in connection with this Note, the Credit
Agreement, the other Loan Documents or the Loans made by the Lender, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Loans made by the Lender.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
ONEX WIND FINANCE LP
By: Its general partner, 1648701 Ontario Inc.
By: /s/ Nigel Wright ----------------------------------------- Name: Nigel Wright Title: Representative |
LOANS AND PAYMENTS WITH
RESPECT THERETO
AMOUNT OF OUTSTANDING END OF PRINCIPAL OR PRINCIPAL AMOUNT INTEREST INTEREST PAID BALANCE NOTATION DATE OF LOAN MADE PERIOD THIS DATE THIS DATE MADE BY -------- ------------ -------- ------------- ----------- -------- |
Exhibit 10.22
SECURITY AGREEMENT
By
MID-WESTERN AIRCRAFT SYSTEMS, INC.,
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC.,
ONEX WIND FINANCE LP,
and
THE SUBSIDIARIES PARTY HERETO,
as Grantors,
and
THE BOEING COMPANY,
as Agent
Dated as of June 16, 2005
TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS 2 SECTION 1.01. Uniform Commercial Code Defined Terms 2 SECTION 1.02. Credit Agreement Defined Terms 2 SECTION 1.03. Definition of Certain Terms Used Herein 2 SECTION 1.04. Rules of Construction 8 ARTICLE II AUTHORITY OF AGENT 8 SECTION 2.01. General Authority of the Agent Over the Collateral 8 SECTION 2.02. Exercise of Powers 9 SECTION 2.03. Remedies Not Exclusive 9 SECTION 2.04. Waiver and Estoppel 9 SECTION 2.05. Limitation by Law 10 SECTION 2.06. Rights of Secured Parties in Respect of Obligations 10 ARTICLE III SECURITY INTERESTS 10 SECTION 3.01. Security Interests 10 SECTION 3.02. No Assumption of Liability 11 SECTION 3.03. Intercreditor and Subordination Agreement 11 ARTICLE IV REPRESENTATIONS AND WARRANTIES 11 SECTION 4.01. Title and Authority 11 SECTION 4.02. Validity of Security Interest and Filings 11 SECTION 4.03. Reserved 12 SECTION 4.04. Other Actions 12 SECTION 4.05. No Conflicts, Consents, etc. 15 ARTICLE V COVENANTS 15 SECTION 5.01. Protection of Security 15 SECTION 5.02. Further Assurances 15 SECTION 5.03. Reserved 16 SECTION 5.04. Reserved 16 SECTION 5.05. Reserved 16 SECTION 5.06. Reserved 16 SECTION 5.07. Certain Covenants and Provisions Regarding Patent, Trademark and Copyright Collateral: 16 ARTICLE VI REMEDIES 16 SECTION 6.01. Remedies upon Default 16 SECTION 6.02. Application of Proceeds 18 SECTION 6.03. Grant of License to Use Intellectual Property 18 |
Page ---- ARTICLE VII INTENTIONALLY OMITTED 19 ARTICLE VIII MISCELLANEOUS 19 SECTION 8.01. Notices 19 SECTION 8.02. Survival of Agreement 19 SECTION 8.03. Binding Effect 19 SECTION 8.04. Successors and Assigns 19 SECTION 8.05. GOVERNING LAW 19 SECTION 8.06. Waivers; Amendment; Several Agreement 19 SECTION 8.07. WAIVER OF JURY TRIAL 20 SECTION 8.08. Severability 20 SECTION 8.09. Counterparts 21 SECTION 8.10. Headings 21 SECTION 8.11. Jurisdiction; Consent to Service of Process 21 SECTION 8.12. Termination 22 SECTION 8.13. Additional Grantors 22 SECTION 8.14. Financing Statements 23 SECTION 8.15. Agent Appointed Attorney-in-Fact 23 SECTION 6. GOVERNING LAW SECTION 6. GOVERNING LAW SECTION 6. GOVERNING LAW |
ANNEXES
Annex I Form of Supplement
Annex II Form of Perfection Certificate
Annex III Form of Securities Account Control Agreement
Annex IV Form of Deposit Account Control Agreement
Annex V-A Form of Copyright Security Agreement
Annex V-B Form of Patent Security Agreement
Annex V-C Form of Trademark Security Agreement
SECURITY AGREEMENT
This SECURITY AGREEMENT (as amended, amended and restated, supplemented or otherwise modified from time to time, this "Agreement") dated as of June 16, 2005 among MID-WESTERN AIRCRAFT SYSTEMS, INC., a Delaware corporation ("Mid-Western"), ONEX WIND FINANCE LP, a Delaware limited partnership (the "Borrower"), MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC., a Delaware corporation ("Parent"), each Subsidiary of Mid-Western and each Borrower Subsidiary listed on the signature pages hereto (collectively, together with each Subsidiary that becomes a party hereto pursuant to Section 8.13 of this Agreement, Mid-Western and Parent, the "Guarantors" and, together with the Borrower, the "Grantors") and THE BOEING COMPANY, as agent (in such capacity, the "Agent").
RECITALS
A. The Grantors, the Agent and the lenders party thereto (the "Lenders") have entered into that certain credit agreement, dated as of June 16, 2005 (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Credit Agreement").
B. The Guarantors have, pursuant to the Guarantee Agreement, dated as of the date hereof, among other things, unconditionally guaranteed the obligations of the Borrower under the Credit Agreement.
C. The Borrower and each Guarantor will receive substantial benefits from the execution, delivery and performance of the obligations under the Credit Agreement and are, therefore, willing to enter into this Agreement.
D. Contemporaneously with the execution and delivery of this Agreement, the Borrower and the Guarantors have executed and delivered to the Agent a Pledge Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Pledge Agreement").
F. This Agreement is given by each Grantor in favor of the Agent for the benefit of the Secured Parties (as hereinafter defined) to secure the payment and performance of all of the Obligations.
NOW THEREFORE, in consideration of the foregoing and other benefits accruing each Grantor, the receipt and sufficiency of which are hereby acknowledged, each Grantor hereby makes the following representations and warranties to the Agent for the benefit of the Secured Parties (and each of their respective successors and assigns), as follows:
ARTICLE I
Definitions
SECTION 1.01. Uniform Commercial Code Defined Terms. Unless otherwise defined herein, terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC, including the following which are capitalized herein:
"Accounts"; "Bank"; "Certificates of Title"; "Chattel Paper"; "Commercial Tort Claim"; "Commodity Account"; "Commodity Contract"; "Commodity Customer"; "Commodity Intermediary"; "Deposit Accounts"; "Documents"; "Electronic Chattel Paper"; "Entitlement Holder"; "Entitlement Order"; "Equipment"; "Financial Asset"; "Fixtures"; "Goods"; "Instruments" (as defined in Article 9 rather than Article 3); "Inventory"; "Investment Property"; "Letter-of-Credit Rights"; "Letters of Credit"; "Securities"; "Securities Account"; "Securities Intermediary"; "Security Entitlement"; "Supporting Obligations"; and "Tangible Chattel Paper".
SECTION 1.02. Credit Agreement Defined Terms. Capitalized terms used but not otherwise defined herein that are defined in the Credit Agreement shall have the meanings given to them in the Credit Agreement.
SECTION 1.03. Definition of Certain Terms Used Herein. As used herein, the following terms shall have the following meanings:
"Account Debtor" shall mean any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.
"Accounts Receivable" shall mean all Accounts and all right, title and interest in any returned goods, together with all rights, titles, securities and guarantees with respect thereto, including any rights to stoppage in transit, replevin, reclamation and resales.
"Agent" shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
"Books and Records" shall mean all instruments, files, records, ledger sheets and documents evidencing, covering or relating to any of the Collateral.
"Borrower" shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
"Charges" shall mean any and all property and other taxes, assessments and special assessments, levies, fees and all governmental charges imposed upon or assessed against, and all claims (including, without limitation, landlords', carriers', mechanics', maritime,
workmen's, repairmen's, laborers', materialmen's, suppliers' and warehousemen's Liens and other claims arising by operation of law) against, all or any portion of the Collateral.
"Collateral" shall mean with respect to each of the Grantors all of the following, in each case, whether now owned or hereafter acquired:
(a) Accounts Receivable;
(b) Books and Records;
(c) cash and Deposit Accounts;
(d) Chattel Paper;;
(e) Commercial Tort Claims described on Schedule 13 to the Perfection Certificate;
(f) Documents;
(g) Equipment;
(h) Fixtures;
(i) General Intangibles;
(j) Goods;
(k) Instruments;
(l) Inventory;
(m) Investment Property;
(n) Letter-of-Credit Rights;
(o) Letters of Credit;
(p) Supporting Obligations;
(q) Intellectual Property;
(r) Motor Vehicles;
(s) to the extent not covered by clauses (a) through (s) of this definition, all other personal property, whether tangible or intangible; and
(t) Proceeds of any and all of the foregoing;
provided that, notwithstanding the foregoing, "Collateral" shall not include any
(i) Securities Collateral (as defined in the Pledge Agreement) or other
collateral for the Obligations pledged under the Pledge Agreement or (ii)
Excluded Property.
"Collateral Estate" shall have the meaning assigned to such term in Section 2.01.
"Commodity Account Control Agreement" shall mean a commodity account control agreement in the same form provided to the Senior Collateral Agent.
"Control" shall mean (i) in the case of each Deposit Account, "control," as such term is defined in Section 9-104 of the UCC, (ii) in the case of any Security Entitlement, "control," as such term is defined in Section 8-106(d) of the UCC, and (iii) in the case of any Commodity Contract, "control," as such term is defined in Section 9-106(b) of the UCC.
"Control Agreement" shall mean, collectively, the Deposit Account Control Agreement, the Securities Account Control Agreement and the Commodity Account Control Agreement.
"Copyright License" shall mean each written agreement, now or hereafter in effect, granting any right to any third party under any Copyright now or hereafter owned by any Grantor or which such Grantor otherwise has the right to license, or granting any right to such Grantor under any Copyright now or hereafter owned by any third party, and all rights of such Grantor under any such agreement.
"Copyrights" shall mean, collectively, with respect to each Grantor, all copyrights (whether statutory or common law, whether registered or unregistered and whether published or unpublished) and all copyright registrations and applications made by such Grantor in the United States, in each case, whether now owned or hereafter created or acquired by or assigned to such Grantor, including, without limitation, the copyrights, registrations and applications listed in Schedule 12(b) of the Perfection Certificate, together with any and all (i) rights and privileges arising under applicable law with respect to such Grantor's use of such copyrights, (ii) reissues, renewals, continuations and extensions thereof, (iii) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof and (iv) rights to sue for past, present or future infringements thereof.
"Credit Agreement" shall have the meaning assigned to such term in the Recitals of this Agreement.
"Deposit Account Control Agreement" shall mean an agreement substantially in the form annexed hereto as Annex IV or such other form that is provided to the Senior Collateral Agent.
"Excluded Equity" shall mean any Voting Stock in excess of 65% of the total outstanding Voting Stock of any Foreign Subsidiary held by any Grantor.
"Excluded Property" shall mean, collectively, (i) any permit, lease, license, contract, instrument or other agreement held by any Grantor that prohibits or requires the consent of any Person as a condition to the creation by such Grantor of a security interest or Lien thereon or that would be breached or give the other party the right to terminate it as a result thereof, or any permit, lease, license contract or other agreement held by any Grantor to the extent that any Requirement of Law, applicable thereto prohibits the creation of a security interest or Lien thereon or that would be breached or give the other party the right to terminate it as a result thereof, but only, in each case, to the extent, and for so long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the UCC (including Sections 9-406(a), 9-407(a), 9-408(a) and 9-409 of the UCC) or any other applicable Requirement of Law, (ii) Equipment owned by any Grantor that is subject to a purchase money Lien or a capital lease which is permitted by the Credit Agreement if the contract or other agreement in which such Lien is granted (or in the documentation providing for such capital lease) prohibits or requires the consent of any Person as a condition to the creation of any other Lien on such Equipment or that would be breached or give the other party the right to terminate it as a result thereof and (iii) Excluded Equity; provided, however, "Excluded Property" shall not include any Proceeds, substitutions or replacements of Excluded Property (unless such Proceeds, substitutions or replacements would constitute Excluded Property).
"General Intangibles" shall mean, collectively, all "general intangibles," as such term is defined in the UCC, and in any event shall include, without limitation, all choses in action and causes of action and all other intangible personal property of any Grantor of every kind and nature now owned or hereafter acquired by any Grantor, including all rights and interests in partnerships, limited partnerships, limited liability companies and other unincorporated entities, corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, hedging agreements and other agreements), Intellectual Property, goodwill, registrations, franchises and tax refund claims. For avoidance of doubt, General Intangibles shall include all rights of Grantors (including, without limitation, any voting rights) under the IRB Agreements (as defined in the Citigroup Credit Facilities) and the Acquisition Documents (as defined in the Citigroup Credit Facilities).
"Guarantors" shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
"Intellectual Property" shall mean all Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the
foregoing, now owned in the United States by a Grantor, or hereafter acquired by any Grantor.
"Lenders" shall have the meaning assigned to such term in the Recitals of this Agreement.
"License" shall mean any domestic Patent License, Trademark License or Copyright License including, without limitation, those listed on Schedules 12(a) and 12(b) of the Perfection Certificate.
"Patent License" shall mean any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention on which a Patent, now or hereafter owned by any Grantor or which any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a Patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement.
"Patents" shall mean all of the following now owned or hereafter acquired in the United States by a Grantor: (a) all letters patent, all registrations and recordings thereof, and all applications for letters patent, including registrations, recordings and pending applications in the United States Patent and Trademark Office, including those listed on Schedule 12(a) of the Perfection Certificate, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.
"Pledge Agreement" shall have the meaning assigned to such term in the Recitals of this Agreement.
"Pledged Securities" shall have the meaning assigned to such term in the Pledge Agreement.
"Proceeds" shall mean, collectively, all "proceeds," as such term is
defined in the UCC, and in any event shall include, without limitation, any
consideration received from the sale, exchange, license, lease or other
disposition of any asset or property that constitutes Collateral, any value
received as a consequence of the possession of any Collateral and any payment
received from any insurer or other Person or entity as a result of the
destruction, loss, theft, damage or other involuntary conversion of whatever
nature of any asset or property that constitutes Collateral, and shall include
(a) all cash and negotiable instruments received by or held on behalf of the
Agent, (b) any claim of any Grantor against any third party for (and the right
to sue and recover for and the rights to damages or profits due or accrued
arising out of or in connection with) (i) past, present or future infringement
of any Patent now or hereafter owned by any Grantor, or licensed under a Patent
License, (ii) past, present or future infringement or dilution of any Trademark
now or hereafter owned by any Grantor or licensed under a Trademark License or
injury to the goodwill associated with or symbolized by any
Trademark now or hereafter owned by any Grantor, (iii) past, present or future breach of any License and (iv) past, present or future infringement of any Copyright now or hereafter owned by any Grantor or licensed under a Copyright License and (c) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.
"Secured Parties" shall mean, collectively, the Agent and the Lenders.
"Securities Account Control Agreement" shall mean an agreement substantially in the form annexed hereto as Annex III or such other form that is provided to the Senior Collateral Agent.
"Security Interests" shall have the meaning assigned to such term in
Section 3.01(b).
"Senior Collateral Agent" shall mean (x) prior to the Discharge of Senior Obligations, Citicorp North America, as collateral agent under the Citigroup Credit Facilities, and its successors and assigns and (y) thereafter, the Agent.
"Specified Event of Default" means (i) prior to the occurrence of the Senior Discharge Events, an Event of Default described under Section 8.1(e), (f) or (h) of the Credit Agreement and (ii) on and after the occurrence of the Senior Discharge Events, any Event of Default. For the avoidance of doubt, nothing contained in this definition or its application in this Agreement shall limit the applicability of any provision of the Intercreditor and Subordination Agreement, limit the rights of the Senior Secured Parties thereunder or grant to any Secured Party any right or remedy otherwise prohibited by the Intercreditor and Subordination Agreement (for purposes hereof, Senior Secured Parties shall have the meaning assigned to such term in the Intercreditor and Subordination Agreement).
"Trademark License" shall mean any written agreement, now or hereafter in effect, granting to any third party any right to use any Trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any Trademark now or hereafter owned by any third party, and all rights of any Grantor under any such agreement.
"Trademarks" shall mean all of the following now owned or hereafter acquired in the United States by a Grantor: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office or any State of the United States, and all extensions or renewals thereof, including those listed on Schedule 12(a) of the Perfection Certificate, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely reflect or embody such goodwill.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that if by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the Agent's and the Secured Parties' security interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect on the date hereof in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions relating to such provisions.
SECTION 1.04. Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include the singular;
(5) where the context requires, provisions relating to any Collateral, when used in relation to a Grantor, shall refer to such Grantor's Collateral or any relevant part thereof.
ARTICLE II
Authority of Agent
SECTION 2.01. General Authority of the Agent Over the Collateral. The Agent hereby agrees that it holds and will hold all of its right, title and interest in, to and under the Security Documents and the Collateral granted to the Agent hereunder and thereunder whether now existing or hereafter arising (all such right, title and interest being hereinafter referred to as the "Collateral Estate") under and subject to the conditions set forth in this Agreement; and the Agent further agrees that it will hold such Collateral Estate for the benefit of the Secured Parties, for the enforcement of the payment of all Obligations (subject to the limitations and priorities set forth herein and in the respective Security Documents) and as security for the performance of and compliance with the covenants and conditions of this Agreement and each of the Security Documents.
SECTION 2.02. Exercise of Powers. Subject to the terms of the Intercreditor and Subordination Agreement, all of the powers, remedies and rights of the Agent as set forth in this Agreement may be exercised by the Agent in respect of any Security Document as though set forth in full therein and all of the powers, remedies and rights of the Agent as set forth in any Security Document may be exercised by the Agent from time to time as herein and therein provided.
SECTION 2.03. Remedies Not Exclusive. (a) No remedy conferred upon or reserved to the Agent herein or in the Security Documents is intended to be exclusive of any other remedy or remedies, but every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or in any Security Document or now or hereafter existing at law or in equity or by statute.
No delay or omission by the Agent to exercise any right, remedy or power hereunder or under any Security Document shall impair any such right, remedy or power or shall be construed to be a waiver thereof, and every right, power and remedy given by this Agreement or any Security Document to the Agent may be exercised from time to time and as often as may be deemed expedient by the Agent.
If the Agent shall have proceeded to enforce any right, remedy or power under this Agreement or any Security Document and the proceeding for the enforcement thereof shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Agent, then the Grantors, the Agent and the other Secured Parties shall, subject to any determination in such proceeding, severally and respectively be restored to their former positions and rights hereunder or thereunder with respect to the Collateral Estate and in all other respects, and thereafter all rights, remedies and powers of the Agent shall continue as though no such proceeding had been taken.
SECTION 2.04. Waiver and Estoppel. (a) Subject to the terms of the Security Documents, each Grantor agrees, to the extent it may lawfully do so, that it will not at any time in any manner whatsoever claim, or take the benefit or advantage of, any appraisement, valuation, stay, extension, moratorium, turnover or redemption law, or any law permitting it to direct the order in which the Collateral shall be sold, now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance or enforcement of this Agreement or any Security Document and hereby waives all benefit or advantage of all such laws and covenants that it will not hinder, delay or impede the execution of any power granted to the Agent in this Agreement or any Security Document but will suffer and permit the execution of every such power as though no such law were in force; provided that nothing contained in this Section 2.04(a) shall be construed as a waiver of any rights of the Grantors under any applicable federal bankruptcy law or state insolvency law.
Each Grantor, to the extent it may lawfully do so, on behalf of itself and all who may claim through or under it, including without limitation any and all subsequent
creditors, vendees, assignees and licensors, waives and releases all rights to demand or to have any marshaling of the Collateral upon any sale, whether made under any power of sale granted herein or in any Security Document or pursuant to judicial proceedings or upon any foreclosure or any enforcement of this Agreement or any Security Document and consents and agrees that all the Collateral may at any such sale be offered and sold as an entirety.
Each Grantor waives, to the extent permitted by applicable law, presentment, demand, protest and any notice of any kind (except notices explicitly required hereunder or under any Security Document) in connection with this Agreement and the Security Documents and any action taken by the Agent with respect to the Collateral.
SECTION 2.05. Limitation by Law. All rights, remedies and powers provided in this Agreement or any Security Document may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions hereof are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Agreement invalid, unenforceable in whole or in part or not entitled to be recorded, registered or filed under the provisions of any applicable law.
SECTION 2.06. Rights of Secured Parties in Respect of Obligations. Notwithstanding any other provision of this Agreement or any Security Document, but subject to the terms of the Intercreditor and Subordination Agreement the right of each Secured Party to receive payment of the Obligations held by such Secured Party when due (whether at the stated maturity thereof, by acceleration or otherwise), as expressed in the instruments evidencing or agreements governing such Obligations or to institute suit for the enforcement of such payment on or after such due date, shall not be impaired or affected without the consent of such Secured Party given in the manner prescribed by the instruments evidencing or agreements governing such Obligations.
ARTICLE III
Security Interests
SECTION 3.01. Security Interests. It being expressly understood and agreed that the security interests granted herein for the benefit of the Agent on behalf of the Secured Parties shall be subject to the terms of the Intercreditor and Subordination Agreement and the Credit Agreement, the following liens on the Collateral are hereby granted:
(a) As security for the payment and performance, as the case may be, in full of the Obligations, each Grantor hereby collaterally assigns, mortgages, pledges and hypothecates to the Agent, for the ratable benefit of the Secured Parties, and hereby grants to the Agent for the ratable benefit of the Secured Parties, a security interest in, all of such Grantor's right, title
and interest in, to and under the Collateral of such Grantor. The Liens granted in this clause (a) to secure the Obligations are referred to herein as the "Security Interest".
(b) Without limiting the foregoing, the Agent is hereby authorized to file one or more financing statements (including fixture filings), continuation statements, filings with the United States Patent and Trademark Office, United States Copyright Office or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interests granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Agent as secured party.
SECTION 3.02. No Assumption of Liability. The Security Interests are granted as security only and shall not subject the Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral.
SECTION 3.03. Intercreditor and Subordination Agreement. The exercise of any right or remedy by the Agent hereunder is subject to the terms of the Intercreditor and Subordination Agreement. Notwithstanding anything herein to the contrary, in the event of any conflict between the terms of the Intercreditor and Subordination Agreement and this Agreement, the terms of the Intercreditor and Subordination Agreement shall govern and control.
ARTICLE IV
Representations and Warranties
The Grantors jointly and severally represent and warrant to the Agent and the Secured Parties that:
SECTION 4.01. Title and Authority. Each Grantor has good and valid rights in and title to the Collateral with respect to which it has purported to grant the Security Interests hereunder and has full power and authority to grant to the Agent the Security Interests in such Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval which has been obtained.
SECTION 4.02. Validity of Security Interest and Filings.
(a) The Security Interests constitute legal and valid security interests in all the Collateral securing the payment and performance of the Obligations. As of the date hereof, all information set forth herein and in the Perfection Certificate, including the Schedules annexed hereto and thereto is correct and complete in all material respects. Fully completed UCC financing statements (including fixture filings as applicable) containing a description of the Collateral have been delivered to the Agent for filing in each governmental, municipal or
other office specified in Schedule 7 to the Perfection Certificate. Upon (i) the filing of such UCC financing statements with the appropriate filing offices of each jurisdiction specified in Schedule 7 to the Perfection Certificate and (ii) the taking of possession or control by the Senior Collateral Agent, as agent and bailee for the Secured Parties, of the Collateral to the extent possession or control is required, the Agent for the benefit of the Secured Parties will have a perfected security interest in respect of all Collateral, to the extent such security interest can be perfected under the UCC by such filings, taking possession or control. (b) With respect to all Collateral consisting of United States registered Patents, United States registered Trademarks and United States registered Copyrights registered in the name of any Grantor as of the date hereof, fully executed security agreements in the form of Annex V-A, V-B and V-C hereto containing a description of all Collateral consisting of Intellectual Property with respect to United States registered Copyrights, United States registered Patents, and United States registered Trademarks (and Trademarks for which United States registration applications are pending), respectively, have been delivered to the Agent for registration with the United States Patent and Trademark Office and for recordation with the United States Copyright Office pursuant to 35 U.S.C. Section 261 or 17 U.S.C. Section 205 and the regulations thereunder, as applicable. Upon the recordation of such security agreements with the United States Patent and Trademark Office and United States Copyright Office, as applicable, and the filing of proper UCC financing statements with the appropriate filing offices of each jurisdiction specified in Schedule 7 to the Perfection Certificate, the Agent for the benefit of the Secured Parties will have perfected security interests in respect of all Collateral consisting of Patents, Trademarks and Copyrights registered in the name of any Grantor as of the date hereof.
SECTION 4.03. Reserved
SECTION 4.04. Other Actions. In order to further ensure the attachment, perfection and priority of, and the ability of the Agent to enforce, the Agent's security interests in the Collateral, each Grantor agrees, in each case at such Grantor's own expense, to take the following actions with respect to the following Collateral:
(a) Instruments and Tangible Chattel Paper. As of the date hereof, each Instrument and each item of Tangible Chattel Paper specified in Schedule 11 to the Perfection Certificate has been properly endorsed, assigned and delivered to the Senior Collateral Agent, and, if necessary, accompanied by instruments of transfer or assignment duly executed in blank. If any amount individually in excess of $250,000 or in the aggregate in excess of $1,000,000 payable under or in connection with any of the Collateral shall be evidenced by any Instrument or Tangible Chattel Paper, the Grantor acquiring such Instrument or Tangible Chattel Paper shall forthwith endorse, assign and deliver the same to the Senior Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Senior Collateral Agent may from time to time reasonably specify; provided, however, that so long as no Specified Event of Default shall have occurred and be continuing, the Agent (if the Agent is in possession or control any such Instrument or Tangible Chattel Paper) shall return such Instrument or Tangible Chattel Paper to such Grantor from time to time, to
the extent necessary for collection in the ordinary course of such Grantor's business; provided, further, that the Agent (if the Agent is in possession or control any such Instrument or Tangible Chattel Paper) shall return such Instrument or Tangible Chattel Paper to such Grantor if all amounts due pursuant such Instrument or Tangible Chattel Paper have been paid in full.
(b) Deposit Accounts and Investment Property. (i) Each Grantor hereby represents and warrants that as of the date hereof (1) it does not maintain any Deposit Accounts other than the collateral account established and maintained pursuant to the Citigroup Credit Facilities and the accounts listed in Schedule 14 of the Perfection Certificate, (2) it does not maintain any Securities Accounts or Commodity Accounts other than those listed in Schedule 14 of the Perfection Certificate and (3) it does not hold, own or have any interest in any certificated securities or uncertificated securities other than those constituting Securities Collateral or other collateral under the Pledge Agreement, those maintained in Securities Accounts or Commodity Accounts listed in Schedule 14 of the Perfection Certificate and Excluded Equity.
(ii) In the event the Grantors have cash, Investment Property or other funds maintained in any Deposit Accounts (except for (A) Deposit Accounts used solely to make payroll payments and (B) Deposit Accounts having an average daily balance of less than $2,500,000 in the aggregate together with all such other Deposit Accounts under this clause (B) that are not subject to the Agent's Control) and/or Securities Accounts, Mid-Western shall promptly notify the Agent and the Grantors shall promptly enter into Control Agreements in favor of the Agent with the banks, Securities Intermediaries or Commodity Intermediaries with which such Deposit Accounts and Securities Accounts are maintained granting to the Agent Control over such accounts. The Agent agrees with each Grantor that, in the case of a Deposit Account subject to the Agent's Control, the Agent shall not give any instructions directing the disposition of funds from time to time credited to any Deposit Account or withhold any withdrawal rights from such Grantor with respect to funds from time to time credited to any Deposit Account or, in the case of a Securities Account or Commodity Account subject to the Agent's Control, the Agent shall not give any Entitlement Orders or instructions or directions to any Securities Intermediary or Commodity Intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by such Grantor, unless, in each case, a Specified Event of Default has occurred and is continuing or, after giving effect to any withdrawal, would occur.
(iii) If any Grantor shall at any time hold or acquire any certificated securities constituting Investment Property that are not Pledged Securities under the Pledge Agreement, such Grantor shall immediately endorse, assign and deliver the same to the Senior Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank, all in form and substance reasonably satisfactory
to the Senior Collateral Agent; provided, that in no event shall Grantor be required to pledge any Excluded Equity. If any securities now or hereafter acquired by any Grantor constituting Investment Property that are not Pledged Securities under the Pledge Agreement are uncertificated and are not held in accounts required to be subject to a control agreement pursuant to clause (ii) of this Section 4.04(b), such Grantor shall promptly notify the Agent thereof and shall use commercially reasonable efforts to cause the issuer to agree to comply with instructions from the Agent as to such securities, without further consent of any Grantor pursuant to an issuer's acknowledgement in form provided to the Senior Collateral Agent.
(iv) As between the Agent and the Grantors, the Grantors shall bear the investment risk with respect to the Investment Property, and the risk of loss of, damage to or the destruction of the Investment Property, whether in the possession of, or maintained as a security entitlement or deposit by, or subject to the control of, the Agent, a Securities Intermediary, a Commodity Intermediary, any Grantor or any other Person; provided, however, that nothing contained in this Section 4.04(b) shall release or relieve any Securities Intermediary or Commodity Intermediary of its duties and obligations to the Grantors or any other Person under any Control Agreement or under applicable law.
(c) Electronic Chattel Paper and Transferable Records. If any amount
individually in excess of $250,000 or in the aggregate in excess of
$1,000,000 payable under or in connection with any of the Collateral shall
be evidenced by any Electronic Chattel Paper or any "transferable record,"
as that term is defined in Section 201 of the Federal Electronic Signatures
in Global and National Commerce Act, or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction, the
Grantor acquiring such Electronic Chattel Paper or transferable record
shall promptly notify the Agent thereof and shall take such action as the
Senior Collateral Agent may reasonably request to vest in the Senior
Collateral Agent, for the benefit of the Secured Parties, control under UCC
Section 9-105 of such Electronic Chattel Paper or control under Section 201
of the Federal Electronic Signatures in Global and National Commerce Act
or, as the case may be, Section 16 of the Uniform Electronic Transactions
Act, as so in effect in such jurisdiction, of such transferable record.
(d) Letter-of-Credit Rights. If any Grantor is at any time a beneficiary under a Letter of Credit now or hereafter issued in favor of such Grantor in an amount individually in excess of $250,000 or in the aggregate in excess of $1,000,000, such Grantor shall promptly notify the Agent and such Grantor shall use commercially reasonable efforts to (unless the Senior Collateral Agent requests otherwise) pursuant to an agreement in form and substance reasonably satisfactory to the Senior Collateral Agent, either (i) arrange for the issuer and any confirmer of such Letter of Credit to consent to an assignment to the Senior Collateral Agents of the proceeds of any
drawing under the Letter of Credit or (ii) arrange for the Senior Collateral Agent to become the transferee beneficiary of such Letter of Credit.
(e) Commercial Tort Claims. As of the date hereof each Grantor hereby represents and warrants that as of the date hereof it holds no Commercial Tort Claims other than those listed on Schedule 13 to the Perfection Certificate. If any Grantor shall at any time hold or acquire a Commercial Tort Claim having a value individually in excess of $250,000 or in the aggregate in excess of $1,000,000 such Grantor shall promptly notify the Agent thereof and grant to the Agent in writing signed by such Grantor a security interest therein and in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in the form provided to the Senior Collateral Agent.
(f) Motor Vehicles. Upon the request of the Agent during the existence
of a Specified Event of Default, each Grantor shall deliver to the Agent
originals of the certificates of title or ownership for the motor vehicles
(and any other Equipment covered by Certificates of Title or ownership)
owned by it with the Agent listed as a lienholder therein. Such requirement
shall apply to the Grantors if any such motor vehicle (or any such other
Equipment) has a fair market value over $50,000.
SECTION 4.05. No Conflicts, Consents, etc. In the event that a Specified Event of Default has occurred and is continuing and the Agent desires to exercise any remedies, voting or consensual rights or attorney-in-fact powers set forth in this Agreement and determines it necessary to obtain any approvals or consents of any Governmental Authority or any other Person therefor, then, upon the reasonable request of the Agent, such Grantor agrees to use commercially reasonable efforts to assist and aid the Agent to obtain as soon as practicable any necessary approvals or consents for the exercise of any such remedies, rights and powers.
ARTICLE V
Covenants
SECTION 5.01. Protection of Security. Each Grantor shall, at its own cost and expense, take any and all actions reasonably necessary to protect the Security Interests of the Agent in the Collateral.
SECTION 5.02. Further Assurances. Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interests and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interests and the filing of any financing statements or other documents in connection herewith or therewith.
SECTION 5.03. Reserved
SECTION 5.04. Reserved
SECTION 5.05. Reserved
SECTION 5.06. Reserved
SECTION 5.07. Certain Covenants and Provisions Regarding Patent, Trademark and Copyright Collateral:
(a) In the event that any Grantor, either itself or through any agent, employee, licensee or designee, files an application for or, following the Closing Date, becomes the registered owner of, any Patent, Trademark or Copyright (or for the registration of any Trademark or Copyright) with the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States, such Grantor shall with the delivery of its quarterly financial statements notify the Agent thereof, and shall execute and deliver any and all agreements, instruments, documents and papers as the Agent may reasonably request to evidence the Agent's security interest in such Patent, Trademark or Copyright or application therefor, and each Grantor hereby appoints the Agent as its attorney-in-fact to execute and file such writings solely for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable until this Agreement is terminated.
(b) Upon and during the continuance of a Specified Event of Default, each Grantor shall upon the written request of the Agent use its commercially reasonable efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License or Trademark License to effect the assignment of all of such Grantor's right, title and interest thereunder to the Senior Collateral Agent or its designee.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Subject to the terms of the Intercreditor and Subordination Agreement, after the occurrence and during the continuance of a Specified Event of Default, each Grantor agrees to deliver each item of Collateral to the Agent (or, to the extent delivery of such Collateral would be commercially impracticable, make such Collateral available), and it is agreed that the Agent shall have the right to take any of or all the following actions at the same or different times: (a) with respect to any Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an
assignment, transfer and conveyance of any of or all such Collateral by the applicable Grantors to the Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Collateral throughout the world on such terms and conditions and in such manner as the Agent shall determine (other than in violation of applicable law or any then existing licensing arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Collateral and without liability for trespass to enter any premises where the Collateral may be located for the purpose of taking possession of or removing the Collateral and, generally, to exercise any and all rights afforded to a secured party under the UCC or other applicable law. Without limiting the generality of the foregoing, each Grantor agrees that the Agent shall have the right, subject to the requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral, at public or private sale or at any broker's board or on any securities exchange, for cash, upon credit or for future delivery as the Agent shall deem appropriate. The Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
The Agent shall give a Grantor ten (10) Business Days' prior written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the UCC) of the Agent's intention to make any sale or other disposition of such Grantor's Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker's board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Agent may fix and state in the notice of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Agent may (in its sole and absolute discretion) determine. The Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Agent until the sale price is paid by the purchaser or purchasers thereof, but the Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Section, any Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any Obligation then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Agent shall have entered into such an agreement all Specified Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section shall be deemed to conform to the commercially reasonable standards as provided in Section 9-611 of the UCC.
SECTION 6.02. Application of Proceeds.. Subject to the terms of the Intercreditor and Subordination Agreement, the proceeds of any sale of Securities Collateral pursuant to Section 6 shall be applied by the Agent in accordance with Section 8.3 of the Credit Agreement.
SECTION 6.03. Grant of License to Use Intellectual Property. For the purpose of enabling the Agent to exercise rights and remedies under this Article at such time as the Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Agent a nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors during the existence of a Specified Event of Default) to use, license or sublicense any of the Collateral, except to the extent that such license may not be granted as a result of an exclusive license arrangement, consisting of Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof. The use of such license by the Agent shall be exercised, at the option of the Agent, after the occurrence and during the continuation of a Specified Event of Default; provided that any license or sublicense entered into by the Agent with a Person other than the Agent or a Lender in accordance herewith shall be binding upon the Grantors notwithstanding any subsequent cure of a Specified Event of Default.
ARTICLE VII
Intentionally Omitted
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 13.6 of the Credit Agreement. All communications and notices hereunder to any Guarantor shall be given to it at its address or telecopy number set forth on Schedule I, with a copy to Mid-Western.
SECTION 8.02. Survival of Agreement. All covenants, agreements, representations and warranties made by any Grantor herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Agent and the other Secured Parties and shall survive the making by the Lenders of the Loans, regardless of any investigation made by the Secured Parties or on their behalf, and shall continue in full force and effect until this Agreement shall terminate.
SECTION 8.03. Binding Effect. This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Agent and a counterpart hereof shall have been executed on behalf of the Agent, and thereafter shall be binding upon such Grantor and the Agent and their respective successors and assigns, and shall inure to the benefit of such Grantor, the Agent and the other Secured Parties and their respective successors and assigns, except that no Grantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein (and any such assignment or transfer shall be void) except as expressly permitted by any of the other Loan Documents.
SECTION 8.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.
SECTION 8.05. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.06. Waivers; Amendment; Several Agreement. (a) No failure or delay of the Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agent hereunder and of the other Secured Parties under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provisions of this Agreement or consent to any departure by any Grantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Grantor in any case shall entitle such Grantor or any other Grantor to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into among the Agent and the Grantors with respect to which such waiver, amendment or modification is to apply, subject to any consents required in accordance with the Intercreditor and Subordination Agreement and Section 10.1 of the Credit Agreement.
(c) This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.
SECTION 8.07. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.07.
SECTION 8.08. Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of
such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. It is understood and agreed among the parties that this Agreement shall create separate security interests in the Collateral securing the Obligations as provided in Section 3.01, and that any determination by any court with jurisdiction that the security interest securing any Obligation is invalid for any reason shall not in and of itself invalidate the security interest securing any other Obligations hereunder.
SECTION 8.09. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract and shall become effective as provided in Section 8.04. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
SECTION 8.10. Headings. Article and Section headings used herein are for the purpose of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 8.11. Jurisdiction; Consent to Service of Process. (a) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any Delaware State court or Federal court of the United States of America sitting in Delaware, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Delaware State court or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against any Grantor or its properties in the courts of any jurisdiction.
(b) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any Delaware State or Federal court referred to in paragraph (c) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for in Section 13.4 of the Credit Agreement. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
SECTION 8.12. Termination. (a) This Agreement and the Security Interests
(i) shall terminate when all the Obligations (other than contingent
indemnification obligations that are not then due and payable) have been paid in
full and the Lenders have no further commitment to lend under the Credit
Agreement (at which time the Agent shall execute and deliver to the Grantors, at
the Grantors' expense, all UCC termination statements and other documents which
the Grantors shall reasonably request to evidence such termination and shall
return to the Grantors any Collateral held by the Agent) and (ii) shall continue
to be effective or shall be reinstated, as the case may be, if at any time any
payment in respect of any Obligation is rescinded or must otherwise be restored
by any Secured Party upon any bankruptcy or reorganization of any Grantor or
otherwise. Any execution and delivery of termination statements or documents
pursuant to this Section 8.12(a) shall be without recourse to or warranty by the
Agent. Any Subsidiary of Mid-Western that is a Grantor (each a "Mid-Western
Subidiary Grantor") shall automatically be released from its obligations
hereunder and the Security Interests in the Collateral of such Mid-Western
Subsidiary Grantor shall be automatically released in the event that the Equity
Interests of such Mid-Western Subsidiary Grantor shall be sold, transferred or
otherwise disposed of such that such Person is no longer a Subsidiary of
Mid-Western. The Borrower Loan Parties shall automatically be released from
their obligations hereunder and the Security Interests in the Collateral of the
Borrower Loan Parties shall be automatically released in the event the Borrower
assigns its obligations under the Credit Agreement to Mid-Western in accordance
with Section 13.15 of the Credit Agreement.
(b) Upon any sale or other transfer or disposition by any Grantor of any Collateral (other than to another Grantor) and, prior to the Discharge of Senior Obligations, upon the effectiveness of any release by the Senior Collateral Agent of the security interest granted under the Citigroup Credit Facilities in any Collateral, the Security Interests in such Collateral shall be automatically released. In connection with such release, the Agent shall execute and deliver to any Grantor, at such Grantor's expense, all UCC termination statements and other documents that such Grantor shall reasonably request to evidence such termination or release and shall return to such Grantor any Collateral owned by such Grantor that is in the Agent's possession. Any execution and delivery of UCC termination statements and similar documents pursuant to this Section 8.12(b) shall be without recourse to or warranty by the Agent.
SECTION 8.13. Additional Grantors. To the extent any Subsidiary shall be required to become a Grantor pursuant to the Credit Agreement, upon execution and delivery by the Agent and such Subsidiary of an instrument in the form of Annex I hereto, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally
named as a Grantor herein. Each such Subsidiary shall at such time deliver to the Agent a completed Perfection Certificate. The execution and delivery of any such instrument shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.
SECTION 8.14. Financing Statements. Each Grantor hereby irrevocably authorizes the Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements and amendments thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including (i) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor, (ii) any financing or continuation statements or other documents without the signature of such Grantor where permitted by law, including the filing of a financing statement describing the Collateral as "all assets now owned or hereafter acquired by the Grantor or in which Grantor otherwise has rights" and (iii) in the case of a financing statement filed as a fixture filing or covering Collateral constituting minerals or the like to be extracted or timber to be cut, a sufficient description of the real property to which such Collateral relates. Each Grantor agrees to provide all information described in the immediately preceding sentence to the Agent promptly upon request. Copies of such financing statements, as filed, should be sent promptly to Mid-Western at its address for notices pursuant to Section 8.01.
SECTION 8.15. Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the Agent the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable until this Agreement is terminated and coupled with an interest. Subject to the terms of the Intercreditor and Subordination Agreement, without limiting the generality of the foregoing, the Agent shall have the right, after the occurrence and during the continuance of a Specified Event of Default, with full power of substitution either in the Agent's name or in the name of such Grantor, (a) to receive, endorse, assign or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due under and by virtue of any Collateral; (d) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (e) to send verifications of Accounts to any Account Debtor; (f) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (g) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (h) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Agent; and (i) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Agent were the absolute owner of the Collateral for all purposes; provided, that nothing herein contained shall be construed as requiring or obligating the Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for gross negligence or willful misconduct.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
MID-WESTERN AIRCRAFT SYSTEMS, INC.
By: /s/ Nigel Wright ------------------------------------ Name: Nigel Wright Title: Chief Finacial Officer, Vice President, Secrectary and Treauser |
MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS,
INC.
By: /s/ Nigel Wright ------------------------------------ Name: Nigel Wright Title: Chief Finacial Officer, Vice President, Secrectary and Treauser |
MID-WESTERN AIRCRAFT FINANCE, INC.
By: /s/ Nigel Wright ------------------------------------ Name: ---------------------------------- Title: Representative |
ONEX WIND FINANCE LP
By: Its General Partner, 1648701 Ontario
Inc.
By: /s/ Nigel Wright ------------------------------------ Name: ---------------------------------- Title: Representative |
ONEX WIND FINANCE LLC
By: /s/ Donald F. West ------------------------------------ Name: Donald F. West Title: Director |
[Boeing Security Agreement]
3101447 NOVA SCOTIA COMPANY
By: /s/ Nigel Wright ------------------------------------ Name: Nigel Wright Title: President and Chief Financial Officer By: /s/ Seth Mersky ------------------------------------ Name: Seth Mersky Title: Vice President |
[Boeing Security Agreement]
THE BOEING COMPANY, as Agent
By: /s/ X ------------------------------------ Name: ---------------------------------- Title: --------------------------------- |
[Boeing Security Agreement]
Annex I to the Security Agreement
Form of Supplement
SUPPLEMENT NO. ___ dated as of [_________] (this "Supplement"), to the Security Agreement (the "Security Agreement") dated as of [_________], 2005, among MID-WESTERN AIRCRAFT SYSTEMS, INC., a Delaware corporation ("Mid-Western"), ONEX WIND FINANCE LP, a Delaware limited partnership (the "Borrower"), MID-WESTERN AIRCRAFT SYSTEMS HOLDINGS, INC., a Delaware corporation ("Parent"), each Subsidiary of Mid-Western and each Borrower Subsidiary listed on Schedule I hereto (the "Guarantors" and, together with Parent, Mid-Western and the Borrower, the "Grantors") and THE BOEING COMPANY, as agent (in such capacity, the "Agent") for the Secured Parties.
A. Reference is made to (a) the Credit Agreement dated as of June 16, 2005 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Grantors, the lenders party thereto (the "Lenders") and the Agent (b) the Guarantee Agreement dated as of June 16, 2005 (as amended, supplemented or otherwise modified from time to time, the "Guarantee Agreement"), among Parent, Mid-Western, the Guarantors and the Agent, (c) the Pledge Agreement dated as of June 16, 2005 among Grantors and the Agent (as amended, supplemented or otherwise modified from time to time, the "Pledge Agreement", and together with the Security Agreement and the Guarantee Agreement, the "Collateral Documents").
B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement.
C. Pursuant to Section 5.3(b) of the Credit Agreement, certain Subsidiaries (as defined in the Credit Agreement) of Mid-Western and the Borrower are required to enter into the Collateral Documents upon the occurrence of certain events specified therein. Each of the Collateral Documents provides that any such Subsidiary may become a party to the Collateral Documents by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the "New Guarantor") is executing this Supplement in accordance with the requirements of the Credit Agreement to become a party to the Collateral Documents.
Accordingly, the Agent and the New Guarantor agree as follows:
SECTION 1. In accordance with Section 5.3(b) of the Credit Agreement, the New Guarantor by its signature below becomes a Guarantor and/or Grantor and/or Loan Party, as applicable, under the Credit Agreement and each of the Collateral Documents with the same force and effect as if originally named therein as a party thereto and hereby (a) agrees to all terms and provisions of the Credit Agreement and Collateral Documents applicable to it as a Loan Party and/or Guarantor and/or
Grantor, as applicable, thereunder and (b) represents and warrants that the representations and warranties made by it as a Loan Party and/or Guarantor and/or Grantor, as applicable, thereunder are true and correct in all material respects on and as of the date hereof. In furtherance of the foregoing, the New Guarantor, as security for the payment and performance in full of the Obligations (as defined in the Security Agreement), does hereby create and grant to the Agent for the benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all of the New Guarantor's right, title and interest in and to the Collateral (as defined in the Security Agreement) and the Securities Collateral (as defined in the Pledge Agreement) of the New Guarantor (the "First Lien Security Interest"). The Credit Agreement and each of the Collateral Documents is hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors' rights generally and by general principles of equity.
SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Guarantor and the Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.
SECTION 4. The New Guarantor hereby represents and warrants that, as
of the date hereof, (a) all information set forth in the Perfection
Certificate, including the schedules annexed thereto is true and correct in
all material respects (as to the property owned by the New Guarantor) and
(b) the information set forth on Schedule II attached hereto is a true and
correct schedule describing the securities of the New Guarantor being
pledged hereunder.
SECTION 5. Except as expressly supplemented thereby, each of the Collateral Documents shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and
in the Collateral Documents shall not in any way be affected or impaired thereby (it being understood that the invalidity a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 8.01 of the Security Agreement. All communications and notices hereunder of the New Guarantor shall be given to it at the address set forth under its signature below.
IN WITNESS WHEREOF, the New Guarantor and the Agent have duly executed this Supplement to the the Credit Agreement, the Security Agreement, the Pledge Agreement and the Guarantee Agreement as of the day and year first above written.
[Name of New Guarantor],
THE BOEING COMPANY,
as Agent
SCHEDULE I
to the Supplement
Guarantors
SCHEDULE II
to the Supplement
Pledged Securities of the New Grantor
PLEDGED STOCK
Number of Number and Percentage Issuer Certificate Registered Owner Class of Shares of Shares ------ ----------- ---------------- --------------- ---------- |
DEBT SECURITIES
Issuer Principal Amount Date of Note Maturity Date ------ ---------------- ------------ ------------- |
Annex II to the Security Agreement
Form of Perfection Certificate
[PROVIDED UNDER SEPARATE COVER]
Annex III to the Security Agreement
[Form of]
Control Agreement Concerning Securities Accounts
This Control Agreement Concerning Securities Accounts (this "Control Agreement"), dated as of [__________], 2005 by and among [_______________] (the "Grantor"), Citicorp North America, Inc., as Collateral Agent for the benefit of the Senior Secured Parties (as defined below) (the "Senior Collateral Agent"), The Boeing Company, as agent for the benefit of the Subordinated Secured Parties (as defined below) (the "Subordinated Lien Agent") and [______________] (the "Securities Intermediary"), is delivered pursuant to (a) Section 4.04(b) of that certain security agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Security Agreement"), dated as of June 16, 2005 made by Mid-Western Aircraft Systems, Inc., a Delaware corporation ("U.S. Borrower"), ONEX WIND FINANCE LP, a Delaware limited partnership ("Additional Borrower" and, together with the U.S. Borrower, "Borrowers"), and each of the Guarantors listed on the signature pages thereto in favor of the Senior Collateral Agent and (b) pursuant to Section 4.04(b) of that certain security agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Boeing Security Agreement"), dated as of June 16, 2005 made by the Borrowers and each of the Guarantors listed on the signature pages thereto in favor of the Subordinated Lien Agent. For purposes of this Control Agreement, Senior Secured Parties shall mean the "Secured Parties" as such term is defined in the Security Agreement, and Subordinated Secured Parties shall mean the "Secured Parties" as such term is defined in the Boeing Security Agreement. This Control Agreement is for the purpose of perfecting the security interests of the Senior Secured Parties and the Subordinated Secured Parties granted by the Grantor in the Designated Accounts described below. All references herein to the "UCC" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York. References herein to "Collateral Agents" means the Senior Collateral Agent and the Subordinated Lien Agent, collectively. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Security Agreement.
Section 1. Priority of Lien. Pursuant to the Security Agreement and the Boeing Security Agreement and subject to the Subordination and Intercreditor Agreement, the Grantor has granted a security interest in all of the Grantor's rights in the Designated Accounts referred to in Section 2 below to each of the Senior Collateral Agent and the Subordinated Lien Agent, respectively. The Collateral Agents, the Grantor and the Securities Intermediary are entering into this Control Agreement to perfect each of the Senior Collateral Agent's and the Subordinated Lien Agent's security interest in the Designated Accounts. As between the Senior Collateral Agent and the Subordinated Lien Agent, the Senior Collateral Agent shall have a first
priority security interest in the Designated Accounts and the Subordinated Lien Agent shall have a second priority security interest in the Designated Accounts.
Section 2. Confirmation of Establishment and Maintenance of Designated Accounts. The Securities Intermediary hereby confirms and agrees that (i) the Securities Intermediary has established for the Grantor and maintains the account(s) listed in Schedule I annexed hereto (such account(s), together with each such other securities account maintained by the Grantor with the Securities Intermediary collectively, the "Designated Accounts" and each a "Designated Account"), (ii) each Designated Account will be maintained in the manner set forth herein until the earlier of termination of such Designated Account and termination of this Control Agreement, (iii) this Control Agreement is the valid and legally binding obligation of the Securities Intermediary, (iv) the Securities Intermediary is a "securities intermediary" as defined in Article 8-102(a)(14) of the UCC, (v) each of the Designated Accounts is, and will remain, a "securities account" as such term is defined in Section 8-501(a) of the UCC, (vi) all securities or other property underlying any financial assets which are credited to any Designated Account shall be registered in the name of the Securities Intermediary, endorsed to the Securities Intermediary or in blank or credited to another securities account maintained in the name of the Securities Intermediary and in no case will any financial asset credited to any Designated Account be registered in the name of the Grantor, payable to the order of the Grantor or specially endorsed to the Grantor, except to the extent the foregoing have been specially endorsed to the Securities Intermediary or in blank and (vii) the Securities Intermediary shall not change the name or account number of any of the Designated Accounts without the prior written consent of (A) prior to the delivery of a Notice of Termination of Obligations substantially in the form of Exhibit A annexed hereto (the "Notice of Termination of Obligations"), the Senior Collateral Agent, (B) subsequent to the delivery of a Notice of Termination of Obligations, the Subordinated Lien Agent and (C) prior to delivery pursuant to Section 10(i) hereof of a Notice of Sole Control substantially in the form of Exhibit B annexed hereto (the "Notice of Sole Control"), the Grantor.
Section 3. "Financial Assets" Election. The Securities Intermediary hereby agrees that each item of Investment Property credited to any Designated Account shall be treated as a "financial asset" within the meaning of Section 8-102(a)(9) of the UCC.
Section 4. Entitlement Order. If at any time the Securities Intermediary shall receive an "entitlement order" (within the meaning of Section 8-102(a)(8) of the UCC) issued by the Senior Collateral Agent and relating to any financial asset maintained in one or more of the Designated Accounts, the Securities Intermediary shall comply with such entitlement order without further consent by the Grantor or any other person. If at any time the Securities Intermediary shall receive an entitlement order from the Subordinated Lien Agent relating to any financial asset maintained in one or more of the Designated Accounts, the Securities Intermediary shall comply with such entitlement order without further consent by the Grantor or any other person; provided, that unless the Bank shall have received a Notice of Termination of
Obligations from the Senior Collateral Agent or the Subordinated Lien Agent, the Bank shall not comply with such instructions from the Subordinated Lien Agent without the prior written consent by the Senior Collateral Agent. The Securities Intermediary shall also comply with instructions directing the Securities Intermediary with respect to the sale, exchange or transfer of financial assets held in each Designated Account originated by the Grantor, or any representative of, or investment manager appointed by, the Grantor until such time as the Securities Intermediary has received a Notice of Sole Control delivered pursuant to Section 10(i).
Section 5. Subordination of Lien; Waiver of Set-Off. The Securities Intermediary hereby agrees that any security interest in any Designated Account it now has or subsequently obtains shall be subordinate to the security interest of each Collateral Agent. The financial assets and other items deposited to any Designated Account will not be subject to deduction, set-off, banker's lien, or any other right in favor of any person other than the Senior Secured Parties and the Subordinated Secured Parties (except that the Securities Intermediary may set off all amounts due to the Securities Intermediary in respect of its customary fees and expenses for the routine maintenance and operation of the Designated Accounts, including overdraft fees and amounts advanced to settle authorized transactions).
Section 6. Choice of Law. Both this Control Agreement and the Designated Accounts shall be governed by the laws of the State of New York. Regardless of any provision in any other agreement, for purposes of the UCC, New York shall be deemed to be the Securities Intermediary's jurisdiction and the Designated Accounts (as well as the security entitlements related thereto) shall be governed by the laws of the State of New York.
Section 7. Conflict with Other Agreements; Amendments. As of the date hereof, there are no other agreements entered into between the Securities Intermediary and the Grantor with respect to any Designated Account or any security entitlements or other financial assets credited thereto (other than standard and customary documentation with respect to the establishment and maintenance of such Designated Accounts). The Securities Intermediary and the Grantor will not enter into any other agreement with respect to any Designated Account unless the Collateral Agents shall have received prior written notice thereof. The Securities Intermediary and the Grantor have not and will not enter into any other agreement with respect to (i) creation or perfection of any security interest in or (ii) control of security entitlements maintained in any of the Designated Accounts or purporting to limit or condition the obligation of the Securities Intermediary to comply with entitlement orders with respect to financial assets credited to any Designated Account as set forth in Section 4 hereof without the prior written consent of each Collateral Agent acting in its sole discretion. In the event of any conflict with respect to control over any Designated Account between this Control Agreement (or any portion hereof) and any other agreement now existing or hereafter entered into, the terms of this Control Agreement shall prevail. No amendment or modification of this Control Agreement or waiver of any rights hereunder shall be binding on any party hereto unless it is in writing and is signed by all the parties hereto.
Section 8. Certain Agreements.
(i) The Securities Intermediary has furnished to the Collateral Agents the most recent account statement issued by the Securities Intermediary with respect to each of the Designated Accounts and the financial assets and cash balances held therein, identifying the financial assets held therein in a manner acceptable to the Collateral Agents. Each such statement accurately reflects the assets held in such Designated Account as of the date thereof.
(ii) The Securities Intermediary will, upon its receipt of each supplement to the Security Agreement signed by the Grantor and identifying one or more financial assets as "Pledged Collateral," enter into its records, including computer records, with respect to each Designated Account a notation with respect to any such financial asset so that such records and reports generated with respect thereto identify such financial asset as "Pledged".
Section 9. Notice of Adverse Claims. Except for the claims and interest of the Collateral Agents and of the Grantor in the financial assets maintained in the Designated Account(s), the Securities Intermediary on the date hereof does not know of any claim to, or security interest in, any Designated Account or in any financial asset credited thereto and does not know of any claim that any person other than the Collateral Agents have been given "control" (within the meaning of Section 8-106 of the UCC) of any Designated Account or any such financial asset. If the Securities Intermediary becomes aware that any person is asserting any lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process or any claim of control) against any of the financial assets maintained in any Designated Account, the Securities Intermediary shall promptly notify the Collateral Agents and the Grantor thereof.
Section 10. Maintenance of Designated Accounts. In addition to the obligations of the Securities Intermediary in Section 4 hereof, the Securities Intermediary agrees to maintain the Designated Accounts as follows:
(i) Notice of Sole Control. If at any time (a) the Senior Collateral Agent, or (b) after delivery of a Notice of Termination of Obligations, the Subordinated Lien Agent delivers to the Securities Intermediary a Notice of Sole Control with respect to any Designated Account, the Securities Intermediary agrees that, after receipt of such notice, it will take all instructions with respect to such Designated Account solely from such Collateral Agent and cease taking instructions from Grantor, including, without limitation, instructions for investment, distribution or transfer of any financial asset maintained in any Designated Account. Permitting settlement of trades pending at the time of receipt of such notice shall not constitute a violation of the immediately preceding sentence.
(ii) Voting Rights. Until such time as the Securities Intermediary receives a Notice of Sole Control, the Grantor, or an investment manager on behalf of the Grantor,
shall direct the Securities Intermediary with respect to the voting of any financial assets credited to any Designated Account.
(iii) Statements and Confirmations. The Securities Intermediary will send copies of all statements and other correspondence (excluding routine confirmations) concerning any Designated Account or any financial assets credited thereto simultaneously to each of the Grantor and the Collateral Agents at the address set forth in Section 12 hereof. The Securities Intermediary will provide to the applicable Collateral Agent, upon such Collateral Agent's request therefor from time to time and, in any event, as of the last business day of each calendar month, a statement of the market value of each financial asset maintained in each Designated Account.
(iv) Bailee for Perfection. The Securities Intermediary acknowledges that, in the event that it should come into possession of any certificate representing any security or other assets (other than those that are credited to any of the Designated Accounts and the certificate is in the name of the Securities Intermediary or endorsed to the Securities Intermediary in blank), the Securities Intermediary shall retain possession of the same for the benefit of the Senior Collateral Agent, and the Subordinated Lien Agent, and such act shall cause the Securities Intermediary to be deemed a bailee for the Collateral Agents, if necessary to perfect the Collateral Agents' security interests in such securities or assets. The Securities Intermediary hereby acknowledges its receipt of a copy of the Security Agreement and the Boeing Security Agreement, which shall also serve as notice to the Securities Intermediary of a security interest in collateral held by a bailee.
Section 11. Successors; Assignment. The terms of this Control Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective corporate successors and permitted assignees.
Section 12. Notices. Any notice, request or other communication required or permitted to be given under this Control Agreement shall be in writing and deemed to have been properly given when delivered in person, or when sent by telecopy or other electronic means and electronic confirmation of error free receipt is received or two (2) days after being sent by certified or registered United States mail, return receipt requested, postage prepaid, addressed to the party at the address set forth below.
Grantor:
Attention: ____________________
Telecopy: _____________________
Telephone: ____________________
with copy to:
[Address] _____________________
Attention: ____________________
Telecopy: _____________________
Telephone: ____________________
Securities
Intermediary: [______________________________]
[Address] _____________________
Attention: ____________________ Telecopy: _____________________ Telephone: ____________________ Senior Collateral Agent: Citicorp North America, Inc. as Senior Collateral Agent 390 Greenwich St. New York, New York 10013 |
Attention: ____________________
Telecopy: _____________________
Telephone: ____________________
with a copy to: _______________
Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
Attention: Adam Dworkin, Esq.
Telecopy: (212) 269-5420
Telephone: (212) 701-3000
Subordinated
Lien Collateral Agent: The Boeing Company as Subordinated Lien Agent Corporate Headquarters M/C 5003-1001 100 N. Riverside Drive Chicago, Illinois 60606-1596 Attention: General Counsel Telecopy: (312) 544-2829 with a copy to: Sheppard, Mullin, Richter & Hampton LLP 333 South Hope St., 48th Floor Los Angeles, California 90071 Attention: Lawrence M. Braun, Esq. Telecopy: (213) 620-1398 |
Any party may change its address for notices in the manner set forth above.
Section 13. Termination. The rights and powers granted herein to the Collateral Agents are powers coupled with an interest and will be affected neither by the bankruptcy of the Grantor nor by the lapse of time. The obligations of the Securities Intermediary hereunder shall continue in effect until (i) the security interests of the Senior Secured Parties and the Subordinated Secured Parties with respect to the financial assets maintained in the Designated Account(s) have been terminated and each Collateral Agent has notified the Securities Intermediary of such termination in writing or (ii) thirty days following the Securities Intermediary's delivery of written notice of such termination to the Grantor and the Collateral Agents.
Section 14. Severability. If any term or provision set forth in this Agreement shall be invalid or unenforceable, the remainder of this Agreement, other than those provisions held invalid or unenforceable, shall be construed in all respects as if such invalid or unenforceable term or provision were omitted.
Section 15. Counterparts. This Control Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Control Agreement by signing and delivering one or more counterparts.
Section 16. Subordination and Intercreditor Agreement. Notwithstanding anything herein to the contrary, all liens and security interests granted to the Subordinated Lien Agent pursuant to or contemplated by this Agreement, the obligations under this Agreement and the exercise of any right or remedy by the Subordinated Lien Agent hereunder are subject to the provisions of the Subordination and Intercreditor Agreement, dated as of June 16, 2005 (as amended, restated, supplemented or otherwise modified from time to time, the "Subordination and Intercreditor Agreement"), among Citicorp North America, Inc., as Senior Collateral Agent, The Boeing Company, as Subordinated Lien Agent and certain other persons party or that may become party thereto from time to time and the obligations hereunder and the liens and security interests granted or contemplated hereby are subordinated to the extent set forth in the Subordination and Intercreditor Agreement. In the event of any conflict between the terms of the Subordination and Intercreditor Agreement and this Agreement, the terms of the Subordination and Intercreditor Agreement shall govern and control.
[_________________________________],
as Grantor
CITICORP NORTH AMERICA, INC.,
as Senior Collateral Agent
THE BOEING COMPANY,
as Subordinated Lien Agent
[_________________________________], as Securities Intermediary
SCHEDULE I
Designated Account(s)
EXHIBIT A
[Name of Financial Institution]
[Address]
Re: Notice of Termination of Obligations
Ladies and Gentlemen:
You are hereby notified that the Obligations have been terminated and the Discharge of Senior Obligations has occurred. Capitalized terms used but not defined herein shall have the meanings set forth in the Control Agreement Concerning Securities Accounts, dated as of [______________], 2005, among the Grantor, the Collateral Agents and the Securities Intermediary.
Sincerely,
CITICORP NORTH AMERICA, INC.,
as Senior Collateral Agent
EXHIBIT B
[Letterhead of applicable Collateral Agent]
[Date]
[Securities Intermediary]
[Address]
Attention: __________________________
Re: Notice of Sole Control
Ladies and Gentlemen:
As referenced in Section 10(i) of the Control Agreement Concerning
Designated Accounts dated as of [______________], by and among [______________],
us and you (the "Control Agreement") (a copy of which is attached) we hereby
give you notice of our sole control over the financial assets maintained in the
Designated Account(s) referred to in the Control Agreement, account numbers:
________________ (the "Specified Designated Accounts"). You are hereby
instructed not to accept any direction, instruction or entitlement order with
respect to financial assets maintained in the Specified Designated Accounts from
any person other than the undersigned.
You are instructed to deliver a copy of this notice by facsimile transmission to [Grantor].
Very truly yours,
[APPLICABLE COLLATERAL AGENT],
as [Senior Collateral Agent]
[Subordinated Lien Agent]
cc: [Grantor]
Annex IV to the Security Agreement
[Form of]
Control Agreement Concerning Deposit Accounts
This CONTROL AGREEMENT CONCERNING DEPOSIT ACCOUNTS (this "Control Agreement"), dated as of [______________], by and among [______________] (the "Grantor"), Citicorp North America, Inc., as collateral agent for the benefit of the Secured Parties (the "Senior Collateral Agent"), The Boeing Company, as the agent for the benefit of the Subordinated Secured Parties (as defined below) (the "Subordinated Lien Agent") and [______________] (the "Bank"), is delivered pursuant to (a) Section 4.04(b) of that certain security agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Security Agreement"), dated as of [____________], 2005 made by Mid-Western Aircraft Systems, Inc., a Delaware corporation ("U.S. Borrower"), ONEX WIND FINANCE LP, a Delaware limited partnership ("Additional Borrower" and, together with the U.S. Borrower, "Borrowers"), and each of the Guarantors listed on the signature pages thereto in favor of the Senior Collateral Agent and (b) pursuant to Section 4.04(b) of that certain security agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Boeing Security Agreement"), dated as of June 16, 2005 made by the Borrowers and each of the Guarantors listed on the signature pages thereto in favor of the Subordinated Lien Agent. For purposes of this Control Agreement, Senior Secured Parties shall mean the "Secured Parties" as such term is defined in the Security Agreement, and Subordinated Secured Parties shall mean the "Secured Parties" as such term is defined in the Boeing Security Agreement. This Control Agreement is for the purpose of perfecting the security interests of the Senior Secured Parties and the Subordinated Secured Parties granted by the Grantor in the Designated Accounts described below. All references herein to the "UCC" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York. References herein to "Collateral Agents" means the Senior Collateral Agent and the Subordinated Lien Agent, collectively. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Security Agreement.
Section 1. Priority of Lien. Pursuant to the Security Agreement and the Boeing Security Agreement and subject to the Subordination and Intercreditor Agreement, the Grantor has granted a security interest in all of the Grantor's rights in the Designated Accounts referred to in Section 2 below to each of the Senior Collateral Agent and the Subordinated Lien Agent, respectively. The Collateral Agents, the Grantor and the Bank are entering into this Control Agreement to perfect each of the Senior Collateral Agent's and the Subordinated Lien Agent's security interest in the Designated Accounts. As between the Senior Collateral Agent and the Subordinated Lien Agent, the Senior Collateral Agent shall have a first priority security
interest in the Designated Accounts and the Subordinated Lien Agent shall have a second priority security interest in the Designated Accounts.
Section 2. Confirmation of Establishment and Maintenance of Designated Accounts. The Bank hereby confirms and agrees that (i) the Bank has established for the Grantor and maintains the deposit account(s) listed in Schedule 1 annexed hereto (the "Designated Accounts" and each a "Designated Account"), (ii) each Designated Account will be maintained in the manner set forth herein until termination of this Control Agreement, (iii) the Bank is a "bank," as such term is defined in the UCC, (iv) this Control Agreement is the valid and legally binding obligation of the Bank and (v) each Designated Account is a "deposit account" as such term is defined in Article 9 of the UCC.
Section 3. Control. The Bank shall comply with instructions from the Grantor directing the disposition of funds in one or more of the Designated Accounts until such time as the Bank has received a Notice of Sole Control substantially in the form of Exhibit B annexed hereto (the "Notice of Sole Control") delivered pursuant to Section 9(i) hereof. Until such time as the Bank has received a Notice of Sole Control, the Bank shall be entitled to distribute to the Grantor all assets in the Designated Accounts. If at any time the Bank shall receive any instructions originated by the Senior Collateral Agent directing the disposition of funds in one or more of the Designated Accounts, the Bank shall comply with such instructions without further consent by the Grantor or any other person. If at any time the Bank shall receive any instructions originated by the Subordinated Lien Collateral Agent directing the disposition of funds in one or more of the Designated Accounts, the Bank shall comply with such instructions without further consent by the Grantor; provided, that unless the Bank shall have received a Notice of Termination of Obligations substantially in the form of Exhibit A annexed hereto (the "Notice of Termination of Obligations") from the Senior Collateral Agent, the Bank shall not comply with such instructions from the Subordinated Lien Agent without the prior written consent by the Senior Collateral Agent. Notwithstanding anything to the contrary contained herein, if at any time the Bank shall receive conflicting instructions from any Collateral Agent and the Grantor, the Bank shall follow instructions of the Grantor and not the applicable Collateral Agent prior to receipt by the Bank of a Notice of Sole Control delivered in accordance with Section 9.1(i), and thereafter, shall follow the instructions of the applicable Collateral Agent (subject to the consent rights of the other Collateral Agent as set forth above) and not the Grantor.
Section 4. Subordination of Lien; Waiver of Set-Off. The Bank hereby agrees that any security interest in any Designated Account it now has or subsequently obtains shall be subordinate to the security interest of each Collateral Agent. The funds deposited into any Designated Account will not be subject to deduction, set-off, banker's lien, or any other right in favor of any person other than the Senior Secured Parties and the Subordinated Secured Parties (except that the Bank may set off (i) all amounts due to the Bank in respect of its customary fees and expenses for the routine maintenance and operation of the Designated Accounts, including overdraft fees, and (ii) the face amount of any checks or other items which have been credited to
any Designated Account but are subsequently returned unpaid because of uncollected or insufficient funds).
Section 5. Choice of Law. Both this Control Agreement and the Designated Account(s) shall be governed by the laws of the State of New York. Regardless of any provision in any other agreement, for purposes of the UCC, New York shall be deemed to be the Bank's jurisdiction and the Designated Account(s) shall be governed by the law of the State of New York.
Section 6. Conflict with Other Agreements; Amendments. As of the date hereof, there are no other agreements entered into between the Bank and the Grantor with respect to any Designated Account or any funds credited thereto (other than standard and customary documentation with respect to the establishment and maintenance of such Designated Accounts). The Bank and the Grantor will not enter into any other agreement with respect to any Designated Account unless the Collateral Agents shall have received prior written notice thereof. The Bank and the Grantor have not and will not enter into any other agreement with respect to control of the Designated Accounts or purporting to limit or condition the obligation of the Bank to comply with any orders or instructions with respect to any Designated Account as set forth in Section 2 hereof without the prior written consent of each Collateral Agent acting in its sole discretion. In the event of any conflict with respect to control over any Designated Account between this Control Agreement (or any portion hereof) and any other agreement now existing or hereafter entered into, the terms of this Control Agreement shall prevail. No amendment or modification of this Control Agreement or waiver of any right hereunder shall be binding on any party hereto unless it is in writing and is signed by all the parties hereto.
Section 7. Certain Agreements. The Bank has furnished to the Collateral Agents the most recent account statement issued by the Bank with respect to each of the Designated Accounts and the cash balances held therein. Each such statement accurately reflects the assets held in such Designated Account as of the date thereof.
Section 8. Notice of Adverse Claims. Except for the claims and interest of the Collateral Agents and of the Grantor in the Designated Account(s), the Bank on the date hereof does not know of any claim to, or security interest in, any Designated Account or in any funds credited thereto and does not know of any claim that any person other than the Collateral Agents have been given control (within the meaning of Section 8-106 of the UCC) of any Designated Account or any such funds. If the Bank becomes aware that any person is asserting any lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process or any claim of control) against any funds in any Designated Account, the Bank will promptly notify the Collateral Agents and the Grantor thereof.
Section 9. Maintenance of Designated Accounts. In addition to the obligations of the Bank in Section 3 hereof, the Bank agrees to maintain the Designated Accounts as follows:
(i) Notice of Sole Control. If at any time any Collateral Agent delivers to the Bank a Notice of Sole Control with respect to any Designated Account, the Bank agrees that, after receipt of such notice, it will take all instruction with respect to such Designated Account solely from such Collateral Agent in accordance with Section 3 of this Agreement and cease taking instructions from the Grantor, including, without limitation, instructions for distribution or transfer of any funds in any Designated Account; provided, that prior to delivery to the Bank of a Notice of Termination of Obligations from the Senior Collateral Agent, any Notice of Sole Control with respect to any Designated Account delivered to the Bank must include the signature of the Senior Collateral Agent.
(ii) Statements and Confirmations. The Bank will send copies of all statements and other correspondence (excluding routine confirmations) concerning any Designated Account simultaneously to the Grantor and the Collateral Agents at the address set forth in Section 11 hereof. The Bank will promptly provide to the Collateral Agents, upon request therefor from time to time and, in any event, as of the last business day of each calendar month, a statement of the cash balance in each Designated Account. The Bank shall not change the name or account number of any Designated Account without the prior written consent of each Collateral Agent.
Section 10. Successors; Assignment. The terms of this Control Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective corporate successors and permitted assignees.
Section 11. Notices. Any notice, request or other communication required or permitted to be given under this Control Agreement shall be in writing and deemed to have been properly given when delivered in person, or when sent by telecopy or other electronic means and electronic confirmation of error free receipt is received or two (2) days after being sent by certified or registered United States mail, return receipt requested, postage prepaid, addressed to the party at the address set forth below.
Grantor:
Attention: ____________________
Telecopy: _____________________
Telephone: ____________________
with copy to:
[Address] _____________________
Attention: ____________________ Telecopy: _____________________ Telephone: ____________________ Bank: [______________________________] [______________________________] |
[______________________________]
Attention: ____________________
Telecopy: _____________________
Telephone: ____________________
Senior
Collateral
Agent: Citicorp North America, Inc. as Senior Collateral Agent 390 Greenwich Avenue New York, New York 10013 |
Attention: ____________________
Telecopy: _____________________
Telephone: ____________________
with a copy to:
Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
Attention: Adam Dworkin, Esq.
Telecopy: (212) 269-5420
Telephone: (212) 701-3000
Subordinated
Lien
Agent: The Boeing Company as Subordinated Lien Agent Corporate Headquarters M/C 5003-1001 100 N. Riverside Drive Chicago, Illinois 60606-1596 Attention: General Counsel Telecopy: (312) 544-2829 with a copy to: Sheppard, Mullin, Richter & Hampton LLP 333 South Hope St., 48th Floor Los Angeles, California 90071 Attention: Lawrence M. Braun, Esq. Telecopy: (213) 620-1398 |
Any party may change its address for notices in the manner set forth above.
Section 12. Termination. The rights and powers granted herein to the Collateral Agents are powers coupled with an interest and will be affected neither by the bankruptcy of the Grantor nor by the lapse of time. The obligations of the Bank hereunder shall continue in effect until (i) the security interests of the Senior Secured Parties and the Subordinated Secured Parties with respect to the Designated Account(s) have been terminated and the Collateral Agents have notified the Bank of such termination in writing or (ii) thirty days following the Bank's delivery of written notice of such termination to the Collateral Agents and Grantor.
Section 13. Severability. If any term or provision set forth in this Agreement shall be invalid or unenforceable, the remainder of this Agreement, other than those provisions held invalid or unenforceable, shall be construed in all respects as if such invalid or unenforceable term or provision were omitted.
Section 14. Counterparts. This Control Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Control Agreement by signing and delivering one or more counterparts.
Section 15. Subordination and Intercreditor Agreement. Notwithstanding anything herein to the contrary, all liens and security interests granted to the Subordinated Lien Agent pursuant to or contemplated by this Agreement, the obligations under this Agreement and the exercise of any right or remedy by the Subordinated Lien Agent hereunder are subject to the provisions of the Subordination and Intercreditor Agreement, dated as of June 16, 2005 (as amended, restated, supplemented or otherwise modified from time to time, the "Subordination
and Intercreditor Agreement"), among Citicorp North America, Inc., as Senior Collateral Agent, The Boeing Company, as Subordinated Lien Agent and certain other persons party or that may become party thereto from time to time and the obligations hereunder and the liens and security interests granted or contemplated hereby are subordinated to the extent set forth in the Subordination and Intercreditor Agreement. In the event of any conflict between the terms of the Subordination and Intercreditor Agreement and this Agreement, the terms of the Subordination and Intercreditor Agreement shall govern and control.
[_________________________________],
as Grantor
CITICORP NORTH AMERICA, INC.,
as Senior Collateral Agent
THE BOEING COMPANY,
as Subordinated Lien Agent
[_________________________________], as Bank
SCHEDULE 1
Designated Account(s)
EXHIBIT A
[Name of Financial Institution]
[Address]
Re: Notice of Termination of Obligations
Ladies and Gentlemen:
You are hereby notified that the Obligations have been terminated and the Discharge of Senior Obligations has occurred. Capitalized terms used but not defined herein shall have the meanings set forth in the Control Agreement Concerning Deposit Accounts, dated as of [ ], 2004, among the Grantor, the Collateral Agents and the Bank.
Sincerely,
CITICORP NORTH AMERICA, INC.,
as Senior Collateral Agent
EXHIBIT B
[Letterhead of applicable Collateral Agent]
[Date]
[Bank]
[Address]
Attention: __________________________
Re: Notice of Sole Control
Ladies and Gentlemen:
As referenced in Section 9(i) of the Control Agreement Concerning Designated Accounts dated as of [______________], by and among [______________], us and you (the "Control Agreement") (a copy of which is attached) we hereby give you notice of our sole control over the Designated Account(s) referred to in the Control Agreement, having account number(s): ____________________________ (the "Specified Designated Accounts"). You are hereby instructed not to accept any direction or instructions with respect to the Specified Designated Accounts or any funds credited thereto from any person other than the undersigned, unless otherwise ordered by a court of competent jurisdiction.
You are instructed to deliver a copy of this notice by facsimile transmission to [Grantor].
Very truly yours,
[APPLICABLE COLLATERAL AGENT],
as [Senior Collateral]
[Subordinated Lien] Agent
cc: [Grantor]
Annex V-A to the Security Agreement
[Form of]
Copyright Security Agreement
COPYRIGHT SECURITY AGREEMENT, dated as of [______________], by
[___________________] and [___________________] (individually, a "Grantor", and, collectively, the "Grantors"), in favor of The Boeing Company, as agent for the benefit of theSecured Parties (the "Agent").
WITNESSETH:
WHEREAS, the Grantors are party to a Security Agreement of even date herewith (the "Security Agreement") in favor of the Agent pursuant to which the Grantors are required to execute and deliver this Copyright Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Grantors hereby agree with the Agent as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.
SECTION 2. Grant of Security Interest in Copyright Collateral. Each Grantor hereby mortgages, pledges and grants to the Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral of such Grantor:
(a) Copyrights of such Grantor listed on Schedule I attached hereto; and
(b) all Proceeds of any and all of the foregoing (other than Excluded Property).
SECTION 3. Security Agreement and Intercreditor Agreement. The security interest granted pursuant to this Copyright Security Agreement is granted in conjunction with the security interest granted to the Agent pursuant to the Security Agreement and Grantors hereby acknowledge and affirm that the rights and remedies of the Agent with respect to the security interest in the Copyrights made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In
the event that any provision of this Copyright Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control. In the event that any provision of this Copyright Security Agreement is deemed to conflict with the Intercreditor and Subordination Agreement, the provisions of the Intercreditor and Subordination Agreement shall control.
SECTION 4. Termination. Upon the payment in full of the Obligations (other than contingent indemnification obligations for which no claim has been made) and termination of the Security Agreement, the Agent shall execute, acknowledge, and deliver to the Grantors an instrument in writing in recordable form releasing the collateral pledge, grant, assignment, lien and security interests in the Copyrights under this Copyright Security Agreement.
SECTION 5. Counterparts. This Copyright Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Copyright Security Agreement by signing and delivering one or more counterparts.
SECTION 6. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
[signature page follows]
IN WITNESS WHEREOF, each Grantor has caused this Copyright Security Agreement to be executed and delivered by its duly authorized offer as of the date first set forth above.
Very truly yours,
[_________________________________]
Accepted and Agreed:
THE BOEING COMPANY,
as Agent
SCHEDULE I
to
COPYRIGHT SECURITY AGREEMENT
COPYRIGHT REGISTRATIONS AND COPYRIGHT APPLICATIONS
COPYRIGHT REGISTRATIONS:
REGISTRATION OWNER NUMBER TITLE ----- ------------ ----- |
COPYRIGHT APPLICATIONS:
OWNER TITLE ----- ----- |
Annex V-B to the Security Agreement
[Form of]
Patent Security Agreement
PATENT SECURITY AGREEMENT, dated as of [______________], by
[___________________] and [___________________] (individually, a "Grantor", and,
collectively, the "Grantors"), in favor of The Boeing Company, as agent for the
benefit of the Parties (the "Agent").
WITNESSETH:
WHEREAS, the Grantors are party to a Security Agreement of even date herewith (the "Security Agreement") in favor of the Agent pursuant to which the Grantors are required to execute and deliver this Patent Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Grantors hereby agree with the Agent as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.
SECTION 2. Grant of Security Interest in Patent Collateral. Each Grantor hereby mortgages, pledges and grants to the Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral of such Grantor:
(a) Patents of such Grantor listed on Schedule I attached hereto; and
(b) all Proceeds of any and all of the foregoing (other than Excluded Property).
SECTION 3. Security Agreement and Intercreditor Agreement. The security interest granted pursuant to this Patent Security Agreement is granted in conjunction with the security interest granted to the Agent pursuant to the Security Agreement and Grantors hereby acknowledge and affirm that the rights and remedies of the Agent with respect to the security interest in the Patents made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provision of this Patent Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control. In
the event that any provision of this Patent Security Agreement is deemed to conflict with the Intercreditor and Subordinatino Agreement, the provisions of the Intercreditor and Subordination Agreement shall control.
SECTION 4. Termination. Upon the payment in full of the Obligations (other than contingent indemnification obligations for which no claim has been made) and termination of the Security Agreement, the Agent shall execute, acknowledge, and deliver to the Grantors an instrument in writing in recordable form releasing the collateral pledge, grant, assignment, lien and security interests in the Patents under this Patent Security Agreement.
SECTION 5. Counterparts. This Patent Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Patent Security Agreement by signing and delivering one or more counterparts.
SECTION 6. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
[signature page follows]
IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to be executed and delivered by its duly authorized offer as of the date first set forth above.
Very truly yours,
[_________________________________]
Accepted and Agreed:
THE BOEING COMPANY,
as Agent
SCHEDULE I
to
PATENT SECURITY AGREEMENT
PATENT REGISTRATIONS AND PATENT APPLICATIONS
PATENT REGISTRATIONS:
REGISTRATION OWNER NUMBER NAME ----- ------------ ---- |
PATENT APPLICATIONS:
APPLICATION OWNER NUMBER NAME ----- ----------- ---- |
Annex V-C to the Security Agreement
[FORM OF]
TRADEMARK SECURITY AGREEMENT
TRADEMARK SECURITY AGREEMENT, dated as of [______________], by
[___________________] and [___________________] (individually, a "Grantor", and, collectively, the "Grantors"), in favor of The Boeing Company, as agent for the benefit of the Secured Parties (the "Agent").
WITNESSETH:
WHEREAS, the Grantors are party to a Security Agreement of even date herewith (the "Security Agreement") in favor of the Collateral Agents pursuant to which the Grantors are required to execute and deliver this Trademark Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Grantors hereby agree with the Agent as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.
SECTION 2. Grant of Security Interest in Trademark Collateral. Each Grantor hereby mortgages, pledges and grants to the Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral of such Grantor:
(a) Trademarks of such Grantor listed on Schedule I attached hereto;
(b) all Goodwill associated with such Trademarks; and
(c) all Proceeds of any and all of the foregoing (other than Excluded Property).
SECTION 3. Security Agreement and Intercreditor Agreement. The security interest granted pursuant to this Trademark Security Agreement is granted in conjunction with the security interest granted to the Agent pursuant to the Security Agreement and Grantors hereby acknowledge and affirm that the rights and remedies of the Agent with respect to the security interest in the Trademarks made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provision of this Trademark Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control. In the event that any provision of this Trademark Security Agreement is deemed to conflict with the
Intercreditor and Subordination Agreement, the provisions of the Intercreditor and Subordination Agreement shall control.
SECTION 4. Termination. Upon the payment in full of the Obligations (other than contingent indemnification obligations for which no claim has been made) and termination of the Security Agreement, the Agent shall execute, acknowledge, and deliver to the Grantors an instrument in writing in recordable form releasing the collateral pledge, grant, assignment, lien and security interests in the Trademarks under this Trademark Security Agreement.
SECTION 5. Counterparts. This Trademark Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Trademark Security Agreement by signing and delivering one or more counterparts.
SECTION 6. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
[signature page follows]
IN WITNESS WHEREOF, each Grantor has caused this Trademark Security Agreement to be executed and delivered by its duly authorized offer as of the date first set forth above.
Very truly yours,
[_________________________________]
Accepted and Agreed:
THE BOEING COMPANY,
as Agent
SCHEDULE I
to
TRADEMARK SECURITY AGREEMENT
TRADEMARK REGISTRATIONS AND TRADEMARK APPLICATIONS
TRADEMARK REGISTRATIONS:
REGISTRATION OWNER NUMBER TRADEMARK ----- ------------ --------- |
TRADEMARK APPLICATIONS:
APPLICATION OWNER NUMBER TRADEMARK ----- ----------- --------- |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Exhibit 10.23
AMENDMENT 1
SPECIAL BUSINESS PROVISIONS
BETWEEN
THE BOEING COMPANY
AND
SPIRIT AEROSYSTEMS, INCORPORATED.
MS-65530-0016
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
TABLE OF CONTENTS
TITLE PAGE
TABLE OF CONTENTS
ATTACHMENTS
AMENDMENT PAGE
RECITAL PAGE
1.0 DEFINITIONS............................................................................................. - 10 - 2.0 CONTRACT FORMATION...................................................................................... - 14 - 2.1 Order.......................................................................................... - 14 - 2.2 Entire Agreement............................................................................... - 14 - 2.3 Incorporated by Reference...................................................................... - 14 - 2.4 Written Authorization to Proceed............................................................... - 14- 3.0 SUBJECT MATTER OF SALE.................................................................................. - 15 - 3.1 Subject Matter of Sale......................................................................... - 15 - 3.2 Period of Performance.......................................................................... - 15 - 3.3 Nonrecurring Work.............................................................................. - 15 - 3.3.1 Engineering Services.................................................................. - 15 - 3.3.1.1 Engineering Services..................................................... - 15 - 3.3.2 Product Development and Test.......................................................... - 15 - 3.3.2.1 Product Development and Test Activities.................................. - 15 - 3.3.2.2 Static and Fatigue Test Articles......................................... - 16 - 3.3.3 Certification Support................................................................. - 16 - 3.3.4 Tooling............................................................................... - 16 - 3.3.4.1 Tooling - General........................................................ - 16 - 3.3.4.2 Contractor Use-Tooling (also known as Seller-Use Tooling)................ - 16 - 3.3.4.3 Common - Use Tooling..................................................... - 16 - 3.3.4.4 Use of Casting, Forging and Extrusion Tooling............................ - 17 - 3.3.4.5 Initial Planning......................................................... - 17 - 3.3.4.6 Title to Tooling......................................................... - 17 - 3.3.4.7 Use and Disposition of Tooling........................................... - 17 - 3.3.4.8 Reserved................................................................. - 18 - 3.3.4.9 Responsible Party........................................................ - 18 - 3.3.5 Life Cycle Product Teams.............................................................. - 18 - 3.3.6 Weight Status Reporting............................................................... - 18 - 3.4 Recurring Work................................................................................. - 18 - 3.4.1 Production Articles................................................................... - 18 - 3.4.2 Delivery Point and Schedule........................................................... - 19 - 3.4.2.1 Additional Events of Excusable Delay..................................... - 19 - 3.4.3 Transportation Routing Instructions................................................... - 19 - 3.4.4 Manufacturing Configuration........................................................... - 19 - 3.4.5 Sustaining Product Definition......................................................... - 19 - |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
3.4.6 Tooling Maintenance................................................................... - 19 - 3.4.7 Maintenance of Production Planning.................................................... - 20 - 3.4.8 Certification Support................................................................. - 20 - 3.4.9 Type Design and Type Certification Data Development and Protection.................... - 20 - 3.4.10 Seller Authorized Representative (AR) Requirements and Obligations.................... - 20 - 3.5 Product Support and Miscellaneous Work......................................................... - 20 - 3.5.1 Miscellaneous Work.................................................................... - 20 - 3.5.2 Delivery Schedule of Other Products and Performance of Services....................... - 21 - 4.0 PRICING................................................................................................. - 21 - 4.1 Recurring Price................................................................................ - 21 - 4.1.1 Interim Extension Pricing............................................................. - 21 - 4.2 RESERVED....................................................................................... - 22 - 4.3 Pricing of Requirements for Modification or Retrofit........................................... - 22 - 4.3.1 Boeing Responsibility or Regulatory Requirement....................................... - 22 - 4.3.2 Reserved.............................................................................. - 22 - 4.4 Expedite of Production Requirements............................................................ - 22 - 4.5 Pricing for Derivatives........................................................................ - 22 - 4.6 POA Pricing.................................................................................... - 22 - 5.0 PAYMENT................................................................................................. - 23 - 5.1 Invoicing...................................................................................... - 23 - 5.1.1 Invoicing Requirements................................................................ - 23 - 5.1.2 Invoicing Shipset Identification...................................................... - 23 - 5.1.3 Customs Invoicing..................................................................... - 23 - 5.1.4 Mailing Instructions.................................................................. - 23 - 5.1.5 Pay From Receipt...................................................................... - 23 - 5.2 Recurring Payment.............................................................................. - 24 - 5.2.1 Non-Recurring Payment................................................................. - 24 - 5.3 Payment Method................................................................................. - 26 - 5.4 Payment Errors................................................................................. - 26 - 6.0 CHANGES................................................................................................. - 26 - 7.0 CHANGE PROVISIONS....................................................................................... - 27 - 7.1 Price Adjustment for Changes................................................................... - 27 - 7.2 Change Pricing Criteria........................................................................ - 27 - 7.3 Reserved....................................................................................... - 29 - 7.4 Reserved....................................................................................... - 29 - 7.5 Schedule Acceleration/Deceleration............................................................. - 29 - 7.5.1 Production Rates...................................................................... - 29 - 7.6 Total Cost Management.......................................................................... - 29 - 7.6.1 Boeing Generated Technical and Cost Improvement....................................... - 30 - 7.7 Obsolescence................................................................................... - 30 - 7.8 Reserved....................................................................................... - 30 - 7.9 Proposals for Price Adjustment................................................................. - 30 - |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
7.10 Apportionment and Payment of Price Adjustments................................................. - 32 - 7.10.1 Recurring Work Price Adjustment....................................................... - 32 - 7.10.2 Apportionment and Payment............................................................. - 32 - 8.0 GOVERNING QUALITY ASSURANCE REQUIREMENTS................................................................ - 32 - 9.0 STATUS REPORTS/REVIEWS.................................................................................. - 32 - 9.1 Notification of Shipment....................................................................... - 32 - 9.2 General Reports / Reviews...................................................................... - 32 - 9.3 Cost Performance Visibility.................................................................... - 33 - 9.4 Problem Reports................................................................................ - 33 - 9.5 Notice of Delay - Premium Effort............................................................... - 34 - 9.6 Diversity Reporting Format..................................................................... - 35 - 9.7 Planning Schedule.............................................................................. - 35 - 10.0 BOEING ASSISTANCE....................................................................................... - 35 - 10.1 Boeing Technical / Manufacturing Assistance Regarding Seller's Nonperformance.................. - 35 - 10.2 Other Boeing Assistance........................................................................ - 35 - 11.0 REPAIR AUTHORIZATION.................................................................................... - 35 - 11.1 Boeing-Performed Work.......................................................................... - 35 - 11.2 Reimbursement for Repairs...................................................................... - 36 - 12.0 OTHER REQUIREMENTS...................................................................................... - 36 - 12.1 SUPPORTING DOCUMENTATION....................................................................... - 36 - 12.1.1 Supporting Documentation and Priority................................................. - 36 - 12.1.2 Revision of Documents................................................................. - 37 - 12.1.3 Compliance............................................................................ - 38 - 12.2 Reserved ...................................................................................... - 38 - 12.3 ACCOUNTABILITY FOR TOOLING..................................................................... - 39 - 12.4 CERTIFIED TOOL LISTS........................................................................... - 39 - 12.5 BOEING FURNISHED TOOLING....................................................................... - 39 - 12.6 PACKAGING AND SHIPPING......................................................................... - 39 - 12.6.1 Packaging............................................................................. - 39 - 12.6.2 Product Packaging..................................................................... - 40 - 12.6.3 Disposable Shipping Fixtures.......................................................... - 40 - 12.6.4 Packing Sheet and Test Reports........................................................ - 40 - 12.6.5 Additional Copies..................................................................... - 41 - 12.6.6 Price Inclusive....................................................................... - 41 - 12.7 CYCLE TIME REQUIREMENTS........................................................................ - 41 - 12.8 COMPATIBILITY WITH ENGINEERING BUSINESS AND PRODUCTION SYSTEMS................................. - 41 - 12.9 ELECTRONIC ACCESS AND EXCHANGE OF DIGITAL PRODUCT DEFINITION................................... - 41 - 12.9.1 Exchange of Digital Product Definition between Boeing and Seller...................... - 41 - 12.9.2 Systems/Software Compatibility between Boeing and Seller.............................. - 41 - |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
12.9.3 Electronic Access, Communications and Data Exchange via Telecommunications............ - 42 - 12.10 PROGRAM MANAGER................................................................................ - 42 - 12.11 SUBCONTRACTING................................................................................. - 42 - 12.11.1 Subcontractors and Suppliers........................................................... - 43 - 12.12 INTERNATIONAL COOPERATION...................................................................... - 43 - 12.12.1 Market Access and Sales Support....................................................... - 43 - 12.12.2 Offset Assistance..................................................................... - 44 - 12.13 SUPPLY CHAIN INTEGRATION....................................................................... - 44 - 12.13.1 Supplier Banked Material (SBM) or Boeing Provided Details (BPD)....................... - 44 - 12.13.2 Boeing Raw Material Strategy.......................................................... - 45 - 12.13.3 Third Party Pricing................................................................... - 45 - 12.13.4 Obligation to Accept Assignment of Contracts.......................................... - 46 - 12.14 Reserved.......................................................................................... - 46 - 12.15 LIFE CYCLE PRODUCT TEAM........................................................................ - 46 - 12.15.1 Purpose............................................................................... - 46 - 12.15.1.1 Qualifications............................................................. - 46 - 12.15.2 Work Schedule......................................................................... - 46 - 12.15.3 Equipment and Supplies................................................................ - 47 - 12.15.4 Employment Status..................................................................... - 47 - 12.15.5 Team Leader........................................................................... - 47 - 12.15.6 Discipline............................................................................ - 47 - 12.15.7 Removal of Personnel.................................................................. - 47 - 12.16 INCREMENTAL RELEASE............................................................................ - 47 - 12.17 PARTICIPATION................................................................................. - 48 - 12.17.1 Other Boeing Entities................................................................. - 48 - 12.17.2 RESERVED............................................................................... - 48 - 12.17.3 RESERVED............................................................................... - 48 - 12.17.4 Notification of Contract.............................................................. - 48 - 13.0 ORDER OF PRECEDENCE.................................................................................... - 48 - 14.0 RESERVED................................................................................................ - 50 - 15.0 APPLICABLE LAW.......................................................................................... - 50 - 16.0 PRODUCT SUPPORT AND ASSURANCE........................................................................... - 50 - 16.1 Warranty....................................................................................... - 50 - 16.1.1 Product Support and Assurance Document (PSAD) D6-83315................................ - 50 - 17.0 ADMINISTRATIVE MATTERS.................................................................................. - 50 - 17.1 Administrative Authority....................................................................... - 50 - 17.2 Administrative Agreement....................................................................... - 51 - 18.0 OBLIGATION TO PURCHASE AND SELL......................................................................... - 51 - 18.1 Replacements................................................................................... - 51 - |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
19.0 STRATEGIC ALIGNMENT / SUBCONTRACTING.................................................................... - 51 - 20.0 OWNERSHIP OF INTELLECTUAL PROPERTY...................................................................... - 52 - 20.1 Technical Work Product......................................................................... - 52 - 20.2 Inventions and Patents......................................................................... - 52 - 20.3 Works of Authorship and Copyrights............................................................. - 53 - 20.4 Pre-Existing Inventions and Works of Authorship................................................ - 54 - 21.0 SOFTWARE PROPRIETARY INFORMATION RIGHTS................................................................. - 54 - 22.0 INFRINGEMENT............................................................................................ - 54 - 23.0 DIGITIZATION OF PROPRIETARY INFORMATION AND MATERIALS................................................... - 55 - 24.0 CONFIGURATION CONTROL................................................................................... - 55 - 25.0 Reserved................................................................................................ - 55 - 26.0 ON-SITE SUPPORT......................................................................................... - 56 - 26.1 Indemnification Negligence of Seller or subcontractor......................................... - 56 - 26.2 Commercial General Liability.................................................................. - 56 - 26.3 Automobile Liability.......................................................................... - 57 - 26.4 Workers' Compensation......................................................................... - 57 - 26.5 Certificates of Insurance..................................................................... - 57 - 26.6 Self-Assumption............................................................................... - 57 - 26.7 Protection of Property........................................................................ - 58 - 26.8 Compliance with Boeing Site Requirements...................................................... - 58 - 27.0 Reserved................................................................................................ - 58 - 28.0 DELIVERY - TITLE AND RISK OF LOSS....................................................................... - 58 - 28.1 Title and Risk of Loss......................................................................... - 58 - 29.0 Reserved................................................................................................ - 59 - 30.0 CUSTOMER CONTACT........................................................................................ - 59 - 31.0 Reserved................................................................................................ - 59 - 31.1 Interest on Overdue Amounts.................................................................... - 59 - 32.0 SURVIVAL................................................................................................ - 59 - 33.0 INVENTORY AT CONTRACT COMPLETION........................................................................ - 60 - 34.0 SELLER ASSISTANCE....................................................................................... - 60 - 35.0 NONRECURRING WORK TRANSFER.............................................................................. - 61 - 36.0 DISPOSITION OF TOOLING.................................................................................. - 62 - |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
37.0 CUSTOMS-TRADE PARTNERSHIP AGAINST TERRORISM (C-TPAT).................................................. - 62 - 38.0 ENVIRONMENTAL MANAGEMENT SYSTEMS AND HEALTH AND SAFETY MANAGEMENT SYSTEMS............................ - 62 - Signature Page |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
ATTACHMENTS
Attachment 1 Work Statement and Pricing Attachment 2 Production Article Definition and Contract Change Notices Attachment 3 Reserved Attachment 4 Additional Statement of Work Attachment 5 Rates and Factors Attachment 6 Lead time Matrix (Accel/Decel) Attachment 7 Indentured Priced Parts List and POA Pricing Attachment 8 Seller Data Submittals Attachment 9 Reserved Attachment 10 Quality Assurance Requirements Attachment 11 Second Tier Support Attachment 12 Non-U.S. Procurement Report Form Attachment 13 Reserved Attachment 14 Production Article Delivery Schedule Attachment 15 Model Mix Constraint Matrix Attachment 16 Boeing Furnished Material/Boeing Provided Details Attachment 17 Reserved Attachment 18 Reserved Attachment 19 Incremental Release Plan & Lead-times Attachment 20 Quantity Price Adjustment Attachment 21 Commodity Listing and Terms of Sale Attachment 22 Abnormal Escalation Attachment 23 Reserved -8- |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****]. Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1 AMENDMENTS |
AMEND NUMBER DESCRIPTION DATE APPROVAL ------ ------------------------------------------------------- ------- ---------------- 1 Revise Company name from Mid-Western Aircraft Systems 2/23/06 H. McCormick/ R. Incorporated to Spirit AeroSystems throughout document. Stone Update attachments 1, 2, 4, 14 and 16. |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
THESE SPECIAL BUSINESS PROVISIONS (SBP) are entered into as of June 16, 2005 by and between Spirit AeroSystems Inc., a Delaware Corporation with its principal office in Wichita, Kansas ("Seller"), and The Boeing Company, a Delaware corporation acting by and through its Boeing Commercial Airplanes business unit (collectively and individually "Boeing"). Hereinafter, the Seller and Boeing may be referred to jointly as "Parties" hereto.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the Parties agree as follows:
SPECIAL BUSINESS PROVISIONS
1.0 DEFINITIONS
The definitions used herein are the same as those used in the GTA. In addition, the following terms are defined as follows:
A. "Aircraft" means a completed Program Airplane ready for delivery or delivered to a Customer.
B. "Boeing Proprietary Spare Parts" means all Spare Parts, which are manufactured (i) by Boeing, or (ii) to Boeing's detailed design with Boeing's authorization, or (iii) in whole or in part using Boeing Proprietary Information.
C. "Boeing-Use Tooling" means certain gauge and interface Tooling (not including Boeing master gauges) manufactured by Seller in accordance with designs provided by Boeing, to be used exclusively by Boeing.
D. "Common-Use Tooling" means all Contractor-Use Tooling that enters into a Boeing facility or Boeing designated destination and that is required for use by Boeing and Seller, and, if applicable, a third party.
E. "Contract Change Notice" or "CCN" means any written notice sent by Boeing to Seller describing any Change to the general scope of this SBP pursuant to SBP Section 6.0 and authorizing Seller to proceed with the performance of work hereunder in accordance with such Change description.
F. "Contractor-Use Tooling" (also known as "Seller -Use Tooling") means all Tooling needed to manufacture and deliver Products (including but not limited to, Supplier-Use Tools, Common-Use Tools, Mechanical Handling Equipment, Rotating Tools, Shipping Equipment, Interface Control Tools and Interface Production Tools as defined in Boeing Document D33200-1.)
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
G. "Cycle Time" means the period of time that elapses between the dates the Program executes a Customer implementation directive for a Program Airplane and delivery of such Program Airplane to such Customer.
H. "Dataset" means any compilation of data or information (including, without limitation, numerical data, geometric definitions, program instructions or coded information) which may be used directly in, integrated with or applied to, a computer program for further processing. A Dataset may be a composite of two or more other Datasets or an extract of a larger Dataset.
I. "Derivative" means any model airplane that either (1) can be FAA certificated by an amendment to an existing Type Certificate through addition of a new minor model, or by a Supplemental Type Certificate; and bears the same major model designation as an airplane currently being manufactured (e.g. 737, 747, 767, 777) by Boeing: or (2) includes all of the following conditions: (a) has the same number of engines as the existing model airplane; (b) utilizes essentially the same aerodynamic and propulsion design, major assembly components, and systems as the existing model airplane; (c) achieves other payload/range combinations by changes in body length, engine thrust, or variations in certified gross weight; (d) has the same body cross-section as the subject model aircraft; and (e) uses substantially the same technology, design, materials, specifications, and manufacturing processes as existing Program Airplane. Derivative does not mean Boeing Integrated Defense Systems (IDS) Products or any BCA aircraft delivered to Boeing IDS except as currently provided in Attachment 4. A Derivative does not include any subject model airplane, which has been or was currently in production as of the date of execution of this SBP, or any new airplane program receiving a new major model designation and which requires a new Type Certificate. J. "Drawing" means an electronic or manual depiction of graphics or technical information representing a Product or any part thereof and which includes the parts list and specifications relating thereto.
K. "Effective Date" means the date on which both parties fully execute this SBP.
L. "End Item Assembly" means any Product which is described by a single part number and which is comprised of more than one component part.
M. "Engineering Release" means engineering Drawings, Datasets or other Documents, that define the design requirements of any Product.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****]. \ Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
N. "Existing Tooling" means all accountable Tooling relating to this SBP in the possession of Boeing on the date hereof, "Existing Boeing-Use Tooling", "Existing Common-Use Tooling" and "Existing Contractor-Use Tooling" means respectively "Boeing-Use Tooling", "Common-Use Tooling" and "Contractor-Use Tooling" that are not New Tooling.
O. "Life Cycle Product Team" or "LCPT", "Integrated Product Team" or "IPT" or "Design Build Team" or "DBT" means a team composed of representatives from engineering, operations, procurement, finance, design-to-cost and other disciplines as Boeing and Seller shall specify whose objective is to optimize designs for cost, weight, performance and producibility.
P. "Manufacturing Work Package" or "Work Package" means manufacturing effort that Seller will provide under this SBP.
Q. "Miscellaneous Work" is Seller performed work or services that includes, but is not limited to provision of additional test articles, New Boeing-Use Tooling, test support, field support and Boeing-used supplier facilities.
R. "New Tooling" means all Tooling other than Existing Tooling. "New Boeing-Use Tooling", "New Common-Use Tooling", or "New Contractor-Use Tooling", respectively, means Boeing-Use Tooling, Common-Use Tooling, or Contractor-Use Tooling, respectively, that is not Existing Tooling.
S. "Nonrecurring Work" is Seller performed work other than Recurring Work or Spares and Miscellaneous Work, which may include, but is not limited to Product Definition, product development, Tooling, static and fatigue test articles, Transportation Devices and planning.
T. ."Obsolescence" means the discontinuation of the requirement for any Product as a result of engineering or manufacturing change, which has rendered such Product no longer usable in the production of the Program Airplane or any Derivative.
U. ."Person" means any individual, partnership, corporation, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof or any other entity
V. "Price" means the amount to be paid by Boeing to Seller for any Product in accordance with the terms of this SBP.
W. "Products" In addition to the definition in the GTA, "Products" has the meaning of Product Definition.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
X. "Product Definition" means the engineering design deliverables (layouts, interface drawings, stress notes, etc.) required to design, build, test, certify, deliver and support Orders.
Y. "Production Articles" means those completed assemblies defined and
configured, including SCD Products, as set forth in SBP Attachment 1
and 2 "Production Article Definition and Contract Change Notices"
for the Program Airplane and any Derivative, and not including
Products or Production Articles used for modification or retrofit of
previously delivered Program Airplanes, except as provided in SBP
Section 4.3.1. Purchases of Parts or Production Articles for
modifications or retrofits, other than those described in Section
4.3.1, shall be governed by SBP number SBP-6-5118-AEC-016.
Z. "Program" means the design, development, marketing, manufacture, sales and customer support of Program Airplanes, Derivatives and Products.
AA. "Program Airplane" means a Boeing commercial transport aircraft having a model designation of 737, 747, 767 or 777 for which Seller shall provide Product Definition and Production Articles pursuant to this SBP.
BB. "Purchased on Assembly" (POA) - means any detail component needed to replace a component on an End Item Assembly currently in Boeing's assembly line process.
CC. "Recurring Shipset Price" or "Recurring Price" means the Price for the Recurring Work associated with each Shipset and or part as identified in Attachment 1.
DD. "Recurring Work" means work Seller performs in producing Product Definition and Production Articles. The cost of Recurring Work can include, but is not limited to design, tool maintenance, replacement, and storage, packaging, disposable shipping fixtures and maintenance of production planning.
EE. "Replacement" means any model airplane that is not a Derivative airplane and substantially takes the place of a current model or models, or serves the same market segment or both.
FF. "SCD Products" means all goods, including components and parts thereof, designed to a Boeing Specification Control Drawing by Seller or its subcontractors or suppliers, and provided or manufactured under this Contract.
GG. "Shipset" means the total set of Production Articles provided by Seller hereunder necessary for production of one Program Airplane or Derivative.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
HH. "Tooling" For purposes of this SBP, Tooling means all tooling, used in production or inspection of Products, either provided to Seller by Boeing or supplied by Seller whereby Boeing agrees to pay Seller for the manufacture of such tooling, including New Tooling and Existing Tooling.
2.0 CONTRACT FORMATION
2.1 ORDER
Any Order to which this SBP applies will include a statement incorporating this SBP by reference unless otherwise specifically agreed to in writing by the Parties.
Each such Order will be governed by and be deemed to include the provisions of this SBP.
2.2 ENTIRE AGREEMENT
The Order, this SBP, the GTA, the AA, and the EAA sets forth the entire agreement, and supersede any and all other prior agreements, understandings and communications between Boeing and Seller related to the subject matter of an Order. The rights and remedies afforded to Boeing or Customers pursuant to any provisions of an Order are in addition to any other rights and remedies afforded by any other provisions of the Order, the General Terms Agreement (GTA) or the SBP, by law or otherwise.
2.3 INCORPORATED BY REFERENCE
General Terms Agreement ("GTA") BCA-65530-0016 dated June 16, 2005 is incorporated in and made a part of this SBP by this reference.
Administrative Agreement ("AA") AA-65530-0010 dated June 16, 2005 is incorporated in and made a part of this SBP by this reference.
In addition to any other documents incorporated elsewhere in this SBP or GTA by reference, the Documents set forth in SBP Section 12.1 "Supporting Documentation" are incorporated in and made a part of this SBP by reference with full force and effect, as if set out in full text. It is the Seller's responsibility to comply with the latest revision of these documents as made available by Boeing.
2.4 WRITTEN AUTHORIZATION TO PROCEED
Boeing's Procurement Representative may give written or electronic authorization to Seller to commence performance before Boeing issues an Order as provided in the GTA.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
3.0 SUBJECT MATTER OF SALE
3.1 SUBJECT MATTER OF SALE
Subject to the provisions of this SBP, Seller shall sell to Boeing and Boeing
shall purchase from Seller certain Products as described in this SBP including,
certain Production Articles and other recurring Products as described in SBP
Section 3.4 "Recurring Work", and other Miscellaneous Work as described in SBP
Section 3.5 "Product Support and Miscellaneous Work". In addition, Seller shall
be responsible for providing engineering services and other Nonrecurring Work as
described in SBP Section 3.3 "Nonrecurring Work"
3.2 PERIOD OF PERFORMANCE
The period of performance for this SBP shall include manufacturing and all other activities required to support delivery of Products from June 16, 2005 through life of Program Airplanes and Derivatives of those Program Airplanes.
3.3 NONRECURRING WORK
3.3.1 ENGINEERING SERVICES
3.3.1.1 ENGINEERING SERVICES Seller is responsible for engineering activities as set forth in Attachment 4 "Additional Statement of Work". Seller responsibilities for the work packages defined in Attachment 1 include those items outlined in Attachment 4.
Design shall conform to the standards and requirements set forth in Attachment 4 "Additional Statement of Work" and Product Definition in schedules set forth in Attachment 13 and the applicable documents referred to in SBP Section 12.1 "Supporting Documentation".
3.3.2 PRODUCT DEVELOPMENT AND TEST
3.3.2.1 PRODUCT DEVELOPMENT AND TEST ACTIVITIES Seller is responsible for all product development and test activities required to design, build, test, deliver, certify, and support Products as set forth in SBP Attachment 4 "Additional Statement of Work". Seller shall also prepare, and Boeing shall have the right to review, initial product development and test planning documentation as necessary to produce Product Definition, Production Articles in accordance with SBP Attachment 2 "Production Article Definition and Contract Change Notices" and Spare Parts in accordance with SBP Attachment 7.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
3.3.2.2 STATIC AND FATIGUE TEST ARTICLES
Seller will provide Boeing with Products and associated hardware as set forth in SBP Attachment 2 "Production Article Definition and Contract Change Notices" for static and fatigue tests, and as scheduled in SBP Attachment 14.
3.3.3 CERTIFICATION SUPPORT
Seller is responsible for all certification activities as set forth in SBP Attachment 4 "Additional Statement of Work" including the associated costs.
3.3.4 TOOLING
3.3.4.1 TOOLING - GENERAL
Boeing will retain ownership of all Existing Tooling and shall acquire ownership
of all New Tooling upon passage of title thereto to Boeing in accordance with
Section 3.3.4.6 of this SBP, and for financial reporting purposes and income tax
purposes the Parties shall treat all Tooling so owned by Boeing in a manner
consistent with Boeing's ownership thereof. Subject only to Seller's right of
use granted by Boeing hereunder and without diminishing the obligations of
Seller hereunder; Boeing shall have and retain all rights, title and interest in
all Tooling. Seller shall be entitled to use Tooling for the purposes of
performing its obligations of this SBP and for Spares and MRO aftermarket
according to the terms of the HMSGTA, any applicable SLA's and any other
applicable SBP's.
All Tooling produced or used in performance of this SBP must conform to the provisions of Boeing Document D953W001, "General Operations Requirements Document for Suppliers External/Internal Suppliers/Program Partners," and D33200-1, "Boeing Suppliers' Tooling Document" or, subject to Boeing's review and approval not to be unreasonably withheld or delayed, its equivalent or replacement document.
3.3.4.2 CONTRACTOR USE-TOOLING (ALSO KNOWN AS SELLER-USE TOOLING)
As of the date hereof, Seller is responsible for providing all New Contractor-Use Tooling (as defined in "New Tooling") needed to manufacture and deliver Products as required in the performance of this SBP. Seller shall plan, design, manufacture or procure, and test all New Contractor-Use Tooling. Existing Contractor-Use Tooling (as defined in "Existing Tooling") and New Contractor-Use Tooling shall be in the configuration, quantity and quality required to produce (i) Production Articles in accordance with SBP Attachment 14 and (ii) other Boeing requirements for Products (including, without limitation, Spare Parts).
3.3.4.3 COMMON - USE TOOLING
Seller shall design, manufacture or procure, and test all New Common-Use Tooling including, without limitation, strongback handling fixtures, rotable
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
shipping fixtures and handling fittings. The requirements for such items will be defined and identified by Boeing.
3.3.4.4 USE OF CASTING, FORGING AND EXTRUSION TOOLING
Boeing or its designees shall have and retain the right to use all Tooling for the production of castings, forgings and extrusions produced at Seller's direction for use under this SBP and such Tooling shall be used only in the performance of this SBP or any other SBP that Boeing may designate in writing. Such Tooling shall be retained for use in production of castings, forgings and extrusions for Boeing or as Boeing directs until Boeing gives written notice to Seller that a requirement for the use of such Tooling no longer exists. Subject to the terms of this SBP, Boeing hereby grants to Seller the right to use any Tooling during the term of this SBP for the production of castings, forgings or extrusions that will become part of any Product, in which Boeing has a right of use, ownership or other proprietary interest.
3.3.4.5 INITIAL PLANNING
Seller will perform all Tooling and production planning activities. Seller shall also prepare, and Boeing shall have the right to review, Tooling and production planning documentation as necessary to evaluate Seller's ability to produce Production Articles in accordance with SBP Attachment 2 "Production Article Definition and Contract Change Notices" SBP Attachment 4 "Additional Statement of Work" and Spare Parts.
3.3.4.6 TITLE TO TOOLING
Boeing shall retain title to all Existing Tooling. Title to all New Tooling shall pass from Seller or any of Seller's subcontractors to Boeing upon completion of the manufacture of such New Tooling by Seller or any of its subcontractors and after payment therefor by Boeing, in accordance with Section 5.2.1 or otherwise, and such title shall thereafter be retained by Boeing for all purposes. Seller shall ensure that any subcontract for the production of New Tooling provides for the passing of title to Boeing pursuant to the immediately preceding sentence.
3.3.4.7 USE AND DISPOSITION OF TOOLING
Seller shall use any and all Tooling only for the purpose of performing its obligations under this SBP, except as provided in SBP Section 3.3.4.1, and shall not sell, lease or otherwise dispose of any Tooling. Seller shall, on behalf of Boeing as the owner thereof obtain and maintain in effect insurance in respect of all Seller-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Boeing,). Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Boeing, in respect of any Tooling, under this SBP.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
3.3.4.8 RESERVED
3.3.4.9 RESPONSIBLE PARTY
Seller shall absorb all costs associated with non-accountable tooling manufactured and/or purchased by Seller necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling. Seller shall not use tools, which contain, convey, embody, or were made in accordance with or by reference to any Proprietary Information and Materials of Boeing, to manufacture parts for anyone other than Boeing without the prior written authorization of Boeing; provided, however, that Seller shall be entitled to use Tooling as provided in SBP Section 3.3.4.1.
When Boeing agrees to pay for Tooling to support the manufacture and delivery of applicable Product(s) identified herein, the amount shall be set forth in SBP Attachment 1. The costs of necessary repair and maintenance to the Tooling are included in such amount. Invoices received with incorrect, improperly prepared or incomplete certified tool lists will be returned for correction prior to payment. Invoices shall be dated concurrent with, or subsequent to, shipment of the Products. Boeing shall notify Seller of any action required for discrepant Tooling, other than Boeing-Use Tooling.
3.3.5 LIFE CYCLE PRODUCT TEAMS
Seller shall, in accordance with SBP Section 12.15 and as mutually agreed between the Parties locate at Boeing's facilities key personnel for Life Cycle Product Teams (LCPT's) as may be required.
3.3.6 WEIGHT STATUS REPORTING
Seller shall report to Boeing the actual weights of Products in accordance with the requirements of Document D6T-10898-1, "Weight Compliance Requirements/ Participant Contractors".
3.4 RECURRING WORK
3.4.1 PRODUCTION ARTICLES
Upon acceptance of the initial and subsequent Orders, Seller shall provide the Production Articles specified in SBP Attachment 1 "Statement of Work", Attachment 2 "Production Article Definition and Contract Change Notices" in accordance with the delivery schedules set forth in SBP Attachment 14 and/or the Order. All Production Articles will be designed, manufactured, certified, tested, delivered, and supported in accordance with the specifications and schedules set forth in this SBP.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
3.4.2 DELIVERY POINT AND SCHEDULE
Notwithstanding the provisions of GTA Section 4.1, deliveries of Production
Articles shall be strictly in accordance with the quantities, the schedule and
other requirements specified by Boeing. Notwithstanding the provisions of GTA
Section 4.1, all Products shall be delivered F.O.B. carrier's transport at
Seller's plant.
3.4.2.1 ADDITIONAL EVENTS OF EXCUSABLE DELAY
In addition to those Excusable Delays described in GTA Section 14.0, in the event of a delay caused by Boeing affecting Sellers on time delivery, Boeing and Seller shall seek commercially practical solutions to assure Boeing maintains on-schedule delivery of the airplane to the airplane customer.
3.4.3 TRANSPORTATION ROUTING INSTRUCTIONS
Products shall be transported by the agent, carriers and routings specified by Boeing. Seller shall obtain the prior approval of Boeing, not to be unreasonably withheld or delayed, before shipping any Products on a route other than that specified by Boeing.
3.4.4 MANUFACTURING CONFIGURATION
The pricing set forth in SBP Attachment 1, as of the date hereof, is based on the latest definition or revisions of the statement of work, as of the date hereof, and is subject to change in accordance with this SBP.
3.4.5 SUSTAINING PRODUCT DEFINITION
Seller shall provide Product Definition and sustaining engineering in accordance with the documents set forth in Attachment 4 "Additional Statement of Work", Attachment 13 "Product Definition Schedule" and the applicable documents referred to in SBP Section 12.1 "Supporting Documentation".
3.4.6 TOOLING MAINTENANCE
Seller shall provide at no cost to Boeing on Boeing's behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common-Use Tooling in the possession of Seller or its subcontractors in accordance with Document D33200, "Boeing Suppliers' Tooling Document" or, subject to Boeing review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Boeing as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
3.4.7 MAINTENANCE OF PRODUCTION PLANNING
Seller will revise and maintain the production planning as required to support the production and certification of Production Articles and Spare Parts.
3.4.8 CERTIFICATION SUPPORT
Seller is responsible for all certification activities as set forth in SBP Attachment 4 "Additional Statement of Work" including the associated costs.
3.4.9 TYPE DESIGN AND TYPE CERTIFICATION DATA DEVELOPMENT AND PROTECTION
Seller is responsible for the development and maintenance of all type design and type certification data for which they have type design/certification responsibility and/or support type design/certification. Seller shall maintain such type design and type certificate data for the life of such type certificate. Boeing and Seller shall establish which type of data will be retained and the manner of storage which is acceptable through a records management agreement. Seller shall make available to Boeing upon request all compliance data that is maintained by Seller. Such records shall be made available within seventy-two (72) hours of Boeing's request.
Seller will immediately notify Boeing in writing when Seller becomes aware of or suspects any engineering discrepancies in Seller's processes or Products that Seller has delivered or will deliver under this SBP.
3.4.10 SELLER AUTHORIZED REPRESENTATIVE (AR) REQUIREMENTS AND OBLIGATIONS
Seller's AR as designated and approved by Boeing shall operate and act in accordance with Boeing Document DOA-300064-NM "Delegated Option Authorization Procedures Manual" or "BCA Delegated Compliance Organization Procedures Manual" as amended from time to time including but not limited to providing compliance findings to Boeing Delegated Compliance Organization. Said document is incorporated and made a part hereof by this reference.
3.5 PRODUCT SUPPORT AND MISCELLANEOUS WORK
3.5.1 MISCELLANEOUS WORK
Seller shall provide to Boeing Miscellaneous Work, including, without limitation New Boeing-Use Tooling, field support or other related program support items, as may be ordered by Boeing from time to time.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
3.5.2 DELIVERY SCHEDULE OF OTHER PRODUCTS AND PERFORMANCE OF SERVICES
All deliveries of other Products and performance of services will be as set forth in any applicable Order, as set forth in SBP Section 3.4.2.
4.0 PRICING
4.1 RECURRING PRICE
The Price of Recurring Products is set forth in SBP Attachment 1 and includes the total price for all work under this SBP; subject to any applicable adjustment under SBP Section 7.0.
Prices shall be firm fixed priced through the eighth anniversary of the first day of the month in which both Parties fully execute this SBP as developed using Attachment 20 and listed in Attachment 1. For example, if the Parties fully execute this SBP on March 25, 2005 then the eighth anniversary of the first day of the month of that execution is March 1, 2013. In addition, Attachment 1 work package price(s) are subject to adjustment for abnormal escalation as provided in Attachment 22.
Twenty Four (24) months prior to the eighth anniversary of the first day of the month in which both Parties fully execute this SBP, Seller will propose pricing for the following ten (10) years or a period agreed upon by the Parties.
The Parties will negotiate pricing in good faith based on then-prevailing domestic market conditions for 41 sections (all programs), 737 fuselage, 737/777 struts & nacelles and then-prevailing global market conditions for all other Products.
4.1.1 INTERIM EXTENSION PRICING
If the Parties are unable to reach agreement on Pricing by the date which is six months prior to the end of the period for which Pricing has been fixed, then such matter shall be resolved pursuant to GTA Section 33.0. If any dispute on Pricing continues after the eighth anniversary of the first day of the month in which both Parties fully execute this SBP, then interim Pricing shall be established. Interim Pricing shall be the then current Base Price (as of the eighth anniversary referred to above) adjusted in accordance with SBP Attachment 20 and escalated annually using the indices outlined below. At such time as a resolution on Pricing has been achieved, an appropriate debit or credit will be made retroactive to the day after the eighth anniversary of the first day of the month in which both Parties fully execute this SBP. Using the example in section 4.1, the date would be March 2, 2013.
A. Material - [*****]
B. Labor - [*****]
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Approximately forty-five days before the eighth anniversary of the first day of the month in which both Parties fully execute this SBP and on approximately the same date of each year thereafter until such time as a resolution on Pricing has been achieved, Boeing will use the above referenced indices to calculate the appropriate escalation factor based on actual index growth for the previous twelve (12) months using a composite of [*****] and [*****]. Then current Attachment 1 Pricing will be revised to include this escalation factor for deliveries in the following year.
4.2 RESERVED
4.3 PRICING OF REQUIREMENTS FOR MODIFICATION OR RETROFIT
4.3.1 BOEING RESPONSIBILITY OR REGULATORY REQUIREMENT
Any Products required by Boeing to support a modification or retrofit program, which results from a regulatory requirement or which Boeing may be liable for the cost associated with such program, shall be provided to Boeing at the applicable price as set forth in SBP Attachment 1.
4.3.2 RESERVED
4.4 EXPEDITE OF PRODUCTION REQUIREMENTS
Seller agrees to support Boeing's short flow requirements with its best effort.
4.5 PRICING FOR DERIVATIVES
Prices for Derivative(s) will be negotiated in good faith based on then-prevailing market conditions appropriate for each Product type. If the Parties are unable to reach agreement on Pricing then the Parties shall refer to GTA Section 33.0 "Disputes" for resolution.
4.6 POA PRICING
Seller shall expend best efforts to provide the earliest possible delivery of any spare designated as POA by Boeing. Such effort includes but is not limited to working twenty-four (24) hours a day, seven (7) days a week and use of premium transportation. Seller shall specify the delivery date of any such POA within two (2) hours of a POA request.
The price for POA requirements shall be the price for such Products listed in SBP Attachment 1 or the pro rata share of the appropriate Attachment 1 price represented by the POA multiplied by a factor [*****].
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
5.0 PAYMENT
5.1 INVOICING
5.1.1 INVOICING REQUIREMENTS
Seller shall submit separate invoices for items other than Pay from Receipt items (as defined in Section 5.1.5) for each applicable Order.
Materials purchased by Seller from Boeing shall be satisfied by Boeing issuing a debit against Seller's account as follows:
In the case of Boeing Provided Details (as defined in Attachment 16), debits will be issued by Boeing as provided in Attachment 20, section titled "Billing for BPD Parts not yet transferred from Boeing".
For all other materials, including materials purchased from Boeing's Accommodation Sales group, debits will be issued by Boeing on the (net) fifteenth (15th) day from the scheduled delivery date. If the debit amount exceeds the amount outstanding on the Seller's account, Boeing will notify Seller and Seller will pay such amount upon receipt of such notification.
5.1.2 INVOICING SHIPSET IDENTIFICATION
Seller shall indicate on each invoice the line number of each Shipset included therein, as applicable.
5.1.3 CUSTOMS INVOICING
All specific questions and concerns on customs invoicing may be addressed to the Boeing Traffic Organization.
5.1.4 MAILING INSTRUCTIONS
All mailed invoices shall be addressed to:
Boeing Commercial Airplanes
P.O. Box 34656
Seattle, WA 98124-1656
Attention: Payment Services
5.1.5 PAY FROM RECEIPT
An invoice shall not be required from Seller in the case of "Pay From Receipt" items. Pay From Receipt items shall include Products (except Tooling), Production Articles, Purchase On Assembly items (POA's) and such other items as Boeing may designate in writing (collectively, the "Pay From Receipt Items").
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Each shipment shall contain an accurate and complete pack slip. In the case of Pay From Receipt items, the date of payment is calculated from the shipment date (the date items are received by carrier from Seller) as stated on such pack slip. If the Seller's pack slip does not state the actual shipment date, the date of payment is calculated from the date the items are received by Boeing at its manufacturing site.
5.2 RECURRING PAYMENT
Unless otherwise provided under written agreement between the Parties, payments shall be paid in immediately available funds net [*****] calendar days after the shipment date (the date items are received by the carrier from Seller). Except in the case of an Order requiring Pay-From Receipt, the date of payment is calculated from the later of (a) the date the items are delivered to Boeing at its manufacturing site, (b) the date of receipt of a correct and valid invoice or (c) the scheduled delivery date of such Product. Payment shall be done electronically as mutually agreed. Boeing agrees to promptly notify Seller if it receives an invoice Boeing believes to be incorrect.
All Payments are subject to adjustment for shortages, credits and rejections.
5.2.1 NON-RECURRING PAYMENT
Non Recurring Tooling payment shall be paid in immediately available funds net ten (10) calendar days after receipt by Boeing of both a correct and valid invoice and where required, a completed and approved certified tool list (CTL), (whichever is later).
Timing for non-recurring engineering, product development and test payments for Derivatives shall be tied to specific events as non-recurring effort progresses, which events shall not be limited to first shipset delivery and receipt by Boeing. Schedule of specific events to be mutually agreed upon for each engineering development effort (i.e. 25%, 50%, 90% engineering release).
Future Product Development Projects will be supported up to forty (40) hours (includes technical consultation and the development of ROM work statement and schedules as required) before Seller is eligible for compensation under the Technical Services Agreement (TSA) or this SBP.
Attachment 4 contains the Engineering Delegation requirements for sustaining products that are part of this SBP and included in the part pricing in Attachment 1. All costs associated with Seller Engineering responsibility are included within Attachment 1 pricing for sustaining programs and will not be subject to additional payment from Boeing.
To maintain, repair, sustain, and replace Boeing's Tooling and to provide certain capital property, plant, and equipment (excluding leasehold improvements and real property) required to support Seller's activities under this Agreement, Boeing
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
shall pay to Seller forty five million five hundred thousand dollars ($45,500,000) in 2007, an additional one hundred and sixteen million one hundred thousand dollars ($116,100,000) in 2008, and an additional one hundred and fifteen million four hundred thousand dollars ($115,400,000) in 2009 for such Tooling and property, plant, and equipment costs. Within each such year, the payments are to be made in equal quarterly installments within 15 days following each Invoice Date (as defined below) and shall not be affected by the amount of costs set forth in the written list of costs delivered to Boeing on such Invoice Date pursuant to the following paragraph.
By March 15, June 15, September 15, and December 15 (each an "Invoice Date") of each of 2007, 2008, and 2009, Seller will deliver to Boeing a written list of any Tooling and capital property, plant, and equipment (excluding leasehold improvements and real property) acquired after the Effective Date and prior to such Invoice Date (and not previously paid for by Boeing under this provision), and the costs thereof, the aggregate amount of which costs does not exceed the amount of the payment due within 15 days following such Invoice Date . Pursuant to the terms of Section 3.3.4.6, upon payment by Boeing, Boeing will acquire title to and ownership of the Tooling and property, plant and equipment described in such list free of liens, claims or rights of any third party.
In the event Boeing acquires title to and ownership of any property, plant and equipment from Seller pursuant to this Section 5.2.1, Seller shall continue to have the right to use such property, plant and equipment to the same extent it had such right prior to such acquisition by Boeing, without paying any additional consideration to Boeing, and the Parties shall undertake in good faith to enter into any documentation necessary to evidence such right. In addition, to the extent movable, any such property, plant and equipment acquired by Boeing shall remain at Seller's facility subject to the terms of the Agreement, including Boeing's rights under GTA sections 12.0 and 13.0 and SBP section 34.0, and Seller shall have the right to move any such movable property, plant and equipment in accordance with its use thereof and with the terms of the Agreement.
If Boeing acquires title to and ownership of any property, plant and equipment pursuant to this Section 5.2.1, then paragraphs (1) and (2) are also applicable.
(1) Seller shall bear the risk of loss and shall provide at no cost to Boeing on Boeing's behalf as the owner thereof, control, accountability, care, storage, maintenance, and insurance for such property, plant and equipment to the same extent Seller generally provides such services with respect to property, plant and equipment owned by Seller; it being understood, however, that Boeing as the owner thereof bears the economic burden of any applicable depreciation and obsolescence for such property, plant and equipment;
(2) Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Boeing, in respect of any property, plant and equipment, to which Boeing acquires title to and ownership of pursuant to this Section 5.2.1.
To the extent Seller did not incur Tooling or capital property, plant, and equipment (excluding leasehold improvements and real property) costs prior to any Invoice Date which were not previously paid for by Boeing under this provision, in an amount equivalent to the amount paid by Boeing within 15 days following such Invoice Date, the excess amount shall be allocated to other assets not owned by Boeing, in a manner to be mutually determined by Buyer and Seller at that time. For the avoidance of doubt, Boeing will acquire title to and ownership of the other assets to which the excess amounts are allocated free of liens, claims or rights of any third party, provided that such excess amounts allocated are equal to the book value of such other assets.
5.3 PAYMENT METHOD
All payments hereunder shall be made electronically to an account designated in writing by Seller.
5.4 PAYMENT ERRORS
If an error in payment (over payment or under payment) is discovered by Boeing or Seller, a written notification will be submitted to the other Party and resolution of the error will occur in a timely manner after discovery of such error.
6.0 CHANGES
Notwithstanding the provisions of GTA Section 10.1, at any time, Boeing may, by written direction to Seller, make changes within the general scope of this SBP in: (i) Statement of Work requirements and Documents, requirements for Product Definition, Drawings, designs, specifications, configurations, Datasets or any other Document; (ii) Tooling (including, without limitation, the quantities thereof), services or Spare Parts to be provided by Seller under this SBP; (iii) the method of shipping or packing; (iv) the place of delivery, inspection, or acceptance for all Products; (v) Program schedules, delivery rates and schedules for performance of services; including short flow requirements (vi) Products, the Program Airplane and Derivative models and Customer variables; (vii) Boeing Furnished Material and any Boeing furnished or provided property, (viii) the allocation of responsibility as between Seller and Boeing for production of any component of any Product or the provision of any Service such that it does not significantly reduce the content of Seller's Statement of Work for any given major end item or major sub assembly; (ix) the allocation of responsibility among Seller and third parties such that it does not significantly reduce the content of Seller's Statement of Work for any given major end item or major sub assembly ; (x) certification requirements; (xi) Miscellaneous Work requested to be performed not in then current Statement of Work (any of the foregoing a "Change"), (xii) description, time and place of Services to be performed. Seller shall immediately comply with
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
such written direction upon receipt, irrespective of any failure by the Parties to agree that such Change shall be subject to Price adjustment in accordance with SBP Section 7.0 "Change Provisions".
If Seller reasonably expects that any Document or any revision to any Document
shall significantly affect Seller's performance of any work hereunder, Seller
shall, without affecting its obligation to comply, in accordance with SBP
Section 12.1 "Supporting Documentation," with any such Document as revised, so
notify Boeing in writing in accordance with the Administrative Agreement within
twenty (20) days of Seller's receipt of such Document or revision. If Seller
provides notification as required by this Section, then any such revision or any
written direction pursuant to the immediately preceding paragraph that
constitutes or results in a Change shall be subject to Section 7.0.
If Seller considers that Boeing's conduct constitutes a Change, Seller shall notify Boeing's Procurement Representative promptly in writing as to the nature of such conduct and its effect upon Seller's performance. In the absence of such notification, Seller shall not be entitled to equitable adjustment.
SBP Sections 6.0 and 7.0 apply in lieu of GTA Section 10.0.
7.0 CHANGE PROVISIONS
Notwithstanding the provisions of GTA Section 10.0, "Changes", no adjustment will be made to the Price of any Products for any Change orders as provided in GTA Section 10.0 or SBP Section 6.0, "Changes" issued through the period of performance of this SBP except as may be provided under SBP Sections 7.0 through 7.10.
SBP Sections 6.0 and 7.0 apply in lieu of GTA Section 10.0.
7.1 PRICE ADJUSTMENT FOR CHANGES
If any individual Change increases or decreases the cost or time required to perform this contract, Boeing and Seller shall negotiate in good faith an equitable adjustment in the price or schedule for recurring and non recurring work, or both, to reflect the increase or decrease subject to the following provisions: (i) Seller shall be responsible for absorbing the cost of Seller generated changes to meet requirements and specifications of the Program Statement of Work (PSOW) as described in this SBP and as existing prior to the Change; and (ii) Seller shall be responsible for absorbing the cost of changes required to correct Seller's deficiencies related to any delegated engineering part (statement of work) of Seller.
7.2 CHANGE PRICING CRITERIA
The following Change pricing thresholds will apply to all Changes:
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Recurring Price:
An equitable adjustment (either debit or credit) shall be negotiated and incorporated into the applicable Attachment 1 recurring part Price if both of the following conditions are met:
a. For Engineering Changes, the recurring price impact to the Attachment 1 part Price for each individual Change exceeds [*****] of the then current Price for that part or for Statement of Work allocation Changes, the recurring price impact to the Attachment 1 part Price for each individual Change exceeds [*****] of the then current Price for that part (see note 1 below), and
b. The recurring price impact for each individual Change exceeds
[*****] per year based on then current requirements forecasted for
the following calendar year.
Note 1: For Statement of Work allocation changes only there is an annual
cumulative cap [*****]. The annual cumulative cap will begin January 1st
of each year and end December 31st of each year. This cap will re-set to
zero at the beginning of each year and only new Statement of Work
allocation changes falling below the [*****] threshold will be applied
against this cap. The value attributable to each change will be as
negotiated by the Parties and Seller agrees to provide information to
Boeing for these Change proposals consistent with the terms of this SBP
for any and all assertions believed to contribute towards the [*****] cap.
Non-Recurring
An equitable adjustment will be made by Boeing to Seller for non-recurring if both of the following conditions are met:
a. The non-recurring price impact for each individual Change exceeds
[*****], and
b. The non-recurring Change is associated with a new statement of work (not for current configuration of parts defined in Attachment 1 as of June 16, 2005.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
7.3 RESERVED
7.4 RESERVED
7.5 SCHEDULE ACCELERATION/DECELERATION
Boeing may revise the delivery schedule and/or firing order without additional cost or change to the unit price stated in the applicable Order if (a) the delivery date of the Product under such Order is on or before the last date of contract, if applicable, and (b) Boeing provides Seller with written notice of such changes, provided however that Seller shall be entitled to payment for schedule accelerations made with less than the notification lead times for acceleration and deceleration identified in SBP Attachment 6. In case of shorter notification for acceleration, Product price for those Products shipped inside the notification period (less than [*****] notification) shall be equitably adjusted as agreed by the Parties. In case of shorter notification for deceleration, Product price will be adjusted by [*****] for those Products shipped inside the notification period (less than [*****] notification). Except as provided in this clause "Schedule Acceleration/Deceleration", there shall be no other price adjustment for schedule rate or firing order changes. The resulting payment amount shall be paid in accordance with SBP Section 5.0. Boeing shall notify Seller of accelerations, decelerations and refirings as soon as reasonably practical. Boeing and Seller further agree to work in good faith to decrease all lead times identified in SBP Attachment 6 in support of then current Boeing lead time objectives for each Airplane Program. Joint reviews of the program lead times will take place at least annually during the contract period to identify opportunities for reduction. Where the Parties mutually agree to reduce the lead times, SBP Attachment 6 will be updated and such update will not be considered a Change under SBP 6.0.
7.5.1 PRODUCTION RATES
This SBP contains no minimum production rates. The maximum production rates are as defined in Attachment 15 "Maximum Production Rates and Model Mix Constraint Matrix". Seller is responsible to support these rates at no additional cost to Boeing. Higher rates are subject to negotiation
7.6 TOTAL COST MANAGEMENT
Any cost reductions resulting from incorporation of joint Boeing and Seller cost reduction initiatives (TCMS) will result in a reduction in the Attachment 1 Prices in a mutually agreed manner that equitably preserves, or enhances if market conditions allow, the anticipated economics for both Boeing and Seller. The immediately preceding sentence does not apply to material initiatives referred to in Attachment 20.F.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Boeing and Seller confirm their intention for the Program Airplane to remain price and performance (including weight) competitive throughout the life of the Program by incorporating into the Program Airplane advances in design, configuration, materials, or manufacturing processes that will benefit the Parties and Boeing's customers.
If Boeing reasonably demonstrates, after consultation with Seller, that a proposed cost reduction initiative that would materially increase the competitiveness of the Program Airplane in the market place can be accomplished in a manner that would preserve the anticipated economics of the Program for both Boeing and Seller, Seller shall incorporate the subject cost reduction initiative in a timely manner after reasonable notice from Boeing and reduce the price in a mutually agreed manner that equitably preserves the anticipated economics of the Program for both Boeing and Seller.
7.6.1 BOEING GENERATED TECHNICAL AND COST IMPROVEMENT
At any time during the Seller's performance under this SBP, Boeing may offer specific recommendations to Seller for the incorporation of any new technologies and process improvements intended to reduce Seller's costs or improve product performance. These recommendations may include, but are not limited to, Boeing proprietary information and Boeing owned patents. Notwithstanding any other provision(s) elsewhere in this SBP, where a savings is achieved and documented as a result of the implementation of a recommendation initiated by Boeing and which Seller agrees to implement, the Parties will reduce the Price in a mutually agreed manner.
7.7 OBSOLESCENCE
No adjustment pursuant to Section 7.1 shall include any of Seller's costs for Obsolescence. Not withstanding the foregoing Seller shall be entitled to payment for any Obsolescence estimated to exceed the lesser of (i) ten thousand ($10,000) dollars and (ii) ten percent (10%) of the recurring Attachment 1 Price in accordance with GTA Section 12.3. Each Change shall, for purposes of determining Obsolescence costs, be considered separately. Changes, for purposes of determining Obsolescence costs, may not be combined for purposes of exceeding the percentage limit as described in this SBP Section 7.7. Seller may not defer implementation of Changes so as to avoid Obsolescence unless the priority of such Change permits such implementation.
7.8 RESERVED
7.9 PROPOSALS FOR PRICE ADJUSTMENT
Timeframe:
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Changes Prior to 100% Engineering Release - No later than sixty (60) calendar days after 100% Engineering Release, Seller shall submit to Boeing a listing of all Changes which were received by Seller prior to 100% Engineering Release together with Seller's proposal for appropriate price adjustment.
Changes Subsequent to 100% Engineering Release - Seller must assert any claim to Boeing procurement Representative in writing within twenty-five (25) days and a not-to-exceed proposal to Boeing procurement Representative within sixty (60) calendar days after receipt of such direction. A fully supported proposal must be submitted within ninety (90) calendar days after receipt of such direction.
If Boeing does not receive any proposal within the ninety (90) day time period, no such adjustment shall be made to Nonrecurring and Recurring Shipset Prices.
Content:
Seller shall provide a detailed description of each Change, the technical impact on the Product's form, fit, and/or function, and any significant impact on manufacturing processes. Seller shall include with each proposal a complete estimate of the Change's impact on the Seller's cost per Product, including, but not limited to, the impact on labor hours, labor rates, processing costs, sub-tier supplier costs, overhead and raw material costs. Boeing must be able to substantiate and verify Seller's submittal. Any such price adjustment claim by Seller must be consistent with market driven prices for such Product.
Process:
The rates, factors and methodology set forth in SBP Attachment 5, shall be used to calculate the equitable adjustment, if any, to be paid by Boeing for each individual change for which Seller estimates a value that is less than [*****].
For each Change for which Seller estimates a value that is greater than [*****], the proposal shall contain the above mentioned Content and stand on its own merits.
Review of Price Adjustment Proposal
Boeing will review the Seller's provided submittal and Boeing may request from Seller additional reasonable data to allow Boeing to thoroughly review each submittal. Seller will provide Boeing additional data within thirty (30) days of Boeing's request for such additional data. Boeing will review any additional data submitted and inform Seller of any further requirements. Seller may request and Boeing will provide reasonable data to assist in the price adjustment process within thirty (30) days of Seller request. Until such time that new Pricing is negotiated, Seller will continue to be paid at the existing Attachment 1 Price.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
7.10 APPORTIONMENT AND PAYMENT OF PRICE ADJUSTMENTS
7.10.1 RECURRING WORK PRICE ADJUSTMENT
The amount of the Recurring Price adjustment shall be equal to the value of the Change subject to SBP Sections 6 and 7 and shall be documented in SBP Attachment 1.
7.10.2 APPORTIONMENT AND PAYMENT
The then-current recurring billing Price shall be adjusted to reflect the Change beginning with the first Shipset, which incorporates such Change.
8.0 GOVERNING QUALITY ASSURANCE REQUIREMENTS
In addition to those general quality assurance requirements set forth in the GTA, the work performed under this SBP shall be in accordance with the requirements set forth in SBP Attachment 10.
9.0 STATUS REPORTS/REVIEWS
9.1 NOTIFICATION OF SHIPMENT
Seller shall notify the Boeing personnel identified in the "Administrative Agreement", as identified in SBP Section 17.0, by telephone, facsimile or other agreed means when any shipment has been made. Such notification will include (i) a list of the items and quantities of items shipped, (ii) the Shipset number with respect to any item shipped, (iii) the number and weight of containers shipped, (iv) the shipper or packing sheet number with respect to such shipment, and (v) the date of such shipment. Seller shall airmail, facsimile or send by other agreed means copies of shipping manifests for Common-Use Tools to Boeing. Such manifests shall identify Common-Use Tool codes and part numbers, unit numbers of Common-Use Tools and the airplane effectivity of the Production Article contained in such Common-Use Tools.
Seller shall notify Boeing as soon as possible via fax, telecon, or as otherwise agreed to by the Parties of each POA requirement shipment. Such notification shall include time and date shipped, quantity shipped, Order, pack slip, method of transportation and air bill if applicable. Seller shall also notify Boeing immediately upon the discovery of any delays in shipment of any requirement and identify the earliest revised shipment possible.
9.2 GENERAL REPORTS / REVIEWS
When requested by Boeing, Seller shall update and submit, as a minimum, monthly status reports or data requested by Boeing using a method mutually
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
agreed upon by Boeing and Seller. Boeing has the right to impose more frequent reporting on Seller to achieve program objectives, if necessary.
When requested by Boeing, Seller shall provide to Boeing a Product Definition and manufacturing milestone chart identifying the major engineering, purchasing, planning, Tooling and manufacturing operations for the applicable Product(s).
Program reviews will be held at Seller's facility or Boeing's facilities as requested by Boeing. The topics of these reviews may include Product Definition status, raw material and component part status, manufacturing status, production status, Seller's current and future capacity assessments, Boeing supplied components, inventory, Boeing's requirements, Changes, forecasts and other issues pertinent to Seller's performance under this SBP. Reviews will allow formal presentations and discussion of status reports as set forth above.
Formal management reviews shall be held periodically by Boeing and Seller to evaluate total cost performance. During these reviews, Seller shall present and provide actual cost performance data with respect to this SBP. Boeing and Seller will also use these reviews to discuss production forecast information useful for Seller's planning purposes.
All information normally provided under Section 8.0 of the "Administrative Agreement", as identified in SBP Section 17.0, shall be provided by Seller.
9.3 COST PERFORMANCE VISIBILITY
Management reviews will be held by Boeing and Seller that will include total cost performance and schedule performance. These reviews will be held on a regularly scheduled basis.
9.4 PROBLEM REPORTS
In the event of any anticipated or actual delay, including but not limited to delays attributed to labor disputes, that could impact Seller's ability to deliver Product Definition or Products on time and otherwise in conformance with the terms of the Order, Seller shall promptly provide a detailed report, notifying Boeing Procurement Representative of program problems/issues. The report shall contain a detailed description of the problem, impact on the program or affected tasks, and corrective/remedial action, with a recovery schedule. Seller also promptly shall require each of its subcontractors supporting the Order to provide such notification to Seller concerning any such problems/issues of any subcontracted good or service to Seller. Submittal of a report in no way relieves Seller of any obligations under the Order nor does it constitute a waiver of any rights and remedies Boeing may have with respect to any default, except as provided under GTA Section 14.0.
Problem reports shall be promptly submitted to the Boeing Procurement Representative within twenty-four (24) hours of a problem becoming known to Seller. Status reports shall include, but are not limited to, the following topics:
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
A. Product Definition maturity, schedule and performance updates.
B. Delivery schedule updates, written recovery schedules, schedule impact issues and corrective action;
C. Technical/manufacturing progress since the previous report period, including significant accomplishments, breakthroughs, problems and solutions;
D. Identification of changes to key manpower or staffing levels;
E. Identification of the critical events/activities expected within the next month and a discussion of potential risk factors;
F. Progress on open action items, including closure dates;
G. Purchased components and raw material status;
H. Identification of quality issues and resolutions;
I. Manufacturing and quality inspection progress of first article Products;
J. Status on New Tooling design and fabrication, as applicable, until completion;
K. Inventory status of castings and forgings procured by Seller (if applicable).
This SBP Section 9.4 applies in lieu of the 2nd sentence of GTA Section 4.1.
9.5 NOTICE OF DELAY - PREMIUM EFFORT
Where Seller has notified Boeing of a Program problem pursuant to SBP Section 9.4, Boeing may, at its sole discretion, direct Seller to use additional effort, including premium effort, and shall ship via air or other expedited routing in order to avoid or minimize delay to the maximum extent possible. In the absence of delays caused by Boeing or its designees that have an impact on Seller's delivery schedule, all additional costs resulting from such premium effort and/or premium transportation shall be paid by Seller. Additional costs include, but are not limited to all costs and expenses incurred by Boeing as a result of production line disruption attributable to Seller's delayed delivery. These requirements will not apply to Seller during the course of an Excusable Delay, as defined in GTA Section 14.0; however, at the conclusion of the Excusable Delay Seller will be responsible for all provisions of this Section 9.5. Boeing's rights under this SBP Section 9.5 are not exclusive, and any other rights provided in this contract, in law or equity are reserved.
This SBP Section 9.5 applies in lieu of the 3rd sentence of GTA Section 4.1.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
9.6 DIVERSITY REPORTING FORMAT
Seller shall use reasonable efforts to report to Boeing on a quarterly basis, starting from the date of this SBP award, all payments to small businesses, small disadvantaged business/minority business enterprises, women-owned small business and historically black colleges and universities and minority institutions in dollars and as a percentage of the contract price paid to Seller to date, proving the information shown on the Second Tier Report located in SBP Attachment 11.
9.7 PLANNING SCHEDULE
From time to time and at least quarterly, Boeing will provide information to facilitate Seller production forecasting. Any such planning schedule, forecast, or quantity estimate provided by Boeing shall be used solely for informational purposes and shall not be binding on either party.
10.0 BOEING ASSISTANCE
10.1 BOEING TECHNICAL / MANUFACTURING ASSISTANCE REGARDING SELLER'S NONPERFORMANCE
Seller shall reimburse Boeing for all reasonable Boeing costs expended in providing Seller and/or Seller's subcontractor's technical or manufacturing assistance in resolving Seller nonperformance issues. Such reimbursement may be offset against any pending Seller invoice, regardless of Boeing model or program; provided, that Boeing shall not be entitled to set off any such obligation, sum or amount against any invoices for payments, in the totality of $277 million, pursuant to Section 5.2.1 of this SBP. Boeing's rights under this clause are in addition to those available to Boeing for Seller's nonperformance issues, including those where a demand for an Assurance of Performance may be made under GTA Section 17.0.
10.2 OTHER BOEING ASSISTANCE
In the event either Party believes that Seller requires Boeing technical (including engineering), manufacturing or training assistance for any activity within Seller's area of responsibility under this SBP, Seller and Boeing shall negotiate the scope and price for such Boeing assistance.
11.0 REPAIR AUTHORIZATION
11.1 BOEING-PERFORMED WORK
In the event that any Product is rejected by Boeing pursuant to GTA Section 8.3, Seller hereby grants to Boeing the right, without prior authorization from Seller, to repair or rework such Product, or to have such Product repaired or reworked by a
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
third party. Such repair or rework by Boeing or such third party shall be deemed not to be inconsistent with Seller's ownership of such Product.
All reasonable costs and expenses of Boeing relating to such repair or rework shall be paid by Seller. Such costs and expenses shall be an amount equal to Boeing's reasonable estimated rework hours multiplied by Boeing's then-current rate for labor and materials or the amount charged Boeing by any third party for performing such repair or rework. Disruption costs and expenses shall be an amount equal to the portion of resultant planned installation time allocated for reasonable out-of-sequence work multiplied by Boeing's then-current rate for labor. These provisions shall also apply to incomplete work shipped to Boeing for completion (traveled work).
11.2 REIMBURSEMENT FOR REPAIRS
Pursuant to this SBP Section 11.2, Boeing will either: 1) advise Seller
quarterly, commencing on June 16, 2005, of costs and expenses incurred in the
previous quarter for repair of Products; or 2) notify Seller, through Boeing's
automated systems, of costs and expenses incurred for each individual repair.
Seller shall notify Boeing within sixty (60) days after receipt of such advice
of any significant errors detected by Seller in Boeing's estimate of costs and
expenses. Boeing and Seller shall promptly resolve such errors. Seller's failure
to so notify Boeing shall be deemed to be an acceptance of Boeing's estimate of
costs and expenses. The same process shall apply where Seller is repairing
products for Boeing. Boeing shall be entitled to either (a) set off the amount
of such costs and expenses against any amounts payable to Seller hereunder or
(b) invoice Seller for the amount of such costs and expenses, and Seller shall
pay the invoiced amount promptly upon receipt of a valid and correct invoice.
12.0 OTHER REQUIREMENTS
12.1 SUPPORTING DOCUMENTATION
12.1.1 SUPPORTING DOCUMENTATION AND PRIORITY
All Documents (as hereinafter defined) are by this reference incorporated herein and made a part of this SBP. For purposes of this SBP, "Document" means all specifications, Drawings, Datasets, documents, publications and other similar materials, whether in a tangible or intangible form, as the same shall be revised from time to time, which relate to the design, manufacture, test, certification, delivery, support and sale of Products or the provision of services to Boeing pursuant to this SBP, including, but not limited to, the documents listed below, and any other documents specifically referred to in this SBP or in such other documents, but shall not include any SBP (including the attachments hereto or thereto), the GTA, the AA, the EAA, or any Order. Reference in any Document to "Contractor" or "Seller" or "Supplier" shall mean Seller for the purposes of this SBP. In the event of any inconsistency between the terms and conditions of this
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP (not including any Documents) and the terms and conditions of any Document, the terms and conditions of the SBP shall control. In the event any provisions of any Document or Documents conflict among themselves, Boeing will, on its own initiative or at the request of Seller, resolve such conflict (subject to the other provisions of this SBP and the GTA), revise such Document or Documents accordingly, and so notify Seller. In resolving any such conflicts, this SBP shall be read as a whole and in a manner most likely to accomplish its purposes.
12.1.2 REVISION OF DOCUMENTS
Subject to the terms of this SBP Section 12.1, Boeing may at any time revise any Document prepared by Boeing and Boeing shall provide Seller with revisions to Documents prepared by Boeing. No such revision shall be effective with respect to Seller unless and until such revision is available to Seller.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
12.1.3 COMPLIANCE
Seller shall promptly comply with the provisions of all Documents referenced in this SBP, the GTA and any Order, including any revisions Boeing may make thereto provided that no such revision shall be effective with respect to Seller unless and until such revision is available to Seller.
List of Certain Documents:
Item No. Title ---- --- ----- A. D1-4426 Boeing Approved Process Sources B. D6-82479 Boeing Quality Management System Requirements for Suppliers C. D37200 Skin Quality Acceptance Standards for Clad Aluminum Raw Material D. D6-9002 Appearance Control of Clad Aluminum Exterior Skins E. D953W001 General Operations Requirements Document For Suppliers - External/internal Suppliers/Program Partners F. D962W101 Supplier Change Management - Major Structures Program Partners G. D33200-1 Boeing Suppliers' Tooling Document H. D6-17781 Material and Performance Evaluation of Designated Parts I. D6-1276 Control of materials and processes for designated parts and components of Boeing products J. D6T10898-1 Weight Compliance Requirement/Participant Contractors K. ATA 300 Specification for Packaging of Airline Supplies L. D37520-1, -1A, -1B Supplier's Part Protection Guides M. D6-51991 Quality Assurance Standard Reflecting Digital Product Definition for Boeing Suppliers Using CAD/CAM N. D6-81628 Shipping Label, Barcoded Preparation and Placement O. D6-83315 Product Support and Assurance Document (PSAD) P. D6-56199 Hardware and software compatibility requirements for suppliers use of BCAG CATIA native datasets as sole authority for design, manufacturing and inspection Q D6-83267-201 BCA Engineering System and Process Transition and Cutover Plan to Support the Divestiture of the Wichita/Tulsa Division |
12.2 RESERVED
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****]. Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1 |
12.3 ACCOUNTABILITY FOR TOOLING
Seller shall control and account for all Tooling in accordance with the provisions of Boeing Document D33200, "Boeing Suppliers' Tooling Document" or, subject to Boeing review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement. This requirement shall apply to Boeing-Use Tooling until delivery thereof to Boeing and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Boeing or delivery to Boeing or Boeing's designee pursuant to GTA Section 12.0, GTA Section 13.0 or SBP Section 33.0. All Existing Tooling shall remain identified with its identification tag containing the Boeing Lifetime Serial Number of such Tooling. Seller shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Boeing Lifetime Serial Number of each such Tool. Boeing Lifetime Serial Numbers may be provided to Seller by Boeing.
12.4 CERTIFIED TOOL LISTS
Seller shall prepare a list or lists ("Certified Tool List") in accordance with the D33200, "Boeing Suppliers' Tooling Document" or, subject to Boeing review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Boeing shall request. Seller shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Seller shall promptly submit each initial Certified Tool List to Boeing. Seller shall subsequently submit from time to time as specified by Boeing new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.
12.5 BOEING FURNISHED TOOLING
With respect to Existing Tooling and New Tooling, and in the event Boeing furnishes Tooling to Seller, Seller shall conform to the standards and requirements of Document D33200-1. Boeing shall notify Seller of any action required for discrepant Tooling.
12.6 PACKAGING AND SHIPPING
In lieu of the provisions of GTA Section 7.0, the following SBP Sections shall address all packaging and shipping matters.
12.6.1 PACKAGING
The prices shown in SBP Attachment 1 include all packaging costs. Seller shall package Product in accordance with the applicable requirements set forth in the Order.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
12.6.2 PRODUCT PACKAGING
Except as expressly provided otherwise herein, all Products shall be prepared (cleaned, preserved, etc.) and packed for shipment in a manner reasonably acceptable to Boeing pursuant to Document D37520-1, -1A, & -1B, "Supplier's Part Protection Guide," to (i) comply with carrier regulations and (ii) prevent damage or deterioration during handling, shipment and outdoor storage at destination for up to ninety (90) days. Packaging design shall be suitable for, and consistent with, the requirements and limitations of the transportation mode specified by Boeing. Boeing specifically reserves the right, at Boeing's discretion; to direct air shipment or other expedited shipping methods from the delivery point specified in SBP Section 3.2.1 and Seller shall maintain a capability (where reasonably practicable) for meeting this requirement. Seller shall submit two (2) copies of its proposed preparation procedure and packaging design to Boeing for approval (not to be unreasonably withheld or delayed) prior to the first Product delivery, and shall prepare and package each Product in accordance with the procedure and design approved by Boeing. Notwithstanding any Boeing approval of Seller's packaging design, Seller shall be solely liable for the manufacture of such packaging. Any package (or unitized group of packages) weighing in excess of forty (40) pounds or otherwise not suited to manual handling shall be provided with skids to permit use of mechanical handling equipment.
Product packaging shall be in accordance with document D6-81628, "Shipping Label, Barcoded Preparation and Placement", which is incorporated herein by reference.
12.6.3 DISPOSABLE SHIPPING FIXTURES
Seller shall design, manufacture or procure, and test disposable shipping fixtures, as requested by Boeing, to support Orders. The requirements for such items will be defined and identified by Boeing. The design of any disposable shipping fixture shall be approved by Boeing (not to be unreasonably withheld or delayed) and conform to the standards and requirements of the applicable documents referred to in SBP Section 2.3.
12.6.4 PACKING SHEET AND TEST REPORTS
The No. 1 shipping container in each shipment shall contain one (1) copy in English of (i) a packing sheet listing the contents of the entire shipment in accordance with Boeing's written instructions and (ii) any test reports required by the specifications applicable to the Products being shipped.
For Non-United States shipments, prior to exportation of any Product, one (1) copy of the required customs invoice shall be enclosed in a waterproof envelope or wrapper, clearly marked "Customs Invoice," securely attached to the outside of the No. 1 shipping container of each shipment. Each customs invoice shall contain all of the information specified in SBP Section 27.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
12.6.5 ADDITIONAL COPIES
Additional copies of packing sheets, test reports shall be furnished to Boeing in accordance with Boeing's written instructions.
12.6.6 PRICE INCLUSIVE
Unless otherwise specified in this SBP, the Prices for Products stated in this SBP include the cost with respect to such Products of preparation, packaging, crating, shipping fixtures and containers, container marking, furnishing of packing sheets and test reports, in accordance with this SBP.
12.7 CYCLE TIME REQUIREMENTS
Boeing and Seller acknowledge that Boeing is committed to reduce Cycle Time. Seller agrees to support Boeing in its commitment and to work with Boeing to develop mutually acceptable actions to support Cycle Time requirements as specified by Boeing to support the Program Airplane. Upon Boeing's request Seller shall submit to Boeing a written plan describing how Seller would comply with the Cycle Time schedules, as specified by Boeing.
12.8 COMPATIBILITY WITH ENGINEERING BUSINESS AND PRODUCTION SYSTEMS
Seller shall implement and maintain systems as required to ensure: i) compatibility with Boeing systems; and ii) Seller's performance under this SBP, including, but not limited to, business, manufacturing and engineering systems.
12.9 ELECTRONIC ACCESS AND EXCHANGE OF DIGITAL PRODUCT DEFINITION
12.9.1 EXCHANGE OF DIGITAL PRODUCT DEFINITION BETWEEN BOEING AND SELLER
Seller's approval to receive and use computerized data shall be in accordance with documents D6-51991 "Quality Assurance Standards Reflecting Digital Product Definition for Boeing Suppliers using CAD/CAM", D6-56199 "Hardware and Software Compatibility Requirements for Suppliers Use of BCAG CATIA Native Datasets as Authority for Design, Manufacturing and Inspection", and D6-81491, "Authority and Usage of CATIA Native, CATIA IGES and PDM STEP Datasets."
12.9.2 SYSTEMS/SOFTWARE COMPATIBILITY BETWEEN BOEING AND SELLER
After Seller is qualified to use the data exchange methods in accordance with Boeing Document D6-51991, "Quality Assurance Standards Reflecting Digital Product Definition for Boeing Suppliers Using CAD/CAM," Seller shall maintain compatibility with Boeing's systems in accordance with D6-55199 "Hardware and Software Compatibility Requirements for Suppliers Use of BCAG CATIA Native
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Datasets as authority for Design, Manufacturing and Inspection." Boeing shall provide timely notification to Contractor of revisions to Boeing's systems.
12.9.3 ELECTRONIC ACCESS, COMMUNICATIONS AND DATA EXCHANGE VIA TELECOMMUNICATIONS
Any electronic communications and data exchange via telecommunications between the Parties shall be pursuant to an electronic access agreement executed concurrently with this SBP. Provided, that any amendments to the SBP, GTA, AA or EAA shall be communicated in writing and not solely by electronic communication.
Any electronic access to Boeing by Seller or Seller by Boeing shall be pursuant to an electronic access or similar agreement.
12.10 PROGRAM MANAGER
Seller will assign a full-time program manager whose exclusive responsibility will be to oversee and manage Seller's performance hereunder. The assignment of such program manager will be subject to Boeing's prior approval of such person's resume, such approval not to be unreasonably withheld or delayed.
12.11 SUBCONTRACTING
During the term of this SBP, Seller agrees to work with Boeing to identify and implement opportunities to introduce into its sub-contract base substantial changes in manufacturing procedures, manufacturing technology, process specifications, and alternate sourcing to lower cost subcontractors. Seller and Boeing shall periodically review the implementation of these opportunities and evaluate the sharing of cost savings in accordance with SBP Section 7.6.
In addition to the provisions of GTA Section 28.1, for subcontracts in excess of
[*****] in value, subcontracting activities are subject to Boeing review and
approval. Boeing approval is not to be unreasonably withheld or delayed.
This SBP Section 12.11 shall apply in lieu of the first sentence of the 2nd paragraph of GTA Section 28.0.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
12.11.1 SUBCONTRACTORS AND SUPPLIERS
Notwithstanding anything to the contrary set forth in this SBP or the GTA, Seller shall not be in breach of this Agreement with respect to breaches solely attributable to subcontractors or suppliers and where (i) such breach relates to an obligation of Seller with respect to a subcontractor or supplier party to an agreement originally between Boeing and such subcontractor or supplier (an "Assigned Agreement"), (ii) such breach is solely attributable to an Assigned Agreement that prohibits or does not allow, Seller to require such supplier or subcontractor to comply with such obligation and (iii) Seller has used commercially reasonable efforts to persuade such subcontractor or supplier to comply with such obligation. Provided, however, that: (i) Seller will promptly notify Boeing whenever its management becomes aware that an Assigned Agreement prohibits or does not allow Seller to require a supplier or subcontractor to comply with such an obligation; (ii) Seller will use commercially reasonable efforts to obtain the agreement of such supplier or subcontractor to comply with the obligations of Seller to Boeing with respect to subcontractors or suppliers, or both, including reasonable payments therefor. Provided, that this clause shall not apply (i) with respect to obligations that are mandated by law or regulation or safety of flight considerations, and (ii) after two (2) years from the date of this SBP.
12.12 INTERNATIONAL COOPERATION
12.12.1 MARKET ACCESS AND SALES SUPPORT
Seller agrees to work with Boeing to develop a lean global supply stream through application of shared strategies and tactics which support market access, and international business strategy. Boeing and Seller agree to work together to identify countries where Seller may subcontract and manage associated supply chain in support of Boeing's market access and international business strategy. With respect to work covered by this SBP, and if directed by Boeing, Seller shall use commercially reasonable efforts to procure from subcontractors and manage associated supply chain, in countries selected by Boeing, goods and services having a value of not more than twenty-five-percent (25%) of the total Shipset Price of all undelivered Shipsets as of the date of such notice. Such direction shall be at Boeing's sole option and may occur at any time during the performance of this SBP; provided that Seller shall not be required to breach any then existing subcontract. Seller may satisfy such requirement through purchases either related or not related to this SBP. Seller shall document on SBP Attachment 12 all offers to contract and executed contracts with such subcontractors including the dollars contracted. Seller shall provide to Boeing with an updated copy of SBP Attachment 12 for the six-month periods ending June 30 and December 31 of each year. If Seller is directed by Boeing to subcontract any part of its Work Packages and Seller anticipates an increase to the Price of the Order as a result of such direction, Seller shall notify Boeing in
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
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writing within thirty (30) days of such direction. If there is a cost or schedule impact, Boeing shall respond within thirty (30) days on whether Seller is to proceed. In such cases if Boeing directs Seller to proceed and there is a resulting increase to the Price of the Order, then the Parties will mutually agree to an equitable adjustment in Price.
12.12.2 OFFSET ASSISTANCE
Seller shall use commercially reasonable efforts to cooperate with Boeing in the fulfillment of any non-United States offset program obligation that Boeing may have accepted as a condition of the sale of a Boeing product. In the event that Seller is either directed by Boeing pursuant to Section 12.12.1, or on its own solicits bids and/or proposals for, or procures or offers to procure any goods or services relating to the work covered by this SBP from any source outside of the United States, Boeing shall be entitled, to the exclusion of all others, to all industrial benefits and other "offset" credits which may result from such solicitations, procurements or offers to procure. Seller shall take any commercially reasonable actions that may be required on its part to assure that Boeing receives such credits. Seller shall document on SBP Attachment 12 all offers to contract and executed contracts with such subcontractors including the dollars contracted. Seller shall provide to Boeing an updated copy of SBP Attachment 12 for the six-month periods ending June 30 and December 31 of each year. The reports shall be submitted on the next 1st of August and the 1st of February respectively. If Seller is directed by Boeing to subcontract any part of its Product(s) to a country in which Boeing has an offset obligation, and Seller anticipates an increase to the Price of the Product(s) as a result of such direction, Seller shall notify Boeing in writing within thirty (30) days of such direction. If there is a cost or schedule impact, Boeing shall respond within thirty (30) days on whether Seller is to proceed. In such cases if Boeing directs Seller to proceed and there is a resulting increase to the Price of the Product(s), then the Parties will mutually agree to an equitable adjustment in Price. Attachment 12, Section 2 lists obligations in place at contract signing.
This SBP Section 12.12.2 applies in lieu of GTA Section 36.0.
12.13 SUPPLY CHAIN INTEGRATION
12.13.1 SUPPLIER BANKED MATERIAL (SBM) OR BOEING PROVIDED DETAILS (BPD)
Material, including but not limited to raw material, standards, detail components and assemblies, furnished to Seller by Boeing ("Boeing Furnished Material") shall be administered in accordance with a Bonded Stores Agreement..
Boeing Provided Details (including raw material, standards, detail components and assemblies) to Seller's statement of work are listed in Attachment 16 with their associated purchase price and will be updated by Boeing periodically to reflect Boeing current Price.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Seller shall provide Boeing with required on-dock dates for all such material and BPD. Seller's notice shall provide Boeing with sufficient time to acquire the material. If any parts will be supplied by Boeing then they will be identified in Attachment 16.
12.13.2 BOEING RAW MATERIAL STRATEGY
During the term of this SBP, Seller shall procure from Boeing (or its designated service provider who will act on behalf of Boeing) all raw material of the commodity type specified on the SBP Attachment entitled "Commodity Listing and Terms of Sale" (SBP Attachment 21) necessary to support any Order issued pursuant to this SBP. From time to time, Boeing may amend the SBP Attachment entitled "Commodity Listing and Terms of Sale" by adding or deleting commodity types. Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under SBP Section 7.0, provided that Seller shall take no action to terminate its existing supply agreements when such termination would result in an assertion for an adjustment until the Seller has received approval from Boeing. The provision of any raw material by Boeing to Seller shall be according to Boeing's standard terms of sale, the text of which is included in the SBP Attachment entitled "Commodity Listing and Terms of Sale". Boeing shall advise Seller of any designated service provider to be used at the time the Order is issued. Upon request by Boeing, Seller must provide to Boeing documentation (e.g., packing slips, invoices) showing Seller's full compliance with the obligations under this SBP Section. If requested by Boeing or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity. If Seller reasonably believes that Boeing or its designated service provider cannot support Seller requirements to fulfill an Order issued pursuant to this SBP, then Seller shall have the right to procure raw materials from other sources and shall notify Boeing prior to such procurement. The provisions of this Section 12.13.2 will only apply to that portion of Seller contracts that support Boeing Statement of Work.
12.13.3 THIRD PARTY PRICING
Boeing may at any time identify products within Seller's Products, for which Boeing has established a contract that Seller may purchase directly from Boeing's subcontractor under the terms of Boeing's subcontract ("Third Party Price Contract"). Pricing for products under a Third Party Price Contract is only available for products listed in this SBP. Seller is free to negotiate and enter into contracts at lower prices or on better terms, with this subcontractor or another company. Seller to notify Boeing of any cost reductions resulting from use of Third Party Price Contracts. Seller shall apply [*****] of the savings achieved through the use of these Boeing Third Party Price Contracts towards Price reductions on the applicable Boeing Products.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
12.13.4 OBLIGATION TO ACCEPT ASSIGNMENT OF CONTRACTS
If Boeing has a contract(s) with a third party supplier that is primarily related to Seller and the contract was not assigned to Seller as of the date of this SBP and Boeing later determines that it has residual requirements or obligations for goods or services that 1) Boeing had previously obtained from the third party supplier prior to such date; 2) are still used in the Products provided by Seller under the SBP; and 3) that Seller no longer obtains from the third party supplier, Boeing can require Seller to accept an assignment of the contract(s) up through the current term of each contract or contracts in order for Seller to satisfy the residual requirements obligations.
12.14 RESERVED
12.15 LIFE CYCLE PRODUCT TEAM
12.15.1 PURPOSE
In the event Boeing uses Life Cycle Product Teams LCPT (or similar teams), personnel located at Boeing's facilities in accordance with this SBP will conduct their respective activities concurrently in a team environment to assist Boeing in developing firm configuration and product development definition and meeting Program requirements which includes improving producibility, reliability and maintainability of the Program Airplane. Notwithstanding Seller's participation in the LCPT, Boeing shall have the right to make any and all determinations with respect to airplane performance and product strategy and the design of the Program Airplane and any Derivative.
12.15.1.1 QUALIFICATIONS
Boeing shall have the right to review the qualifications of all personnel proposed by Seller for assignment to the LCPT or similar teams. Seller shall forward professional resumes of such personnel to Boeing for review and approval not to be unreasonably withheld or delayed prior to assignment of such personnel.
12.15.2 WORK SCHEDULE
Except for sickness and other unavoidable absence, all personnel assigned to the LCPT by Seller pursuant to this SBP Section 12.15, shall be available during the customary work shift at the place designated by Boeing eight (8) working hours per day, Monday through Friday (except for identified Boeing holidays and such vacation periods as Boeing may reasonably permit) and shall work all overtime hours as Boeing may reasonably request.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
12.15.3 EQUIPMENT AND SUPPLIES
Boeing shall furnish certain office equipment (e.g. desks, telephones, network access) and office supplies to Seller's LCPT personnel. Boeing will not provide personal property (such as computing equipment, software or drafting equipment and calculators) necessary for the performance by Seller's LCPT personnel. Seller shall provide all computing equipment and software required to support its LCPT personnel while located at Boeing's facilities.
Boeing shall not be responsible for loss or damage to such personal property.
12.15.4 EMPLOYMENT STATUS
Seller's LCPT personnel shall at all times remain employees of Seller and not employees of Boeing. Seller shall be responsible for all wages, salaries and other amounts due Seller's LCPT personnel and shall be responsible for all reports, requirements and obligations respecting them under local, state or federal laws of the United States, or the laws of any foreign country, including but not limited to social security, income tax, unemployment compensation, workers' compensation and any other local, state or federal taxes of the United States or the taxes of any foreign country.
12.15.5 TEAM LEADER
Seller shall designate one of its LCPT personnel "Team Leader." Administrative matters between Boeing and Seller arising during the performance of this SBP shall be managed by the Team Leader.
12.15.6 DISCIPLINE
Discipline of Seller's LCPT personnel shall be Seller's responsibility. While on Boeing premises, Seller's LCPT personnel shall obey all Boeing rules. While on Seller premises, Boeing's LCPT personnel shall obey all Seller rules.
12.15.7 REMOVAL OF PERSONNEL
Upon receipt of a written request from Boeing for the replacement of any person assigned to the LCPT by Seller pursuant to this SBP Section 12.15, Seller shall remove such person from the LCPT. As soon thereafter as reasonably possible, Seller shall promptly furnish a satisfactory replacement or alternate arrangement.
12.16 INCREMENTAL RELEASE
Seller shall develop production plans and schedules for Production Articles based on SBP Attachment 14. These production plans and schedules will include plans for the incremental purchase of material and the fabrication and assembly of specific numbers of Production Articles in accordance with pre-determined lead times ("Incremental Release Schedules"). Incremental Release
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Schedules for each Production Article shall be submitted to Boeing as part of Seller's proposal, and, after review and concurrence by Boeing, shall be incorporated into SBP Attachment 19. Any revision to any Incremental Release Schedule shall be reviewed by Boeing and, subject to Boeing's concurrence with such revision; SBP Attachment 19 shall be revised accordingly. Seller shall purchase material, standards and purchased parts and authorize fabrication and assembly of Production Articles in accordance with Incremental Release Schedules.
Seller proposed and Boeing approved costs associated with Incremental Release Schedules will be addressed pursuant to GTA Sections 12.3, 15.0, 16.0 and 25.2, provided the procedural requirements of those GTA sections are met.
12.17 PARTICIPATION
12.17.1 OTHER BOEING ENTITIES
Seller agrees that any Boeing division or Boeing subsidiary ("Boeing Entity") not specifically included in this SBP may, by issuing a purchase order, work order, or other release document, place orders under this SBP during the term hereof or any written extension thereof, under the terms, conditions and pricing specified by this SBP. Seller agrees that the prices set forth herein may be disclosed by Boeing on a confidential basis to Boeing entities wishing to invoke this SBP Section 17.1. Seller shall notify the Boeing Procurement Representative named in SBP Section 9.0 of Boeing Entities not specifically referenced herein who frequently use this SBP.
12.17.2 RESERVED
12.17.3 RESERVED
12.17.4 NOTIFICATION OF CONTRACT
In the event a purchaser known by Seller to be a Boeing Entity places an order for supplies or services covered by this SBP but fails to reference this SBP or otherwise seek the prices established by this SBP, Seller shall notify such purchaser of the existence of this SBP and the prices established hereunder and shall offer such prices to such purchaser.
12.18 Reserved
13.0 ORDER OF PRECEDENCE
In the event of a conflict or inconsistency between any of the terms of the following documents, the following order of precedence shall control:
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
A. These Special Business Provisions ("SBP") including attachments (excluding all documents listed below, then
B. General Terms Agreement ("GTA") (excluding all documents listed elsewhere on this listing), then
C. Purchase contract, if any, then
D. Order (excluding all documents listed elsewhere on this listing), then
E. D6-83323, Engineering Delegation Levels and Responsibility, Accountability and Authority (RAA) Descriptions for Specific Components on 737, 767, 747 and 777 Aircraft
F. D6- 83267-2, BCA Engineering Requirements for Mid-Western Aircraft Systems, Incorporated -- Divestiture of the Wichita/Tulsa Division
G. Engineering Drawing by Part Number and, if applicable Supplier Specification Plan (SSP) then
H. All documents incorporated by reference in SBP Section 12.1 "Supporting Documentation", List of Certain Documents, and 16.0, Product Support and Assurance, of this SBP, then
I. Electronic Access Agreement, then
J. Administrative Agreement, if any, then
K. Any other Boeing generated exhibits, attachments, forms, flysheets, codes or documents that the Parties agree shall be part of this SBP, then lastly
L. Any Seller generated documents that the Parties agree shall be part of this SBP.
In resolving any such conflicts or inconsistencies, these documents shall be read as a whole and in a manner most likely to accomplish their purposes.
Either party shall promptly report to the other party in writing any inconsistencies in these documents, even if the inconsistency is resolvable using the above rules.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****]. Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1 14.0 RESERVED 15.0 APPLICABLE LAW |
This contract shall be governed by the laws of the State of Washington No consideration shall be given to Washington's conflict of law rules. This contract excludes the application of the 1980 United Nations Convention on Contracts for the International Sale of Goods. Boeing and Seller hereby irrevocably consent to and submit themselves exclusively to the jurisdiction of the applicable courts of King County, Washington and the federal courts of Washington State for the purpose of any suit, action or other judicial proceeding arising out of or connected with any Order or the performance or subject matter thereof. Boeing and Seller hereby waive and agree not to assert by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that (a) Boeing and Seller are not personally subject to the jurisdiction of the above-named courts, (b) the suit, action or proceeding is brought in an inconvenient forum or (c) the venue of the suit, action or proceeding is improper.
16.0 PRODUCT SUPPORT AND ASSURANCE
16.1 WARRANTY
Seller acknowledges that Boeing and Customers must be able to rely on each Product performing as specified and that Seller will provide all required support pursuant to the PSAD. Accordingly, the following provisions, including documents, if any, set forth below are incorporated herein and made a part hereof:
16.1.1 PRODUCT SUPPORT AND ASSURANCE DOCUMENT (PSAD) D6-83315
Boeing may choose initially not to extend the Seller's full warranty of Product to Customers. This action shall in no way relieve Seller of any obligation set forth in the warranty documents listed above. Boeing, at its sole discretion, may extend Seller's full warranty of Product to its Customers at any time. Furthermore, Seller agrees to support the Product as long as any aircraft using or supported by the Product remains in service.
17.0 ADMINISTRATIVE MATTERS
17.1 ADMINISTRATIVE AUTHORITY
For all matters requiring the approval or consent of either Party, such approval or consent shall be requested in writing and is not effective until given in writing by a person authorized to do so in the Administrative Agreement. With respect to Boeing, authority to grant approval or consent is limited to Boeing's Procurement Representative as provided in the Administrative Agreement.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
17.2 ADMINISTRATIVE AGREEMENT
An Administrative Agreement is used for administrative matters not specifically addressed elsewhere and sets forth certain obligations of the Parties relating to the administration of the SBP, GTA and each Order. The Administrative Agreement is identified and incorporated in SBP Section 12.1 "Supporting Documentation".
18.0 OBLIGATION TO PURCHASE AND SELL
Boeing and Seller agree that in consideration of the prices set forth in
Attachment 1, Seller shall sell and deliver to Boeing and Boeing shall purchase
from Seller all of Boeing's requirements for Products as set forth in SBP
Section 3.0 and corresponding Products as required for Derivatives which shall
be added to Attachment 1 during the period of performance for this SBP. Such
Products shall be shipped at any scheduled rate of delivery in accordance with
the terms of delivery as determined by Boeing, and Seller shall sell to Boeing
and Boeing shall purchase exclusively from Seller Boeing's requirements of such
Products during the term of this SBP, provided that, without limitation on
Boeing's right to determine its requirements, Boeing shall not be obligated to
issue an Order for any given Product and shall be relieved of its exclusivity
obligations for that Product to the extent that Boeing has the right to cancel
as provided in GTA Section 13.2.A.
18.1 REPLACEMENTS
This Agreement contains no obligation for either Party relating to Replacement Aircraft.
19.0 STRATEGIC ALIGNMENT / SUBCONTRACTING
With the exclusion of major end items as set forth in Attachment 1, Boeing may assign this SBP or any Order, in whole or in part, to a third party who is under an obligation to supply Boeing with components, kits, assemblies or systems that require the Seller's Product; Provided that such assignment shall not relieve Boeing of its obligations under this SBP or any Order. Seller may subcontract its obligations hereunder to a third party, subject to the terms of this SBP and provided that such subcontracting shall not relieve Seller of its obligations under this SBP or any Order.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****]. Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1 20.0 OWNERSHIP OF INTELLECTUAL PROPERTY 20.1 TECHNICAL WORK PRODUCT |
All technical work product, including to the extent protectible by ownership rights, but not limited to, ideas, information, data, documents, drawings, software, software documentation, software tools, designs, specifications, and processes produced by or for Seller, either alone or with others, in the course of or as a result of any work performed by or for Seller pursuant to this SBP will be the exclusive property of Boeing and be delivered to Boeing promptly upon request.
20.2 INVENTIONS AND PATENTS
20.2.1 Subject to the provisions of paragraph 20.2.3, all inventions conceived by or for Seller on or after the effective date of this SBP, either alone or with others, in the course of or as a result of any work performed by or for Seller pursuant to this SBP shall be owned by Seller, and any patents claiming such inventions (both domestic and foreign), will be the exclusive property of Seller. Nothing in this paragraph 20.2.1 shall abridge or modify Boeing's rights under 35 USC secs. 102 or 103 to inventions independently developed by or for Boeing on or after the effective date of this SBP.
20.2.2 Seller shall (i) use commercially reasonable efforts to promptly disclose to Boeing in written detail all inventions disclosed to Seller which were conceived prior to the effective date of this SBP ("Boeing Inventions") and (ii) shall, at Boeing's sole cost and expense, execute all papers, cooperate with Boeing, and perform all acts, reasonably requested by Boeing to assist Boeing in connection with the filing, prosecution, maintenance, or assignment of patents and patent applications claiming such Boeing Inventions.
20.2.3 Notwithstanding anything to the contrary in this SBP, all inventions conceived, developed, or first reduced to practice by or for Seller, either alone or with others, in the course of or as a result of any work performed by or for Seller, pursuant to this SBP ("SBP Inventions") that Boeing reasonably believes are applicable to, developed for, incorporated in or to be incorporated in the 787 ("SBP 787 Inventions"), and any patents claiming such inventions (both domestic and foreign) will, subject to paragraph 20.2.3 (b) below, be the exclusive property of Boeing. Seller will promptly disclose all SBP Inventions to Boeing in written detail. Boeing shall have 90 days in which to inform Seller in writing whether Boeing reasonably believes such SBP Inventions are SBP 787 Inventions, and further, which SBP 787 Inventions Boeing wishes to pursue patent protection on the SBP 787 Inventions.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
(a) In the event Boeing elects to pursue patent protection on the SBP 787 Inventions, Boeing shall bear the entire cost and expense and Seller shall execute all papers, cooperate with Boeing and perform all acts, reasonably requested by Boeing to assist Boeing in connection with the filing, prosecution, maintenance, or assignment of related patents or patent applications on behalf of Boeing.
(b) In the event Boeing elects not to pursue patent protection on the SBP 787 Inventions, Seller shall have a period of 12 calendar months, commencing upon receipt of Boeing's notice to not pursue patent protection, in which to file a formal patent application under 35 USC sec. 111(a) or a formal application under the Patent Cooperation Treaty or, subject to the following sentence, a provisional patent application under 35 USC secs. 111(b) or 119(e) or other similar provisional filing permitted by other sovereigns. The filing of a provisional patent application or other similar provisional filing shall not qualify as the filing of a formal patent application for purposes of this subsection (b) unless Seller files a formal patent application within twelve (12) months after the filing of the provisional patent application In any event, Seller shall, prior to the date on which any such provisional patent application would be published, either abandon or file a formal patent application with respect to any provisional patent application. Seller shall bear the entire cost and expense of filing, prosecuting and maintaining any patents and patent applications so filed.
(c) In the event Seller fails to file a formal patent application or
abandons a patent application in the manner described in sub
paragraph (b) above and Boeing has also elected not to pursue patent
protection on said SBP 787 Inventions as described in subparagraph
(a) above, the subject matter of said SBP 787 Inventions shall be
held as a trade secret and shall be the sole and exclusive property
of Boeing.
20.3 WORKS OF AUTHORSHIP AND COPYRIGHTS
All works of authorship (including, but not limited to, documents, drawings, software, software documentation, software tools, photographs, video tapes, sound recordings and images) created by or for Seller, either alone or with others, in the course of or as a result of any work performed by or for Seller pursuant to this SBP, together with all copyrights subsisting therein, will be the sole property of Boeing. To the extent permitted under United States copyright law, all such works will be works made for hire, with the copyrights therein vesting in Boeing. The copyrights in all other such works, including all of the exclusive rights therein, will be promptly transferred and formally assigned free of charge to Boeing.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
20.4 PRE-EXISTING INVENTIONS AND WORKS OF AUTHORSHIP
Seller grants to Boeing, with the right of Boeing to sublicense the same to Boeing's subcontractors, suppliers, and customers in connection with Products or work being performed for Boeing, an irrevocable, nonexclusive, paid-up, worldwide license under any patents, copyrights, industrial designs and mask works (whether domestic or foreign) owned or controlled by Seller at any time and existing prior to or during the term of this SBP, but only to the extent that such patents or copyrights would otherwise interfere with Boeing's or Boeing's subcontractors', suppliers', or customers' use or enjoyment of Products or the work product, inventions, or works of authorship belonging to Boeing under this SBP.
21.0 SOFTWARE PROPRIETARY INFORMATION RIGHTS
Seller hereby grants to Boeing a perpetual, nonexclusive, paid-up, worldwide license to reproduce, distribute copies of, perform publicly, display publicly, and make Seller intended derivative works from software included in or provided with or for Products (Software) and related information and materials (Software Documentation) as reasonably required by Boeing in connection with (1) the testing, certification, use, sale, or support of a Product, or the manufacture, testing, certification, use, sale, or support of any aircraft including and/or utilizing a Product, or (2) the design or acquisition of hardware or software intended to interface with Software. The license granted to Boeing under this SBP Section 21.0, also includes the right to grant sublicenses to Customers as reasonably required in connection with Customers' operation, maintenance, overhaul, and modification of any aircraft including and/or utilizing Software. All copies and Seller intended derivative works made pursuant to the foregoing license or any sublicense to a Customer will automatically become, subject to the foregoing license, the property of Boeing or Customer, and Boeing agrees to preserve Seller's copyright notice thereon to the extent that such a notice was included with the original Software and/or Software Documentation. Seller acknowledges that Boeing is the owner of all tangible copies of Software and Software Documentation provided to or made by Boeing or Customers pursuant to this SBP, and Seller hereby authorizes Boeing and Customers to dispose of, and to authorize the disposal of, the possession of any and all such copies by rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending.
22.0 INFRINGEMENT
Each Party will indemnify, defend, and hold harmless the other Party from all claims, suits, actions, awards (including, but not limited to, awards based on intentional infringement of patents known at the time of such infringement, exceeding actual damages, and/or including attorneys' fees and/or costs), liabilities, damages, costs and attorneys' fees related to the actual or alleged infringement of any United States or foreign intellectual property right (including, but not limited to, any right in a patent, copyright, industrial design or
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
semiconductor mask work, or based on misappropriation or wrongful use of information or documents) and arising out of the use of the indemnifying Party's Proprietary Information and Materials in connection with the manufacture, sale or use of Products by the other Party or by Boeing's Customers. Each Party will duly notify the other Party of any such claim, suit or action in respect of which the notifying Party may be obligated to provide indemnification under this SBP Section 22.0; and the indemnifying Party will, at its own expense, fully defend such claim, suit or action on behalf of the indemnified Party and, if applicable, Boeing's Customers. Neither Party shall have any obligation under this SBP Section 22.0 with regard to any infringement arising from: (i) such Party's compliance with formal specifications issued by the other Party where infringement could not be avoided in complying with such specifications or (ii) use or sale of Products in combination with other items when such infringement would not have occurred from the use or sale of those Products solely for the purpose for which they were designed or sold by such Party. For purposes of this SBP Section 22.0 only, the term "Customer" shall not include the United States government; and the term "Party" shall include Boeing or Seller, as applicable, its subsidiaries and all officers, agents and employees of Boeing or Seller, as applicable, or any of its subsidiaries.
23.0 DIGITIZATION OF PROPRIETARY INFORMATION AND MATERIALS
Seller grants to Boeing a license under Seller's copyrights for the purpose of converting Seller's Proprietary Information and Materials to a digital format ("Digital Materials") and making such Digital Materials available to its employees for company internal use through a computer data base system solely in connection with the use of the Products as permitted by Boeing's license rights in the underlying Seller Proprietary Information and Materials. Except as otherwise specifically agreed to in writing by the Parties, said license set forth hereunder shall survive termination or cancellation of this SBP relative to Digital Materials included in Boeing's computer data base system prior to receipt of such notice of termination or cancellation.
24.0 CONFIGURATION CONTROL
Seller agrees not to make any change in materials or design details which would affect the Product or any component part thereof except as may be provided for in SBP Attachment 4 without prior written approval, not to be unreasonably withheld or delayed, of Boeing. If such approval is granted, all part numbers and the originals of all drawings and data shall be revised accordingly. Seller will use commercially reasonable efforts to place the above requirement in all its subcontracts for supplier identified purchased equipment which it enters into after the date hereof, whether such equipment is supplied to Seller as an end item or as a component part of an end item.
25.0 RESERVED
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****]. Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1 26.0 ON-SITE SUPPORT 26.1 INDEMNIFICATION NEGLIGENCE OF SELLER OR SUBCONTRACTOR |
Seller shall indemnify and hold harmless Boeing , its subsidiaries, and their directors, officers, employees, and agents from and against all actions, causes of action, liabilities, claims, suits, judgments, liens, awards, and damages, of any kind and nature whatsoever for property damage, personal injury, or death (including without limitation injury to or death of employees of Seller or any subcontractor thereof) and expenses, costs of litigation and counsel fees related thereto or arising out of or in any way related to this Agreement t, the performance thereof by Seller or any subcontractor thereof , including without limitation the provision of services, personnel, facilities, equipment, support, supervision, or review which occurs while Seller's employees are on premises owned or controlled by Boeing. The foregoing indemnity shall apply only to the extent of the negligence of Seller, any subcontractor thereof, or their respective employees. In no event shall Seller's obligations hereunder be limited to the extent of any insurance available to or provided by the Seller or any subcontractor thereof. Seller expressly waives any immunity under industrial insurance, whether arising out of statute or source, to the extent of the indemnity set forth in this paragraph.
Boeing shall indemnify and hold harmless Seller, its subsidiaries, and their directors, officers, employees, and agents from and against all actions, causes of action, liabilities, claims, suits, judgments, liens, awards, and damages, of any kind and nature whatsoever for property damage, personal injury, or death (including without limitation injury to or death of employees of Boeing or any subcontractor thereof) and expenses, costs of litigation and counsel fees related thereto or arising out of or in any way related to this Agreement , the performance thereof by Boeing or any subcontractor thereof , including without limitation the provision of services, personnel, facilities, equipment, support, supervision, or review which occurs while Boeing's employees are on premises owned or controlled by Seller. The foregoing indemnity shall apply only to the extent of the negligence of Boeing, any subcontractor thereof, or their respective employees. In no event shall Boeing's obligations hereunder be limited to the extent of any insurance available to or provided by Boeing or any subcontractor thereof. Boeing expressly waives any immunity under industrial insurance, whether arising out of statute or source, to the extent of the indemnity set forth in this paragraph.
This SBP Section 26.1 applies in lieu of GTA Section 5.3.
26.2 COMMERCIAL GENERAL LIABILITY
If Seller or any subcontractor thereof will be performing work on Boeing premises, Seller shall carry and maintain, and ensure that all subcontractors or suppliers thereof carry and maintain, throughout the period when work is performed and until final acceptance by Boeing, Commercial General Liability
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
insurance with available limits of not less than One Million Dollars ($l,000,000) per occurrence for bodily injury and property damage combined.
26.3 AUTOMOBILE LIABILITY
If licensed vehicles will be used in connection with the performance of the work, Seller shall carry and maintain, and ensure that any subcontractor thereof who uses a licensed vehicle in connection with the performance of the work carries and maintains, throughout the period when work is performed and until final acceptance by Boeing, Business Automobile Liability insurance covering all vehicles, whether owned, hired, rented, borrowed, or otherwise, with available limits of not less than One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage.
26.4 WORKERS' COMPENSATION
Throughout the period when work is performed and until final acceptance by Boeing, Seller shall, and ensure that any subcontractor thereof shall, cover or maintain insurance in accordance with the applicable laws relating to Workers' Compensation with respect to all of their respective employees working on or about Boeing premises. If Boeing is required by any applicable law to pay any Workers' Compensation premiums with respect to an employee of Seller or any subcontractor, Seller shall reimburse Boeing for such payment. Notwithstanding such insurance requirement above, in this SBP section 26.4 Seller shall be allowed to self insure; in compliance with applicable state law.
26.5 CERTIFICATES OF INSURANCE
Prior to commencement of the work Seller shall provide for Boeing review and
approval, not to be unreasonable withheld or delayed. Certificates of Insurance
reflecting full compliance with the requirements set forth in SBP Section 26.2
"Commercial General Liability", SBP Section 26.3 "Automobile Liability" and, SBP
Section 26.3 "Workers' Compensation". Such certificates shall be kept current
and in compliance throughout the period when work is being performed and until
final acceptance by Boeing, and shall provide for thirty (30) days advance
written notice to Boeing in the event of cancellation. Failure of Seller or any
subcontractor thereof to furnish Certificates of Insurance, or to procure and
maintain the insurance required herein or failure of Boeing to request such
certificates, endorsements or other proof of coverage shall not constitute a
waiver of the respective Seller's or subcontractor's obligations hereunder.
26.6 SELF-ASSUMPTION
Any self-insured retention, deductibles, and exclusions in coverage in the policies required under this Section 26.0 shall be assumed by, for the account of, and at the sole risk of Seller or the subcontractor, which provides the insurance, and to the extent applicable shall be paid by such Seller or subcontractor. In no event
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
shall the liability of Seller or any subcontractor thereof be limited to the extent of any of the minimum limits of insurance required herein.
26.7 PROTECTION OF PROPERTY
Seller assumes, and shall ensure that all subcontractors or suppliers thereof and their respective employees assume, the risk of loss or destruction of or damage to any property of such Parties whether owned, hired, rented, borrowed, or otherwise. Seller waives, and shall ensure that any subcontractor thereof and their respective employees waive, all rights of recovery against Boeing, its subsidiaries, and their respective directors, officers, employees, and agents for any such loss or destruction of or damage to any property of Seller, any subcontractor, or their respective employees, other than for any such loss, destruction or damage resulting from the negligence or willful misconduct of Boeing, any of its subsidiaries, or any of their respective directors, officers, employees or agents..
At all times Seller shall, and ensure that any subcontractor thereof shall, use suitable precautions to prevent damage to Boeing property. If any such property is damaged by the fault, negligence, or willful misconduct of Seller or any subcontractor thereof, Seller shall, at no cost to Boeing, promptly and equitably reimburse Boeing for such damage or repair or otherwise make good such property to Boeing's satisfaction. If Seller fails to do so, Boeing may do so and recover from Seller the cost thereof.
26.8 COMPLIANCE WITH BOEING SITE REQUIREMENTS
In the event the Seller or Seller's Subcontractor(s) performs any aspect of an applicable GTA, SBP or Order on property owned, operated, leased, or controlled by Boeing (hereinafter "On-Site Work"), Seller agrees to comply with Boeing's environmental, safety and health requirements. These are the same provisions with which Boeing employees must comply. In the event Boeing or Boeing's subcontractor(s) performs any aspect of an applicable GTA, SBP or Order on property owned, operated, leased, or controlled by Seller, Boeing agrees to comply with Seller's environmental, safety and health requirements. These are the same provisions with which Seller's employees must comply.
27.0 RESERVED 28.0 DELIVERY - TITLE AND RISK OF LOSS 28.1 TITLE AND RISK OF LOSS |
Without diminishing the obligations of Seller under this SBP, title to and risk of any loss of, or damage to, all Products (except for Tooling) shall pass from Seller to Boeing upon delivery as set forth in SBP Section 3.4.2 (Delivery Point and Schedule), except for loss or damage to the extent resulting from Seller's fault, negligence, willful misconduct or failure to comply with the material terms of this
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP. Passing of title on delivery shall not constitute final acceptance of such Products by Boeing.
Notwithstanding the provisions of this SBP Section 28.1, and without diminishing Seller's obligations under this SBP, risk of any loss of, or damage to, all Existing Tooling and New Tooling (except for Common-Use Tooling) shall pass from Seller to Boeing upon delivery as set forth in Section 3.4.2 (Delivery Point and Schedule), except for loss or damage to the extent resulting from Seller's fault or negligence or failure to comply with the terms of this SBP.
29.0 RESERVED
30.0 CUSTOMER CONTACT
Boeing is responsible for all contact with Customers regarding the Program, Program Airplanes and Derivatives and any other Boeing model aircraft programs. Seller shall not make any contact with actual or potential Customers on the subject of the Program, Program Airplanes or Derivatives without Boeing's prior written consent, not to be unreasonable withheld or delayed; and Seller shall respond to any inquiry from actual or potential Customers regarding the Program, Program Airplanes or Derivatives by requesting that the inquiry be directed to Boeing. Seller shall, concurrently with such response, advise Boeing of such inquiry.
31.0 RESERVED
31.1 INTEREST ON OVERDUE AMOUNTS
If Seller or Boeing shall fail to pay when and as due any amount payable hereunder, such amount shall bear interest, payable on demand, at the per annum rate announced by Citibank, New York, New York, as its prime rate on the last working day of the month in which such amount becomes due.
32.0 SURVIVAL
Without limiting any other survival provision contained herein and
notwithstanding any other provision of this SBP or the GTA to the contrary, the
representations, covenants, agreements and obligations of the Parties set forth
in GTA Section 12.3 "Seller's Claim", GTA Section 16.0 "Termination or Wrongful
Cancellation", GTA Section 18.0 "Responsibility for Property", GTA Section 20.0
"Proprietary Information and Items", GTA Section 24.0 "Boeing's Rights in
Seller's Patents, Copyrights, Trade Secrets and Tooling", GTA Section 29.0
"Non-Waiver/Partial Invalidity", GTA Section 38.0 "Applicable Law", GTA Section
39.0 "Order of Precedence", this SBP Section 32.0 "Survival", SBP Sections 3.5
"Product Support and Miscellaneous Work", SBP Section 13.0 "Order of
Precedence", SBP Section 15.0 "Applicable Law", SBP Section 16.0 "Product
Support and Assurance", SBP Section 20.0 "Intellectual Property", SBP Section
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
22.0 "Infringement", and SBP Section 26.0 "Insurance for On-Site Support" (if applicable), shall survive any cancellation, termination or expiration of this SBP, any assignment of this SBP or any payment and performance of any or all of the other obligations of the Parties hereunder. Termination or cancellation of any part of this SBP shall not alter or affect any part of this SBP which has not been terminated or cancelled.
33.0 INVENTORY AT CONTRACT COMPLETION
Subsequent to Seller's last delivery of Product(s), which contain, convey,
embody or were manufactured in accordance with or by reference to Boeing's
Proprietary Information or Materials, including but not limited to finished
goods, work-in-process and detail components (hereafter "Inventory") which are
in excess of Order quantity may be made available to Boeing for purchase. Seller
may be entitled to keep such inventory for other Boeing approved purposes. In
the event Boeing, in its sole discretion, elects not to purchase the Inventory,
Seller may keep and sell such Inventory, under the terms of its spares
supplemental license agreement with Boeing, as long as that supplemental license
agreement is in good standing. If Seller's spares supplemental license agreement
has been terminated or cancelled, Seller shall scrap the Inventory. Prior to
scrapping the Inventory, Seller shall mutilate or render it unusable. Seller
shall maintain, pursuant to their quality assurance system, records certifying
destruction of the applicable Inventory. Said certification shall state the
method and date of mutilation and destruction of the subject Inventory. Boeing
or applicable regulatory agencies shall have the right to review and inspect
these records at any time it deems necessary. In the event Seller elects to
maintain the Inventory, Seller shall maintain accountability for the Inventory
and Seller shall not sell or provide the Inventory to any third party without
prior specific written authorization from Boeing. Failure to comply with these
requirements shall be a material breach and grounds for default pursuant to GTA
Section 13.0. Nothing in this SBP Section 33.0 prohibits Seller from making
legal sales directly to the United States of America government.
34.0 SELLER ASSISTANCE
In accordance with GTA Section 12.2 and GTA Section 13.2 Boeing may, by written
notice to Seller, require Seller to transfer to Boeing or to Boeing's designee
title (to the extent not previously transferred) to certain (i) Contractor-Use
Tooling, Common-Use Tooling and other Tooling, (ii) Transportation Devices,
(iii) Boeing Furnished Material, (iv) raw materials, parts, work-in-process,
incomplete or completed assemblies, and all other Products or parts thereof in
the possession or under the effective control of Seller or any of its
subcontractors, and (v) Proprietary Information of Boeing, including, without
limitation, planning data, Product Definition, Drawings and other Proprietary
Information relating to the design, production, maintenance, repair and use of
all Products and Contractor-Use Tooling and Common-Use Tooling, in the
possession or under the effective control of Seller or any of its
subcontractors, in each case free and clear of all liens, claims or other rights
of any Person. Seller
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
shall immediately transfer and deliver, and cause each of its subcontractors to transfer and deliver, any or all of the aforesaid items in accordance with any written notice or notices given hereunder by Boeing to Seller, notwithstanding any event or circumstance whatsoever, including, without limitation, any claim or dispute Seller may assert in connection with a termination of this SBP or any payment for any such items. If Boeing shall require Seller to transfer and deliver to Boeing or Boeing's designee any of the aforesaid items, Seller shall cooperate with and shall assist Boeing in developing and implementing plans to transfer the production of Products and provision of services to Boeing, or to any other Person designated by Boeing, in an expeditious and orderly manner and will take such other steps to assist Boeing as Boeing may request in good faith, all for the purpose of maintaining, or attempting to maintain as nearly as may be possible, production of Program Airplanes and Derivatives in accordance with Boeing's schedule of delivery of Program Airplanes and Derivatives to Customers. Boeing will bear the reasonable costs associated with such cooperation, assistance and other steps except following an Event of Default in which case Seller shall bear such reasonable costs.
Following an Event of Default, Boeing and Seller acknowledge that the Program, and Boeing's ability to sell and deliver Program Airplanes and Derivatives to Customers, will be substantially impaired if Seller delays, for any reason, its performance under this SBP Section 34.0. Boeing and Seller also acknowledge that Seller's assistance hereunder in the event of a cancellation, in whole or in part, of this SBP will be of fundamental significance to reduce incidental, consequential or other damages to Boeing. Consequently, Seller shall transfer and deliver to Boeing any or all of the aforesaid items notwithstanding any dispute or claim that Seller may have against Boeing. Seller shall not delay its performance under this SBP Section 34.0 by any action, including, without limitation, any judicial or other proceeding, or by any failure to act. Seller hereby authorizes Boeing or its representatives to enter upon its, or any of Seller's subcontractors (Seller shall obtain from its subcontractors Boeing's right to so enter and act), premises at any time during regular business hours upon one (1) day's advance written notice, for the limited purpose of taking physical possession of any or all of the aforesaid items. At the request of Boeing, Seller shall promptly provide to Boeing a detailed list of such items, including the location thereof, and shall catalog, crate, package, mark and ship such items expeditiously and in an orderly manner and otherwise in the manner requested by Boeing, which request may specify incremental or priority shipping of certain items. Seller shall, if instructed by Boeing, store or dispose of any or all of the aforesaid items in any reasonable manner requested by Boeing.
35.0 NONRECURRING WORK TRANSFER
Following an Event of Default, Program Cancellation, expiration of this SBP or the termination of this SBP by mutual agreement of the Parties, Seller agrees to transfer to Boeing all Nonrecurring Work relating to the affected Program, or if this SBP is cancelled, all Non-Recurring Work set forth in SBP Section 3.3 "Nonrecurring Work".
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
36.0 DISPOSITION OF TOOLING
In the event Boeing exercises its rights under GTA Section 12.0, GTA Section 13.0 or SBP Section 34.0, Seller shall transfer and deliver to Boeing any and all Tooling that must be transferred and delivered pursuant to GTA Section 12.0, GTA Section 13.0 or SBP Section 34.0 free and clear of any and all liens, claims or rights of any third party.
37.0 CUSTOMS-TRADE PARTNERSHIP AGAINST TERRORISM (C-TPAT)
C-TPAT is an initiative between business and government to protect global commerce from terrorism and increase the efficiencies of global transportation. The program calls for importers, carriers and brokers to establish policies to enhance their own security practices and those of their business partners involved in their supply chain. Such practices may include but are not limited to the following:
Procedural Security - Procedures in place to protect against unmanifested material being introduced into the supply chain -
Physical Security - Buildings constructed to resist intrusion, perimeter fences, locking devices, and adequate lighting;
Access Controls - Positive identification of all employees, visitors and suppliers;
Personnel Security - Employment screening, background checks and application verifications
Education and Training Awareness - Security awareness training, incentives for participation in security controls
Seller agrees to work with Boeing and appropriate industry and governmental agencies, as necessary, to develop and implement policies and procedures consistent with the C-TPAT initiative to ensure the safe and secure transport of Products under this SBP.
38.0 ENVIRONMENTAL MANAGEMENT SYSTEMS AND HEALTH AND SAFETY MANAGEMENT SYSTEMS
Seller shall implement an environmental management system ("EMS") and health and safety management system ("HSMS") with respect to its performance under this SBP; and insert, in any of its subcontractor and supplier contracts for performance of Seller's obligations under this SBP, provisions substantially similar to this SBP Section 38.0 and GTA Section 21.0 (Compliance with Laws).
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
EXECUTED in duplicate as of the date and year first set forth above by the duly authorized representatives of the Parties.
BOEING SELLER THE BOEING COMPANY Spirit AeroSystems Inc. Boeing Commercial Airplanes /s/ John Borst /s/ Nigel Wright ---------------- ------------------ Name: John Borst Name: Nigel Wright Title: Director-Asset Management Title: VP, Secretary & Treasurer Date: June 16, 2005 Date: June 16, 2005 |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS
WORK STATEMENT AND PRICING
(Reference SBP Sections 3.2.1, 3.3.4.1, 3.4.4, 4.1, 4.8.2, 7.2, 7.2.1, 7.10.1, 12.6.1, 18.0)
FOR PURPOSES OF SBP Section 18.0, "OBLIGATION TO PURCHASE AND SELL" Boeing shall be defined as the following organizations, divisions, groups or entities:
BCA Supply Management and Procurement; The Boeing Company, Seattle, WA THE
PRICE FOR PRODUCTS TO BE DELIVERED ON OR BEFORE THE EIGHTH ANNIVERSARY OF
THE FIRST DAY OF THE MONTH IN WHICH BOTH PARTIES FULLY EXECUTE THIS SBP
EXCEPT AS OTHERWISE NOTED BELOW WILL BE AS FOLLOWS:
Period 1 TBD Period 5 TBD Period 2 TBD Period 6 TBD Period 3 TBD Period 7 TBD Period 4 TBD Period 8 TBD |
ATTACHMENT 1 STEP DOWN PRICING IS FROM BASE YEAR.
- [NOTE: THE TOTAL VALUE REFLECTED IN ATTACHMENT 1 (SOW) IS INTENDED TO REPRESENT THE TOTAL LLOYD SITE SOW (BCA PRODUCTION) AND TOTAL PRICE ON JUNE 16, 2005 PER THE ESTABLISHED 2003 BASELINE. IF A DISPARITY IS IDENTIFIED BETWEEN ATTACHMENTS 1 SOW AND THE ACTUAL LLOYD SITE SOW, ATTACHMENT 1 WILL BE REVISED TO REFLECT THE CHANGE AND THE SUMMARY VALUE WILL BE RE-SPREAD AMONG THE REVISED SOW. THIS ATTACHMENT WILL CONTINUE TO BE REVISED THROUGH THE TRANSITION PERIOD TO REFLECT ANY CHANGE TO THE 2003 BASELINE VALUES AND/OR PART NUMBERS. ITEMS MARKED AS LMI'S ARE BEING FURTHER DEFINED AS BOEING PART NUMBERS (PART NUMBERS MAY BE ONE-TO-ONE OR ONE-TO-MANY AFTER CONVERSION), ENGINEERING CHANGES, PART NUMBER ROLLS, UN-IDENTIFIED PARTS MAY BE ADDED/DELETED TO THE SOW TO ENSURE A CLEAN STATEMENT OF WORK, AND ANY WORK TRANSFER ACTIVITY IDENTIFIED (IE..737 HORIZONTAL/VERTICAL STABILIZERS, 737 TAIL CONE, ETC.) WILL BE DELETED FROM THIS SBP UPON THE WORK TRANSFER DATE. SELLER WILL CONTINUE TO SUPPORT BOEING REQUIREMENTS FOR THESE PRODUCTS UNTIL SUCCESSFULLY TRANSFERRED TO ANOTHER PARTY.
- "Boeing and Seller agree that Attachment 1 prices will be set such that:
(i) when the prices are applied to the parts in the bill of material for
any minor model type listed on Schedule A [this is to be the agreed minor
model pricing sheet], the shipset price for such minor model will equal
the amount set forth on Schedule A unless mutually agreed by Boeing and
Seller as provided for below; (ii) the shipset price per minor model set
forth on Schedule A is to be allocated to component parts incorporated
into such shipset proportionately to the part pricing information
contained in Boeing's enterprise resource planning (ERP) system, with the
proviso that any part that is common to two or more minor models will bear
a single price irrespective of the minor model for which it is intended to
be used; and (iii) to the extent that the proviso in subclause (ii) would
result in the bill of material pricing for any minor model not aggregating
to the Schedule A price, then the excess or deficiency is to be allocated
among parts that are unique to such minor model, proportionately to the
part pricing information for such unique parts contained in Boeing's ERP
system. Boeing and Seller agree to use their best efforts to set
Attachment 1 prices on the foregoing basis within 10 calendar days
following the date on which the APA is signed. If within this 10 day
period a price allocation methodology acceptable to both Boeing and Seller
is
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
developed that aligns final Attachment 1 part prices to the proportionate part pricing in Boeing's ERP system more closely than the foregoing basis, this revised methodology will be referred to a committee comprised of any four of John Borst, Bryan Gerard, Luis Valdes, Seth Mersky, and Nigel Wright. If for any reason Boeing and Seller have not completed an Attachment 1 acceptable to both Parties within 10 calendar days from the date on which the APA is signed, all associated issues will be referred to such committee. Any decision of such committee must be made unanimously to be valid. When prices are established in accordance with the foregoing, this Attachment 1 will be updated accordingly."]
The following pages provide detailed part numbers and pricing for each year.
[Note: Attachment 1 Parts and Prices provided under separate file due to size.]
ATTACHMENT 1 SCHEDULE A
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
WITCHITA SITE [*****] [*****] ---------- ------------ [*****] [*****] $ [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] |
TULSA AND MCALESTER SITES [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS
PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES
(Reference SBP Section 3.3.2.1, 3.3.2.2, 3.3.4.6, 3.4.1)
A. Configuration
The configuration of each Production Article shall be as described in the latest released Supplier Specification Plan (SSP) revision in the Order and/or in the Contract Change Notices listed in Paragraph B below as such Contract Change Notices relate to the configuration of any Production Article:
B. Contract Change Notices
The following Contract Change Notices are hereby incorporated into this
SBP.
Amendment 1 incorporates:
1 2 4 5 6 rev A 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 67 68 69 70R1 71 71 rev A 72 73 74 75 76 rev A 77 78 79 80 81 83 84 85 86 87 88 89 91 92 92 (dup #) 93 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 117 118 119 120 121 122 123 124 125 127 |
Attachment 2 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 3 TO
SPECIAL BUSINESS PROVISIONS
RESERVED
Attachment 3 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 4 TO
SPECIAL BUSINESS PROVISIONS
ADDITIONAL STATEMENT OF WORK
(Reference SBP Section 3.3.1.1, 3.3.2.1, 3.3.3, 3.4.5, 3.4.8)
A. Sustaining Engineering Delegation Statement of Work
Seller's responsibilities as they relate to Sustaining Engineering Delegation work for the products included in this Special Business Provisions are defined in Boeing Document D6-83323. This Document includes summary matrices depicting the Engineering Delegation requirements for each product commodity and a Responsibility, Authority and Accountability (RAA) Document. The baseline as of the date hereof shall be D6-83323 Rev. New signed January 21, 2005 which will be subject to periodic update.
D6-83323 is a summary of the Engineering Delegation requirements for sustaining products that are part of this SBP and included in the part pricing in Attachment 1. All costs associated with Seller Engineering responsibility as described within D6-83323 with the exception of Fleet Support or as provided for below are included within Attachment 1 pricing for sustaining programs and will not be subject to additional payment from Boeing.
In addition, Boeing and Seller responsibilities related to the 737MMA program are defined in the 737MMA BCA/IDS Working Together Agreement signed December 2004 by R.K. Gardner, J.L. Turner and A.M. Parasida. All activities and responsibilities identified for "BCA - Wichita" within this document will be the responsibility of Seller.
Product development projects in work at Boeing's Wichita Division that have been selected for inclusion in this SBP as of the date hereof are outlined in Section B of this Attachment 4. Section B.1 includes those major re-design efforts that support Derivative aircraft and will be subject to non-recurring engineering payments according to the terms of SBP 5.2.1. The level of effort expended by Boeing on these development projects prior to June 16, 2005 will not be included in such non-recurring engineering payments to Seller. Section B.2 includes a list of known projects that will be subject to such non-recurring engineering payments only after the threshold for embedded engineering support as described below has been exceeded.
For future product development projects, a determination will be made as to whether (i) a requirement for production hardware associated with this developmental effort is anticipated; and (ii) the production hardware resulting from this developmental effort is either a change to or a derivative of the current Attachment 1 Statement of Work. If these conditions are not met then the development projects should not be added to Attachment 4 and instead, should be covered by the Services Agreement. If these conditions are met, these projects will be added to Section B.1 or B.2 of Attachment 4. Those projects that support Derivative aircraft or where applicable, BCA aircraft delivered to IDS, will be added to B.1 and will be subject to non-recurring payments.
Those projects that support changes to the then existing Attachment 1 statement of work will be added to B.2 and not be subject to additional non-recurring payment until the sustaining engineering threshold for the program appropriate for each project has been exceeded. Only Boeing initiated PRR changes will apply towards these
Attachment 4 - Page 1 of 3
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
thresholds and will be eligible for additional non-recurring payment once the thresholds have been exceeded. Customer Introductions and Master Changes are Seller's responsibility and will not be subject to additional non-recurring payment. In addition, only those Boeing initiated PRR changes with an impact to Seller that exceeds [*****] engineering hours per change will apply towards these thresholds. PRR changes that do not result in a minimum impact of [*****] engineering hours per change to Seller will not apply towards the threshold and will not be subject to additional non-recurring payment.
The baseline threshold for each program is identified below. These program engineering thresholds will be adjusted annually to reflect changes in delivery rates for each program.
Baseline PRR Engineering Thresholds
- 737 - [*****] hours
- 747 - [*****] hours
- 767 - [*****] hours
- 777 - [*****] hours
When these thresholds are divided by the 2003 airplane deliveries for each respective model it yields the following ratios of engineering hours per airplane by program.
2003 Airplane Deliveries by Program
- 737 - 173 airplanes
- 747 - 19 airplanes
- 767 - 24 airplanes
- 777 - 39 airplanes
PRR Engineering Thresholds per Airplane
- 737 - [*****] hours
- 747 - [*****] hours
- 767 - [*****] hours
- 777 - [*****] hours
Each year, an adjustment will be made concurrent with the quantity based price adjustment process outlined within Attachment 20 to establish the appropriate threshold for each program for the following year. To calculate the new threshold, the PRR Engineering Thresholds per Airplane as identified above will be multiplied by [*****] (beta factor) times the change in delivery rates by program for the target year vs. 2003 Airplane Deliveries by Program. This value will then be added to (or subtracted from) the Baseline PRR Engineering Thresholds. In other words, the PRR Engineering Threshold for any given year will be increased (or decreased) by [*****] of the variation in airplane deliveries by program for that year versus 2003 airplane deliveries.
For those projects added to B.1, Seller will provide up to [*****] hours in the aggregate of engineering support per project at no charge to Boeing. This support will include but shall not be limited to technical consultation, work statement development and schedule development.
Attachment 4 - Page 2 of 3
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
B. Product Development Projects in work at Boeing's Wichita Division B.1 Product Development Projects Subject to Non-Recurring Engineering Payments The following list of product development projects will be subject to non-recurring engineering payments according to the terms of SBP 5.2.1. The level of effort expended by Boeing on these development projects prior to June 16, 2005 will not be included in such non-recurring engineering payments. - 737 Short Field Landing Performance - 737-900X - 737-800MMA - 737 Wedgetail - 747-8 - 777-200LR Freighter B.2 Projects Not Subject to Non-Recurring Engineering Payments The following is a list of known projects that will not be subject to non-recurring engineering payments until the thresholds identified above have been exceeded. - [*****] - [*****] - [*****] - [*****] - [*****] - SFAR 88 - [*****] - [*****] - [*****] - [*****] - [*****] Attachment 4 - Page 3 of 3 |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****]. BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1 SBP ATTACHMENT 5 TO SPECIAL BUSINESS PROVISIONS |
RATES AND FACTORS
(Reference SBP Section 7)
The following Rates will be utilized for changes to Material, Outside Processing and Touch Labor. All other costs and profit are part of the Wrap Rates fixed for life of contract.
COST ITEM FACTOR OR RATE
Direct Engineering: [*****] Engineering, Planning, N/C Programming, & Tool Design are to be billed at this rate Does not include Engineering Management which is an Indirect Cost
Direct Manufacturing Labor: [*****] Basic Factory Labor and Quality Assurance are to be billed at this rate Direct Support Costs are included as an Indirect Cost and part of the rate also
Direct Material/Outside Processing/Non-Labor: [*****]
Attachment 5 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc.
Special Business Provisions (SBP)
MS-65530-0016
Amendment 1
SBP ATTACHMENT 6 TO
SPECIAL BUSINESS PROVISIONS
LEAD TIME MATRIX - ACCEL / DECEL
(Reference Section 7.5)
LEAD TIME MATRIX
MONTHS FROM AUTHORIZATION TO PROCEED TO F.O.B. SELLER'S PLANT
737 747 767 777 Structures S/N Structures S/N Structures S/N Structures S/N ---------- ------- ---------- ------- ---------- ------- ---------- ------- FORWARD BUY AUTHORIZATION [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] ORDER BASE EXTENSION [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] RATE INCREASE [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] RATE DECREASE [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] CUSTOMER INTRODUCTION [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] CUSTOMER REORDER [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] CUSTOMER REFIRE [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] CUSTOMER DEIMPLEMENTATION [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] |
LEAD TIME IN MONTHS IS FROM AUTHORIZATION TO PROCEED TO F.O.B. SELLER'S PLANT.
Attachment 6 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 7 TO
SPECIAL BUSINESS PROVISIONS
INDENTURED PRICED PARTS LIST FOR POA'S
(SELLER TO SUBMIT TO BOEING WITHIN 60 DAYS OF CONTRACT SIGNING)
A. INDENTURE PRICED PARTS LIST
(Reference SBP 3.3.2.1, 3.3.4.6, 4.2.1, 4.4, 4.5, 4.6, 12.14.1)
B. FOR POA's
(1) Shipset Reorder Unit Price [*****] Part No. Quantity Lead Time (per "A" above) -------- -------- --------- --------------- |
Attachment 7 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 8 TO
SPECIAL BUSINESS PROVISIONS
SELLER DATA SUBMITTALS
(Reference SBP 9.0, 3.5.3)
EXAMPLES
1. Program Status Reports (as requested by Boeing) Seller's program progress reports, highlighting significant accomplishments and critical program issues, etc.
2. Product Definition Milestone Schedule (as requested by Boeing) Seller's Product Definition schedule depicting key milestone events to support program requirements.
3. Manufacturing Milestone Schedule (as requested by Boeing) Seller's manufacturing schedule depicting key milestone events to support program requirements.
4. Certified Tool List Seller's Certified Tool Lists for identifying all accountable tools, including any subsequent new, reworked or re-identified tools affecting the first production spares Product. .
5. Problem Reports (as required) Seller's written notification to Boeing of program problems, potential program impact and corrective action. .
6. Total Cost Management System Plan Annually Seller will submit a TCMS plan as required under SBP Section 7.6
Attachment 8 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 9 TO
SPECIAL BUSINESS PROVISIONS
RESERVED
Attachment 9 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 10 TO
SPECIAL BUSINESS PROVISIONS
QUALITY ASSURANCE REQUIREMENTS
All work performed under this SBP shall be in accordance with the following:
A10.1 QUALITY SYSTEM A. Document AS/EN/JISQ 9100, "Quality Systems - Aerospace - Model for Quality Assurance in Design, Development, Production, Installation and Servicing" as may be revised from time to time, which are incorporated herein and made a part hereof by this reference. B. Document D6-82479, "Boeing Quality Management System Requirements for Suppliers - Appendix A - Quality Management System" as amended from time to time, which is incorporated herein and made a part hereof by this reference. C. Document D6-82479, "Boeing Quality Management System Requirements for Suppliers - Addendum 1 - Advanced Quality System for Product and Process Improvement" as amended from time to time, which is incorporated herein and made a part hereof by this reference. |
A10.2 COMMON QUALITY PURCHASING DATA AND BUSINESS REQUIREMENTS
A10.2.1 SELLER ANNUAL INTERNAL QUALITY AUDIT
At least annually, the Seller shall conduct an internal audit to ensure compliance to their quality system and the controlling quality assurance document.
A10.2.2 CHANGE IN QUALITY MANAGEMENT REPRESENTATIVE
The Seller shall promptly notify Boeing of any changes in the management representative with assigned responsibility and authority for the quality system
A10.2.3 ENGLISH LANGUAGE
When specifically requested by Boeing, Seller shall make specified quality data and/or approved design data available in the English language.
The Seller shall maintain an English language translation of (1) its quality manual, and (2) an index of all other Seller procedures that contain quality requirements. Boeing may require the Seller to translate additional documentation.
Attachment 10 - Page 1 of 7
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
A10.2.4 CHANGES TO QUALITY SYSTEM
The Seller shall immediately notify Boeing in writing of any change to the quality control system that may affect the inspection, conformity or airworthiness of the Product. After the issue of initial Boeing quality system approval, each change to the quality control system is subject to review by Boeing.
A10.2.5 SUPPLIER QUALITY PERFORMANCE
If Seller fails to achieve and maintain 98% site quality acceptance rate, which is a prerequisite for delegated inspection authority awarded at Boeing's discretion, the Seller shall be responsible for one or more of the following as directed by Boeing:
A. Obtaining source inspection from a Boeing-qualified contractor at Seller's own expense;
B. Reimbursing Boeing for reasonable Boeing costs incurred at the point of manufacture (i.e. Seller's site) to verify product conformance;
C. Reimburse Boeing for reasonable Boeing costs incurred at the point of receipt to verify product conformance.
The site quality acceptance rate is a calculation of the ratio of acceptable units delivered to the total units delivered, or an alternate criteria quality acceptance rating, equivalent to 98% as defined by the contracting Boeing site(s).
A10.2.6 EXCESS INVENTORY
The Seller shall strictly control all inventory of Boeing proprietary product that is in excess of contract quantity in order to prevent product from being sold or provided to any third party without prior written authorization from Boeing.
A10.2.7 AEROSPACE QUALITY MANAGEMENT SYSTEM (AQMS) CERTIFICATION
Boeing recognition of Seller's AQMS certification/registration does not affect the right of Boeing to conduct audits and issue findings at the Seller's facility. Boeing reserves the right to provide Boeing-identified quality system findings, associated quality system data, and quality performance data to the Seller's Certification /Registration Board (CRB.)
Seller shall ensure the following relative to AQMS certification:
Attachment 10 - Page 2 of 7
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
A10.2.7.1 ACCREDITATION OF CERTIFICATION/REGISTRATION BODY
The certification/registration body (CRB) is accredited to perform aerospace quality management system (AQMS) assessments. The CRB must use approved auditors and operate in accordance with the corresponding International Aerospace Quality Group (IAQG) certification/registration scheme.
NOTE: IAQG sanctioned certification/registration schemes include but are
not limited to AIR 5359, SJAC 9010, TS157, etc. Reference IAQG
website for listing of accredited CRBs:
http://www.iaqg.sae.org/servlets/index?PORTAL_CODE=IAQG
A10.2.7.2 RECORDS OF CERTIFICATION/REGISTRATION
The seller maintains objective evidence of CRB certification/registration on file at Seller's facility. Objective evidence shall include:
a. The accredited AQMS certificate(s) of registration;
b. The audit report(s), including all information pertaining to the audit results in accordance with the applicable certification/registration scheme;
c. Copies of all CRB finding(s), objective evidence of acceptance of corrective action(s), and closure of the finding(s).
NOTE: Certification records shall be maintained in accordance with Boeing specified contractual quality record retention requirements.
A10.2.7.3 RIGHT OF ACCESS TO CRB
The CRB services agreement provides for "right of access" to all CRB records by Boeing, applicable accreditation body, applicable Registrar Management Committee (RMC) and other regulatory or government bodies for the purpose of verifying CRB certification/registration criteria and methods are in accordance with the applicable IAQG certification/registration scheme.
A10.2.7.4 AUDIT RESULTS/DATA REPORTING TO IAQG
The CRB has Seller's written permission to provide audit results/data to IAQG membership as required by the applicable IAQG certification/registration scheme.
Attachment 10 - Page 3 of 7
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
A10.2.7.5 NOTIFICATION TO BOEING OF CHANGE IN STATUS
Boeing is immediately notified in writing should the Seller's certification/registration be suspended or withdrawn, or accreditation status of Seller's CRB be withdrawn. Send email notification to grpcrboversightrep@boeing.com.
A10.2.7.6 PROVISION OF BOEING QUALITY DATA TO CRB
Boeing-identified findings and Seller's quality performance data is provided to the CRB during certification/registration and surveillance activity.
A10.2.7.7 CRB ACCESS TO PROPRIETARY DATA
CRB shall be provided access to applicable proprietary data (including Boeing proprietary data) to the extent necessary to assess Seller's compliance to AQMS requirements. CRB shall agree to keep confidential and protect Boeing proprietary information under terms no less stringent than Seller's contractual agreement with Boeing. Seller will assure that such information is conspicuously marked "BOEING PROPRIETARY".
A10.2.7.8 SELLER COMPLIANCE WITH CRB REQUIREMENTS
Seller complies with all CRB requirements imposed to issue and maintain certification/registration.
A10.2.8 VERIFICATION OF CORRECTIVE ACTION
When Boeing notifies Seller of a detected nonconformance, Seller shall
immediately take action to eliminate the nonconformance on all products in
Seller's control. Seller shall also maintain on file verification that root
cause corrective action has occurred and has resolved the subject condition. At
the specific request of Boeing, this verification shall occur for the next five
(5) shipments after implementation of the corrective action to ensure detected
nonconformance has been eliminated. Boeing reserves the right to review the
verification data at Seller's facility or have the data submitted to Boeing.
A10.2.9 CORRECTIVE ACTION REPORT
Where Seller is requested to submit a corrective action report, Seller will submit its response within ten (10) days of receipt of such request unless an extension is otherwise provided by Boeing. Any corrective action report submitted to Boeing shall be in the format specified by Boeing. If after submittal to Boeing supplier determines need for revision, Seller shall immediately notify Boeing of such revision In the event Seller is unable to respond within the allotted ten day time frame, Seller shall submit a request for extension which shall include the reason for the extension request and the time need to complete the corrective action report.
Attachment 10 - Page 4 of 7
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
A10.2.10 RELOCATION/SUBCONTRACT NOTIFICATION (PUGET SOUND ONLY)
The Seller shall not relocate or subcontract any Category I or II work outside the U.S. without written Boeing acceptance. Notification to Boeing should be made to the Procurement Agent who manages the Seller's contract and shall contain the subcontractor name, address, telephone number, QA manager name, applicable part numbers, and part descriptions. Category I and II work is defined in FAA Order 8120.2, Appendix 4.
A10.2.11 QUALITY METRICS & REPORTING
When requested by Boeing, Seller agrees to work with Boeing to develop and implement processes designed at improving Seller's quality performance. Process will include sufficient detail to allow Boeing to evaluate Seller's progress
A10.3 SITE UNIQUE QUALITY PURCHASING DATA REQUIREMENTS
A10.3.1 ACCEPTANCE/REJECTION OF SELLER'S ROOT CAUSE/CORRECTIVE ACTION
Boeing reserves the right to reject any root cause and/or corrective action determination provided by the Seller, and may request subsequent investigation and/or corrective action to either Boeing or Seller-initiated corrective action requests. If the Seller is late in responding to corrective action requests by Boeing, or if Boeing requires subsequent corrective action, Boeing reserves the right to withhold acceptance of shipments either at source or destination until Seller corrective action is submitted to Boeing's satisfaction
A10.3.2 CHANGE IN MANUFACTURING FACILITY
The Seller shall immediately notify Boeing in writing of any change to the manufacturing facility location of the contracted part number or assembly
A.10.4 INCORPORATED BY REFERENCE
In addition to any other documents incorporated elsewhere in this SBP or GTA by reference, Seller is required to maintain compliance with the following documents as may be revised from time to time, and incorporated herein, and made a part of this SBP by reference with full force and effect, as if set out in full text:
A10.4.1 DOCUMENT AS/EN/SJAC 9102, "AEROSPACE FIRST ARTICLE INSPECTION (FAI)
Requirement"
Seller shall perform First Article Inspections (FAIs) in accordance with
AS/EN/SJAC 9102.
Attachment 10 - Page 5 of 7
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
A10.4.2 BOEING DOCUMENT D1-8007, "APPROVAL GUIDE FOR SUPPLIER STATISTICAL SAMPLING PLANS"
A Seller that performs acceptance sampling shall meet the requirements of document D1-8007. Boeing approval of Seller's acceptance sampling plan is required prior to performing acceptance sampling when it is used for in-process or final inspection, and employs continuous sampling or repetitive lot sampling. Subsequent revisions to approved sampling plans require Boeing approval prior to implementation. Prior Boeing approval of a sampling plan is not required if it is used exclusively for receiving inspection, or employs only isolated lot sampling during in-process or final inspection.
When statistical process control is used as an option for either in-process or final inspection, Seller shall satisfy the requirements of document AS/EN/SJAC 9103, Variation Management of Key Characteristics.
In all cases, inspection requirements identified by engineering drawing or specification take precedence over the inspection requirements defined herein.
A10.4.3 BOEING DOCUMENT D6-51991, "QUALITY ASSURANCE STANDARD FOR DIGITAL
PRODUCT DEFINITION (DPD) AT BOEING SUPPLIERS"
Seller is required to obtain Boeing approval as a DPD-capable supplier if seller receives, downloads, and/or uses Computer Aided Design (CAD) geometry in any format from any Boeing facility. Boeing digital datasets are reference only (not design or inspection authority) until Boeing DPD approval status is obtained.
A10.4.4 BOEING DOCUMENT D1-4426, "APPROVED PROCESS SOURCES"
This document defines the approved sources for special processing, composite raw materials, composite products, aircraft bearings, designated fasteners, and metallic raw materials.
A10.4.5 BOEING DOCUMENT D-13709-4, "REQUIREMENTS FOR OBTAINING MRB AUTHORITY BY BOEING SUPPLIERS"
Seller shall not use dispositions of use-as-is or repair on Boeing-designed product unless current revision of Seller's Material Review Board (MRB) plan complies with D-13709-4 (not in 7E7) and has been approved by Boeing.
A10.4.6 RESERVED
Attachment 10 - Page 6 of 7
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
A10.4.7 PROCUREMENT OPERATING INSTRUCTIONS (POI M6-1007) (USED BY PUGET SOUND)
Procurement Operating Instructions (POI M6-1007), as revised from time to time.
Individual Quality notes contained in Procurement Operating Instructions (POI
M6-1007) are applicable when identified on the purchase document.
See Boeing Website -
http://www.boeing.com/companyoffices/doingbiz/index.html, or contact Boeing
Procurement representative for printed copy of notes.
Attachment 10 - Page 7 of 7
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc.
Special Business Provisions (SBP)
MS-65530-0016
Amendment 1
SBP ATTACHMENT 11 TO
SPECIAL BUSINESS PROVISIONS
BOEING COMMERCIAL AIRPLANES (BCA) SECOND TIER REPORT (Reference SBP Section 9.6)
Seller Name: Date: Seller Contact: Phone: BCA Procurement Agent Contact: Phone: |
BCA Purchase Contract #:
Reporting Period * Jan - Mar Apr - Jun July - Sept Oct - Dec Year: Definitions ** Small Business (SB) The term "small business" shall mean a small business as defined pursuant to section 3 of the Small Business Act (15 U.S.C.A. 632) and relevant regulations issued pursuant thereto. Generally, this means a small business organized for profit, it is independently owned and operated, is not dominant in the field of operations in which it is bidding, and meets the size standards as prescribed in Government regulations. (Includes SDBs, SMBEs and WOSBs) Small Disadvantaged business (SDB) A small business certified by the U.S. Small Business Administration as a socially and economically small disadvantaged business for consideration of Government set-a-side contracting opportunities and business development. (Includes SDBs who are women-owned) Small Minority Business Enterprise (SMBE) A small business that is at least 51 percent owned, operated and controlled by a minority group member (Asian, Black, Hispanic, and Native Americans); or, in the case of a publicly-owned business, at least 51% of the stock is owned by one or more minority group members and such individuals control the management and daily operations. (Includes SDBs) Women-owned Small Business (WOSB) A small business concern that is at least 51 percent owned by one or more women; or, in the case of any publicly owned business, at least 51 percent of the stock is owned by one or more women; and whose management and daily business operations are controlled by one or more women. (Includes WOSBs who are also SDBs) |
Contract Dollars Received by Seller
A. Boeing Commercial Airplanes contract dollars received by seller for the above reporting period* (report in whole numbers): $______________________
VALUE OF SUBCONTRACT 2ND TIER DOLLARS AWARDED
(for Boeing Commercial Airplanes Purchase Contracts ONLY)
Diversity Category Reporting Period (see above*) Dollars Percent of (report in whole numbers) Seller Dollars ---------------------------------------------------------------------------------------------------------------- B. Small Business (SB) (B / A) (C / A) C. Small Minority Business Enterprise (SMBE) (D / A) D. Women-owned Small Business (WOSB) AUTHORIZED COMPANY REPRESENTATIVE (PRINT): AUTHORIZED COMPANY REPRESENTATIVE (SIGNATURE): DATE: |
Attachment 11 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 12 TO
SPECIAL BUSINESS PROVISIONS
NON-U.S. PROCUREMENT REPORT FORM
(Reference SBP Section 12.12)
(Seller to Submit)
Attachment 12, Section 1
Seller Name Country Commodity/ Bid Contracted Nomenclature Dollars Dollars
Attachment 12 - Page 1 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc.
Special Business Provisions (SBP)
MS-65530-0016
Amendment 1
SBP ATTACHMENT 12 TO
SPECIAL BUSINESS PROVISIONS
ATTACHMENT 12
(Reference SBP Section 12.12)
Attachment 12 Section 2
The following outlines offset requirements that are currently in work and that Seller is obligated to complete as part of this SBP.
1) Korea - Horizontal Stabilizers and Vertical Fin
- Obligation for Wichita to complete transfer of 737NG
Horizontal Stabilizers and Vertical Fin, [*****] (or most
current configuration) according to plan and schedule in place
on (June 16, 2005).
- The schedules and hardware quantities are subject to
change in support of program requirements. Such changes
will be made in accordance with the terms identified in
Paragraph 7.5 in the Special Business Provisions.
- Offload to KAI in Korea
- Seller to provide work transfer support/resources as
identified for "Wichita" in above referenced plan. Boeing
shall reimburse Seller for the reasonable travel costs
incurred by Seller's employees for purposes of providing such
work transfer support in Korea. Travel costs shall include
airfare, hotels, meals and car rental costs consistent with
Seller's standard travel practices and shall not exceed the
cost of Boeing's ordinary travel practices. Seller shall
promptly submit invoices to Boeing substantiating costs for
which Seller seeks reimbursement. Such invoices shall be paid
by Boeing in accordance with Paragraph 5.0.
- These part numbers will be removed from Attachment 1 of this
SBP and Boeing will have no further obligation to purchase
these part numbers from Seller at the conclusion of this work
transfer.
Attachment 12 - Page 2 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
WICHITA
737NG HORIZONTAL STABILIZER
PRODUCTION DELIVERY SCHEDULE R-142R2
SHIP TO SHIP TO SHIP TO C/L RENTON C/L RENTON C/L RENTON ---- -------- ---- ---------- ---- --------- 1732 5/4/2005 1842 10/11/2005 1982 4/14/2006 1737 5/12/2005 1845 10/14/2005 1987 4/20/2006 1742 5/19/2005 1848 10/19/2005 1991 4/26/2006 1746 5/25/2005 1851 10/24/2005 1995 5/2/2006 1749 5/31/2005 1854 10/27/2005 2000 5/8/2006 1752 6/3/2005 1857 11/1/2005 2004 5/12/2006 1755 6/8/2005 1860 11/4/2005 2010 5/18/2006 1758 6/13/2005 1863 11/8/2005 2014 5/24/2006 1761 6/16/2005 1866 11/11/2005 2018 5/30/2006 1764 6/21/2005 1869 11/15/2005 2023 6/5/2006 1767 6/24/2005 1872 11/18/2005 2028 6/8/2006 1770 6/29/2005 1875 11/23/2005 2032 6/14/2006 1773 7/5/2005 1878 11/29/2005 2036 6/19/2006 1776 7/8/2005 1881 12/2/2005 2041 6/23/2006 1779 7/13/2005 1886 12/8/2005 2046 6/28/2006 1782 7/18/2005 1890 12/14/2005 2050 7/5/2006 1785 7/21/2005 1895 12/20/2005 2054 7/10/2006 1788 7/26/2005 1899 1/4/2006 2059 7/14/2006 1791 7/29/2005 1904 1/10/2006 2064 7/19/2006 1794 8/3/2005 1909 1/16/2006 2067 7/24/2006 1797 8/8/2005 1913 1/20/2006 2071 7/27/2006 1800 8/11/2005 1918 1/26/2006 2075 8/1/2006 1803 8/16/2005 1922 2/1/2006 2079 8/4/2006 1806 8/19/2005 1927 2/7/2006 2084 8/9/2006 1809 8/24/2005 1931 2/13/2006 2087 8/14/2006 1812 8/29/2005 1936 2/17/2006 2091 8/17/2006 1815 9/1/2005 1940 2/23/2006 2095 8/22/2006 1818 9/7/2005 1945 3/1/2006 2099 8/25/2006 1821 9/12/2005 1950 3/7/2006 2103 8/30/2006 1824 9/15/2005 1954 3/13/2006 2107 9/5/2006 1827 9/20/2005 1959 3/17/2006 2111 9/8/2006 1830 9/23/2005 1963 3/23/2006 2115 9/13/2006 1833 9/28/2005 1968 3/29/2006 2119 9/18/2006 1836 10/3/2005 1973 4/4/2006 2123 9/21/2006 1839 10/6/2005 1977 4/10/2006 2127 9/26/2006 |
Attachment 12 - Page 3 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
WICHITA
737NG HORIZONTAL STABILIZER
PRODUCTION DELIVERY SCHEDULE R-142R2- continued
SHIP TO SHIP TO C/L RENTON C/L RENTON ---- --------- ---- -------- 2131 9/29/2006 2272 3/8/2007 2135 10/4/2006 2275 3/13/2007 2139 10/9/2006 2279 3/16/2007 2143 10/12/2006 2284 3/21/2007 2147 10/17/2006 2287 3/26/2007 2151 10/20/2006 2291 3/29/2007 2155 10/25/2006 2295 4/3/2007 2159 10/30/2006 2299 4/6/2007 2163 11/2/2006 2304 4/11/2007 2167 11/7/2006 2307 4/16/2007 2170 11/10/2006 2311 4/19/2007 2174 11/15/2006 2315 4/24/2007 2179 11/20/2006 2320 4/27/2007 2183 11/27/2006 2323 5/2/2007 2187 11/30/2006 2327 5/7/2007 2191 12/5/2006 2331 5/10/2007 2196 12/8/2006 2335 5/15/2007 2199 12/13/2006 2339 5/18/2007 2203 12/18/2006 2343 5/23/2007 2207 12/21/2006 2347 5/29/2007 2211 1/4/2007 2351 6/1/2007 2215 1/9/2007 2356 6/6/2007 2220 1/12/2007 2359 6/11/2007 2223 1/17/2007 2363 6/14/2007 2227 1/22/2007 2367 6/19/2007 2231 1/25/2007 2372 6/22/2007 2235 1/30/2007 2375 6/27/2007 2240 2/2/2007 2379 7/2/2007 2243 2/7/2007 2383 7/6/2007 2247 2/12/2007 2388 7/11/2007 2251 2/15/2007 2391 7/16/2007 2255 2/20/2007 2395 7/19/2007 2259 2/23/2007 2399 7/24/2007 2264 2/28/2007 2268 3/5/2007 |
Attachment 12 - Page 4 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
THE BALANCE OF THIS SCHEDULE IS FOR PLANNING PURPOSES ONLY
SHIP TO SHIP TO SHIP TO C/L RENTON C/L RENTON C/L RENTON ------ --------- ------ --------- ------ -------- S/S 1 8/1/2007 S/S 22 11/1/2007 S/S 43 5/1/2008 S/S 2 8/1/2007 S/S 23 11/1/2007 S/S 44 5/1/2008 S/S 3 8/1/2007 S/S 24 11/1/2007 S/S 45 5/1/2008 S/S 4 8/1/2007 S/S 25 12/1/2007 S/S 46 5/1/2008 S/S 5 8/1/2007 S/S 26 12/1/2007 S/S 47 6/1/2008 S/S 6 8/1/2007 S/S 27 1/1/2008 S/S 48 6/1/2008 S/S 7 9/1/2007 S/S 28 1/1/2008 S/S 49 6/1/2008 S/S 8 9/1/2007 S/S 29 1/1/2008 S/S 50 7/1/2008 S/S 9 9/1/2007 S/S 30 1/1/2008 S/S 51 7/1/2008 S/S 10 9/1/2007 S/S 31 2/1/2008 S/S 52 7/1/2008 S/S 11 9/1/2007 S/S 32 2/1/2008 S/S 53 8/1/2008 S/S 12 9/1/2007 S/S 33 2/1/2008 S/S 54 8/1/2008 S/S 13 10/1/2007 S/S 34 2/1/2008 S/S 55 8/1/2008 S/S 14 10/1/2007 S/S 35 3/1/2008 S/S 56 9/1/2008 S/S 15 10/1/2007 S/S 36 3/1/2008 S/S 57 9/1/2008 S/S 16 10/1/2007 S/S 37 3/1/2008 S/S 58 9/1/2008 S/S 17 10/1/2007 S/S 38 3/1/2008 S/S 59 10/1/2008 S/S 18 10/1/2007 S/S 39 4/1/2008 S/S 60 10/1/2008 S/S 19 11/1/2007 S/S 40 4/1/2008 S/S 61 10/1/2008 S/S 20 11/1/2007 S/S 41 4/1/2008 END OF PRODUCTION S/S 21 11/1/2007 S/S 42 4/1/2008 |
Attachment 12 - Page 5 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Wichita 737NG Vertical Fin Master Schedule R-142R2
SHIP TO SHIP TO SHIP TO S/S C/L BOEING S/S C/L BOEING S/S C/L BOEING --- ---- --------- --- ---- --------- --- ---- --------- 1 1731 5/2/2005 36 1811 8/25/2005 71 1902 1/9/2006 2 1732 5/3/2005 37 1814 8/30/2005 72 1904 1/10/2006 3 1734 5/6/2005 38 1816 9/1/2005 73 1905 1/12/2006 4 1737 5/11/2005 39 1819 9/7/2005 74 1907 1/16/2006 5 1740 5/16/2005 40 1821 9/9/2005 75 1910 1/18/2006 6 1743 5/19/2005 41 1822 9/12/2005 76 1912 1/19/2006 7 1746 5/24/2005 42 1824 9/14/2005 77 1913 1/23/2006 8 1749 5/27/2005 43 1826 9/16/2005 78 1915 1/25/2006 9 1751 6/1/2005 44 1829 9/21/2005 79 1918 1/27/2006 10 1754 6/6/2005 45 1831 9/23/2005 80 1920 1/30/2006 11 1756 6/8/2005 46 1834 9/28/2005 81 1921 2/1/2006 12 1757 6/9/2005 47 1836 9/30/2005 82 1923 2/3/2006 13 1759 6/13/2005 48 1839 10/5/2005 83 1926 2/7/2006 14 1761 6/15/2005 49 1841 10/7/2005 84 1928 2/8/2006 15 1764 6/20/2005 50 1842 10/10/2005 85 1929 2/10/2006 16 1766 6/22/2005 51 1844 10/12/2005 86 1931 2/14/2006 17 1769 6/27/2005 52 1846 10/14/2005 87 1934 2/16/2006 18 1771 6/29/2005 53 1849 10/19/2005 88 1936 2/17/2006 19 1774 7/5/2005 54 1851 10/21/2005 89 1937 2/21/2006 20 1776 7/7/2005 55 1854 10/26/2005 90 1939 2/23/2006 21 1779 7/12/2005 56 1856 10/28/2005 91 1942 2/27/2006 22 1781 7/14/2005 57 1859 11/2/2005 92 1944 2/28/2006 23 1784 7/19/2005 58 1861 11/3/2005 93 1945 3/2/2006 24 1786 7/21/2005 59 1866 11/10/2005 94 1947 3/3/2006 25 1789 7/26/2005 60 1870 11/15/2005 95 1949 3/7/2006 26 1791 7/28/2005 61 1873 11/18/2005 96 1951 3/8/2006 27 1794 8/2/2005 62 1877 11/23/2005 97 1952 3/10/2006 28 1795 8/3/2005 63 1880 11/30/2005 98 1954 3/13/2006 29 1796 8/4/2005 64 1883 12/5/2005 99 1956 3/15/2006 30 1799 8/9/2005 65 1886 12/7/2005 100 1958 3/16/2006 31 1801 8/11/2005 66 1889 12/15/2005 101 1959 3/20/2006 32 1803 8/15/2005 67 1891 12/16/2005 102 1961 3/21/2006 33 1804 8/16/2005 68 1893 12/19/2005 103 1962 3/23/2006 34 1806 8/18/2005 69 1894 12/22/2005 104 1964 3/24/2006 35 1809 8/23/2005 70 1897 1/5/2006 105 1966 3/28/2006 |
Attachment 12 - Page 6 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Wichita 737NG Vertical Fin Master Schedule R-142R2 - continued
SHIP TO SHIP TO SHIP TO S/S C/L BOEING S/S C/L BOEING S/S C/L BOEING --- ---- --------- --- ---- --------- --- ---- --------- 106 1968 3/29/2006 141 2030 6/13/2006 176 2099 8/25/2006 107 1969 3/31/2006 142 2032 6/14/2006 177 2101 8/29/2006 108 1971 4/3/2006 143 2034 6/16/2006 178 2103 8/30/2006 109 1973 4/5/2006 144 2036 6/19/2006 179 2105 9/1/2006 110 1975 4/6/2006 145 2038 6/21/2006 180 2107 9/5/2006 111 1976 4/10/2006 146 2039 6/22/2006 181 2109 9/7/2006 112 1978 4/11/2006 147 2041 6/26/2006 182 2111 9/8/2006 113 1979 4/13/2006 148 2043 6/27/2006 183 2113 9/12/2006 114 1982 4/14/2006 149 2045 6/29/2006 184 2115 9/13/2006 115 1983 4/18/2006 150 2047 6/30/2006 185 2117 9/15/2006 116 1985 4/19/2006 151 2049 7/5/2006 186 2119 9/18/2006 117 1986 4/21/2006 152 2051 7/6/2006 187 2121 9/20/2006 118 1988 4/24/2006 153 2053 7/10/2006 188 2123 9/21/2006 119 1990 4/26/2006 154 2055 7/11/2006 189 2125 9/25/2006 120 1992 4/27/2006 155 2057 7/13/2006 190 2127 9/26/2006 121 1993 5/1/2006 156 2059 7/14/2006 191 2129 9/28/2006 122 1995 5/2/2006 157 2061 7/18/2006 192 2131 9/29/2006 123 1997 5/4/2006 158 2063 7/19/2006 193 2133 10/3/2006 124 1999 5/5/2006 159 2065 7/21/2006 194 2135 10/4/2006 125 2001 5/9/2006 160 2067 7/24/2006 195 2137 10/6/2006 126 2002 5/10/2006 161 2069 7/26/2006 196 2139 10/9/2006 127 2003 5/12/2006 162 2071 7/27/2006 197 2141 10/11/2006 128 2006 5/15/2006 163 2073 7/31/2006 198 2143 10/12/2006 129 2007 5/17/2006 164 2075 8/1/2006 199 2145 10/16/2006 130 2009 5/18/2006 165 2077 8/3/2006 200 2147 10/17/2006 131 2010 5/22/2006 166 2079 8/4/2006 201 2149 10/19/2006 132 2012 5/23/2006 167 2081 8/8/2006 202 2151 10/20/2006 133 2014 5/25/2006 168 2083 8/9/2006 203 2153 10/24/2006 134 2016 5/26/2006 169 2085 8/11/2006 204 2155 10/25/2006 135 2018 5/31/2006 170 2087 8/14/2006 205 2157 10/27/2006 136 2020 6/1/2006 171 2089 8/16/2006 206 2159 10/30/2006 137 2022 6/5/2006 172 2091 8/17/2006 207 2161 11/1/2006 138 2024 6/6/2006 173 2093 8/21/2006 208 2163 11/2/2006 139 2026 6/8/2006 174 2095 8/22/2006 209 2165 11/6/2006 140 2028 6/9/2006 175 2097 8/24/2006 210 2167 11/7/2006 |
Attachment 12 - Page 7 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1 Wichita 737NG Vertical Fin Master Schedule R-142R2 - continued
SHIP TO SHIP TO SHIP TO S/S C/L BOEING S/S C/L BOEING S/S C/L BOEING --- ---- --------- --- ---- -------- --- ---- --------- 211 2169 11/9/2006 246 2239 2/2/2007 281 2309 4/18/2007 212 2171 11/10/2006 247 2241 2/6/2007 282 2311 4/19/2007 213 2173 11/14/2006 248 2243 2/7/2007 283 2313 4/23/2007 214 2175 11/15/2006 249 2245 2/9/2007 284 2315 4/24/2007 215 2177 11/17/2006 250 2247 2/12/2007 285 2317 4/26/2007 216 2179 11/20/2006 251 2249 2/14/2007 286 2319 4/27/2007 217 2181 11/22/2006 252 2251 2/15/2007 287 2321 5/1/2007 218 2183 11/27/2006 253 2253 2/19/2007 288 2323 5/2/2007 219 2185 11/29/2006 254 2255 2/20/2007 289 2325 5/4/2007 220 2187 11/30/2006 255 2257 2/22/2007 290 2327 5/7/2007 221 2189 12/4/2006 256 2259 2/23/2007 291 2329 5/9/2007 222 2191 12/5/2006 257 2261 2/27/2007 292 2331 5/10/2007 223 2193 12/7/2006 258 2263 2/28/2007 293 2333 5/14/2007 224 2195 12/8/2006 259 2265 3/2/2007 294 2335 5/15/2007 225 2197 12/12/2006 260 2267 3/5/2007 295 2337 5/17/2007 226 2199 12/13/2006 261 2269 3/7/2007 296 2339 5/18/2007 227 2201 12/15/2006 262 2271 3/8/2007 297 2341 5/22/2007 228 2203 12/18/2006 263 2273 3/12/2007 298 2343 5/23/2007 229 2205 12/20/2006 264 2275 3/13/2007 299 2345 5/25/2007 230 2207 12/21/2006 265 2277 3/15/2007 300 2347 5/29/2007 231 2209 1/3/2007 266 2279 3/16/2007 301 2349 5/31/2007 232 2211 1/4/2007 267 2281 3/20/2007 302 2351 6/1/2007 233 2213 1/8/2007 268 2283 3/21/2007 303 2353 6/5/2007 234 2215 1/9/2007 269 2285 3/23/2007 304 2355 6/6/2007 235 2217 1/11/2007 270 2287 3/26/2007 305 2357 6/8/2007 236 2219 1/12/2007 271 2289 3/28/2007 306 2359 6/11/2007 237 2221 1/16/2007 272 2291 3/29/2007 307 2361 6/13/2007 238 2223 1/17/2007 273 2293 4/2/2007 308 2363 6/14/2007 239 2225 1/19/2007 274 2295 4/3/2007 309 2365 6/18/2007 240 2227 1/22/2007 275 2297 4/5/2007 310 2367 6/19/2007 241 2229 1/24/2007 276 2299 4/6/2007 311 2369 6/21/2007 242 2231 1/25/2007 277 2301 4/10/2007 312 2371 6/22/2007 243 2233 1/29/2007 278 2303 4/11/2007 313 2373 6/26/2007 244 2235 1/30/2007 279 2305 4/13/2007 314 2375 6/27/2007 245 2237 2/1/2007 280 2307 4/16/2007 315 2377 6/29/2007 |
Attachment 12 - Page 8 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1 Wichita 737NG Vertical Fin Master Schedule R-142R2 - continued
SHIP TO S/S C/L BOEING --- ---- -------- 316 2379 7/2/2007 317 2381 7/5/2007 318 2383 7/6/2007 319 2385 7/10/2007 320 2387 7/11/2007 321 2389 7/13/2007 322 2391 7/16/2007 323 2393 7/18/2007 324 2395 7/19/2007 325 2397 7/23/2007 326 2399 7/25/2007 |
Attachment 12 - Page 9 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
THE BALANCE OF THIS SCHEDULE IS FOR PLANNING PURPOSES ONLY
SHIP TO SHIP TO SHIP TO C/L RENTON C/L RENTON C/L RENTON --- -------- --- --------- --- -------- 1 8/1/2007 41 11/1/2007 81 4/1/2008 2 8/1/2007 42 11/1/2007 82 4/1/2008 3 8/1/2007 43 11/1/2007 83 4/1/2008 4 8/1/2007 44 11/1/2007 84 4/1/2008 5 8/1/2007 45 11/1/2007 85 4/1/2008 6 8/1/2007 46 12/1/2007 86 4/1/2008 7 8/1/2007 47 12/1/2007 87 4/1/2008 8 8/1/2007 48 12/1/2007 88 4/1/2008 9 8/1/2007 49 12/1/2007 89 4/1/2008 10 8/1/2007 50 12/1/2007 90 4/1/2008 11 8/1/2007 51 1/1/2008 91 4/1/2008 12 8/1/2007 52 1/1/2008 92 5/1/2008 13 9/1/2007 53 1/1/2008 93 5/1/2008 14 9/1/2007 54 1/1/2008 94 5/1/2008 15 9/1/2007 55 1/1/2008 95 5/1/2008 16 9/1/2007 56 1/1/2008 96 5/1/2008 17 9/1/2007 57 1/1/2008 97 5/1/2008 18 9/1/2007 58 1/1/2008 98 5/1/2008 19 9/1/2007 59 2/1/2008 99 5/1/2008 20 9/1/2007 60 2/1/2008 100 5/1/2008 21 9/1/2007 61 2/1/2008 101 6/1/2008 22 9/1/2007 62 2/1/2008 102 6/1/2008 23 9/1/2007 63 2/1/2008 103 6/1/2008 24 10/1/2007 64 2/1/2008 104 6/1/2008 25 10/1/2007 65 2/1/2008 105 6/1/2008 26 10/1/2007 66 2/1/2008 106 6/1/2008 27 10/1/2007 67 2/1/2008 107 6/1/2008 28 10/1/2007 68 2/1/2008 108 6/1/2008 29 10/1/2007 69 2/1/2008 109 6/1/2008 30 10/1/2007 70 3/1/2008 110 7/1/2008 31 10/1/2007 71 3/1/2008 111 7/1/2008 32 10/1/2007 72 3/1/2008 112 7/1/2008 33 10/1/2007 73 3/1/2008 113 7/1/2008 34 10/1/2007 74 3/1/2008 114 7/1/2008 35 11/1/2007 75 3/1/2008 115 7/1/2008 36 11/1/2007 76 3/1/2008 116 7/1/2008 37 11/1/2007 77 3/1/2008 117 7/1/2008 38 11/1/2007 78 3/1/2008 118 8/1/2008 39 11/1/2007 79 3/1/2008 119 8/1/2008 40 11/1/2007 80 3/1/2008 120 8/1/2008 |
Attachment 12 - Page 10 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING/Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
THE BALANCE OF THIS SCHEDULE IS FOR PLANNING PURPOSES ONLY
SHIP TO SHIP TO C/L RENTON C/L RENTON --- -------- --- -------- 121 8/1/2008 161 1/1/2009 --- -------- --- -------- 122 8/1/2008 162 1/1/2009 123 8/1/2008 163 1/1/2009 124 8/1/2008 164 1/1/2009 125 8/1/2008 165 2/1/2009 126 8/1/2008 166 2/1/2009 127 9/1/2008 167 2/1/2009 128 9/1/2008 168 2/1/2009 129 9/1/2008 169 2/1/2009 130 9/1/2008 170 2/1/2009 131 9/1/2008 171 2/1/2009 132 9/1/2008 172 2/1/2009 133 9/1/2008 173 3/1/2009 134 9/1/2008 174 3/1/2009 135 9/1/2008 175 3/1/2009 136 10/1/2008 176 3/1/2009 137 10/1/2008 177 3/1/2009 138 10/1/2008 178 3/1/2009 139 10/1/2008 179 3/1/2009 140 10/1/2008 180 3/1/2009 141 10/1/2008 181 4/1/2009 142 10/1/2008 182 4/1/2009 143 10/1/2008 183 4/1/2009 144 10/1/2008 184 4/1/2009 145 11/1/2008 END OF PRODUCTION 146 11/1/2008 147 11/1/2008 148 11/1/2008 149 11/1/2008 150 11/1/2008 151 11/1/2008 152 11/1/2008 153 12/1/2008 154 12/1/2008 155 12/1/2008 156 12/1/2008 157 1/1/2009 158 1/1/2009 159 1/1/2009 160 1/1/2009 |
Attachment 12 - Page 11 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
WICHITA/TULSA KAI 737 HS & VF SUPPORT SCHEDULE
2005-2008
The support schedule below represents the support schedule currently agreed to by both parties; it is subject to change by Boeing based on program requirements. Support schedule will be maintained on a rolling 90 day notification process.
2005
ASSEMBLY SUPPORT: PROGRAM SUPPORT: --------------------------------- ------------------------------- MAY: 1 PERSON (15 DAYS IN-PLANT) 1 PERSON (3 DAYS IN-PLANT) JUNE: 2 PEOPLE (5 DAYS EACH IN-PLANT) 1 PERSON (3 DAYS IN-PLANT) JULY: 2 PEOPLE (5 DAYS EACH IN-PLANT) 3 PEOPLE (3 DAYS EACH IN-PLANT) AUG: 3 PEOPLE (5 DAYS EACH IN-PLANT) 1 PERSON (3 DAYS IN-PLANT) SEP: 2 PEOPLE (10 DAYS EACH IN-PLANT) 1 PERSON (5 DAYS IN-PLANT) OCT: 2 PEOPLE (10 DAYS EACH IN-PLANT) 2 PEOPLE (3 DAYS EACH IN-PLANT) NOV: 1 PERSON (10 DAYS IN-PLANT) 4 PEOPLE (3 DAYS EACH IN-PLANT) 2006: ---- 1ST QTR. 2 PEOPLE (10 DAYS EACH IN-PLANT 8 PEOPLE (5 DAYS EACH IN-PLANT) 2ND QTR. 1 PERSON (5 DAYS IN-PLANT) 2 PEOPLE (5 DAYS EACH IN-PLANT) 3RD QTR. 2 PEOPLE (5 DAYS EACH IN-PLANT) 6 PEOPLE (5 DAYS EACH IN-PLANT) 4TH QTR. NO PLANNED SUPPORT NO PLANNED SUPPORT 2007: ---- 1ST QTR. NO PLANNED SUPPORT 2 PEOPLE (5 DAYS EACH IN-PLANT) 2ND QTR. 4 PEOPLE (5 DAYS EACH IN-PLANT 4 PEOPLE (5 DAYS EACH IN-PLANT) 3RD QTR. NO PLANNED SUPPORT 4 PEOPLE (5 DAYS EACH IN-PLANT) 4TH QTR. 4 PEOPLE (5 DAYS EACH IN-PLANT) 4 PEOPLE (5 DAYS EACH IN-PLANT) 2008: ---- 1ST QTR. 4 PEOPLE (5 DAYS EACH IN-PLANT) 4 PEOPLE (5 DAYS EACH IN-PLANT) |
Attachment 12 - Page 12 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
2ND QTR. NO PLANNED SUPPORT NO PLANNED SUPPORT 3RD QTR. 4 PEOPLE (5 DAYS EACH IN-PLANT) 6 PEOPLE (5 DAYS EACH IN-PLANT) 4TH QTR. 4 PEOPLE (5 DAYS EACH IN-PLANT) 4 PEOPLE (5 DAYS EACH IN-PLANT) |
Attachment 12 - Page 13 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
2) Turkey - Lot Time Hardware
- Obligation for Wichita to subcontract statement of work as identified in the below referenced plan.
- Offload to TAI or other suppliers in Turkey
- Wichita offloading in Five (5) phases of lot time work.
- The work packages are identified below to denote the scope of work and dollar amounts. It is not Boeing's intent to manage the work statement and individual part numbers. For the avoidance of doubt, the intent is that Seller agrees to offload the parts in these work packages to Turkey or place parts of equivalent estimated value
The key elements of the Turkey Program are:
I. Define the work statement using the following WTP numbers:
WTP B2000- 341 - Package # 1 WTP B2000- 416 - Package # 2 WTP B2000- 322 - Package # 3 WTP B2001- 420 - Package # 4 WTP B2001- 425 - Package # 5
Additionally, Attachment TP 1 (below) describes the number of parts per package.
II. Continue to provide financial actuals to BCAG Finance for Industrial Participation (IP) reporting purposes. Wichita Seller will not be responsible for calculating Turkish Added Value (TAV); however they need to be aware of the TAV contractual requirements levied on the Boeing Company. Boeing is required to have a minimum of 30% TAV on hardware deliveries during the years 2003 to mid-2006; 35% during mid-2006 to mid-2009; and 40% on shipments beyond 2009.
III. Maintain the functions of the current management team supporting the IP program and the direct relationships that have been established. For the period commencing on the date of this SBP and ending at first article shipment of the last detail part of WTP B2001-425-package number 5, Boeing shall reimburse Seller for the reasonable travel costs incurred by such management team. Travel costs shall include airfare between the U.S. and Turkey, hotels, meals and car rental costs consistent with Seller's standard travel practices and shall not exceed the cost of Boeing's ordinary travel practices. Seller shall promptly submit invoices to Boeing substantiating costs for which Seller seeks reimbursement. Such invoices shall be paid by Boeing in accordance with Paragraph 5.0. Boeing shall pay for any travel to, and support to, Turkey. The IP manager for Turkey, the procurement organizations and the work transfer group, finance and quality assurance. All of these organizations are involved in the IP program for Turkey and we want to maintain these direct relationships as opposed to working through other entities.
Attachment 12 - Page 14 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
TURKEY WORK PACKAGES
TAI PACKAGE #1
Model Phase Package ACC Assy's FAB POP IWA ----- ----- ------- --- ------ ---- --- --- 737 2 216 33 47 62 1 737 2 217 89 274 138 11 737 2 218 14 27 40 2 737 3 301 10 21 9 0 767 2 222 7 0 20 8 767 2 223 4 8 4 1 767 2 224 6 0 18 0 767 2 232 1 0 2 0 767 2 233 79 196 135 17 777 2 226 69 378 81 3 777 2 227 5 20 0 2 777 2 228 34 79 19 0 TOTALS 12 351 1050 528 45 |
TAI PACKAGE #2
Model Phase Package ACC Assy's FAB POP IWA ------ ----- ------- --- ------ ---- ---- --- 737 2 215 62 83 73 0 737 3 302 72 64 122 23 737 3 307 63 196 149 8 737 3 310 26 24 144 0 737 4 2 0 0 0 13 737 4 9 28 64 38 6 737 4 24 9 64 16 0 747 2 229 40 67 25 4 TOTALS 8 300 562 567 |
TAI PACKAGE #3
Model Phase Package ACC Assy's FAB POP IWA ------- ----- ------- --- ------ ---- --- --- 737 5 6 251 376 453 30 737 5 9 37 38 75 11 737 5 13 19 22 58 15 737 5 16 49 116 32 4 737 5 19 17 39 48 1 737 5 27 14 11 19 7 737 5 38 12 24 0 0 747 5 41 36 50 42 0 767 2 221 7 7 6 0 767 3 309 122 437 76 4 767 3 314 50 110 50 4 777/767 3 308 20 53 41 24 TOTALS 13 634 1283 900 100 |
Attachment 12 - Page 15 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
TURKEY WORK PACKAGES - CONTINUED
TAI PACKAGE #4
Model Phase Package ACC Assy's FAB POP IWA ------ ----- ------- --- ------ ---- --- --- 737 3 318 22 48 33 0 737 4 25 5 3 14 0 737 4 27 4 4 7 0 737 4 36 0 6 0 0 737 4 39 46 69 132 5 737 5 1 22 25 35 6 737 5 5 37 32 50 12 747 1 202 37 50 54 0 747 3 305 11 36 34 0 747 3 316 64 78 91 0 747 4 45 19 39 22 1 767 1 213 87 255 99 4 767 2 220 68 100 97 26 777 1 206 8 20 2 0 TOTALS 14 430 765 670 54 |
TAI PACKAGE #5
Model Phase Package ACC Assy's FAB POP IWA ------ ----- ------- --- ------ ---- --- --- 737 3 304 23 54 7 0 737 3 321 4 7 6 6 737 3 323 8 13 6 0 737 4 21 4 4 4 0 737 4 41 3 3 8 2 737 4 42 6 12 7 0 737 4 43 3 14 3 0 737 5 87 13 24 34 0 737 5 88 3 3 2 1 747 3 300 28 61 22 6 747 4 46 6 19 16 0 747 4 49 9 8 12 0 747 4 54 69 93 127 6 747 4 58 16 2 29 0 747 5 44 57 170 60 9 747 5 45 54 145 50 0 777 3 303 7 13 3 0 777 3 312 23 60 16 0 777 3 313 42 127 32 0 777 3 317 33 51 17 2 777 3 319 50 101 0 0 777 3 320 8 0 0 18 777 3 325 11 16 19 4 777 4 88 3 34 2 0 777 4 89 64 130 38 0 777 4 100 12 18 13 9 777 4 102 16 18 32 0 777 4 103 26 48 20 11 TOTALS 30 601 1248 585 74 |
Attachment 12 - Page 16 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
TURKEY WORK PACKAGES - CONTINUED
PACKAGE SUMMARY
PKG 1 PKG 2 PKG 3 PKG 4 PKG 5 TOTAL ----- ----- ----- ----- ----- ----- 737 146 233 399 136 67 981 747 0 40 36 131 239 446 767 97 0 179 155 0 431 777 108 0 20 8 295 431 TOTAL 351 273 634 430 601 2289 |
Attachment 12 - Page 17 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
3) China737 Tailcone
- Work transfer [*****]
- This part number will transition from a Seller build to a Boeing Puget Sound Global Partners purchased item.
- Boeing Puget Sound Global Partners will have responsibility for entering into and maintaining a contract with the target supplier for this work transfer. In the event that Boeing requests that Seller travel to China for purposes of providing support in China, Boeing shall reimburse Seller for the reasonable travel costs incurred by Seller's employees. Travel costs shall include airfare between the U.S. and China, hotels, meals and car rental costs consistent with Seller's standard travel practices and shall not exceed the cost of Boeing's ordinary travel practices. Seller shall promptly submit invoices to Boeing substantiating costs for which Seller seeks reimbursement. Such invoices shall be paid by Boeing in accordance with Paragraph 5.0.
This part number will be removed from Attachment 1 of this SBP and Boeing will have no further obligation to purchase part number from Seller at the conclusion of this work transfer. The schedule and hardware quantities are subject to change support program requirements. Such changes will be made in accordance with the terms of paragraph 7.5 of the Special Business Provisions
- For each 737 airplane delivered by Boeing after the date this SBP is fully executed and through the duration of this SBP, Boeing will make a payment to Spirit AeroSystems Inc. in the amount of [*****] where: (i) Spirit AeroSystems Inc. does not produce and/or supply to Boeing a Tailcone for use on the 737 aircraft delivered and (ii) Boeing obtains and installs on the 737 aircraft delivered a Tailcone from a source other than Spirit AeroSystems Inc.
- Reference WTM item 613
Attachment 12 - Page 18 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SCHEDULE FOR 737 TAILCONE FOR WICHITA
MONTH WICHITA DELIVERY QUANTITY ----- ------------------------- JAN-05 19 FEB-05 20 MAR-05 20 APR-05 19 MAY-05 21 JUN-05 20 JUL-05 23 AUG-05 21 SEP-05 21 OCT-05 20 NOV-05 19 DEC-05 24 JAN-06 24 FEB-06 24 MAR-06 24 APR-06 24 MAY-06 21 JUN-06 21 JUL-06 21 AUG-06 21 SEP-06 21 OCT-06 21 NOV-06 21 DEC-06 21 JAN-07 14 FEB-07 14 MAR-07 14 APR-07 14 MAY-07 14 JUN-07 10 JUL-07 10 AUG-07 10 SEP-07 10 OCT-07 10 NOV-07 10 DEC-07 10 JAN-08 0 FEB-08 0 MAR-08 0 APR-08 0 651 |
Attachment 12 - Page 19 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Additionally, Boeing receives Market Access credit through the Wichita, Tulsa and McAlester sites as follows:
Australia: Tulsa / Wichita
Canada: Tulsa / Wichita
China:
Europe/NATO
France-Wichita / Tulsa
India:
South Africa:
South Korea: Wichita / Tulsa
United Kingdom: Wichita / Tulsa
Russia
Attachment 12 - Page 20 of 19
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 13 TO
SPECIAL BUSINESS PROVISIONS
RESERVED
Attachment 13 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 14 TO
SPECIAL BUSINESS PROVISIONS
PRODUCTION ARTICLE DELIVERY SCHEDULE
(Reference SBP Section 3.3.2, 3.3.4, 3.4.1)
MASTER SCHEDULE **
737 R144R3
747 E-124 R1
767 T-112R2
777 U-40R3
To be provided by Boeing for Products Delivered via manual FOB Master Schedule. All other products schedules via the Order.
** EACH TIME A MASTER SCHEDULE FIRING ORDER FOR THE MODEL 737, 747, 767 & 777 PROGRAM IS RELEASED, BOEING WILL FURNISH SELLER WITH A COPY. SELLER WILL USE THAT INFORMATION TO DETERMINE THE AIRPLANE CONFIGURATION FOR EACH LINE NUMBER.
Attachment 14 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 15 TO
SPECIAL BUSINESS PROVISIONS
MAXIMUM PRODUCTION RATE
AND MODEL MIX CONSTRAINT MATRIX
(Reference SBP Section 7.5.1)
BOEING LIMITED
WICHITA MODEL MIX CONSTRAINT MATRIX AS OF: 11/05/04
STRUCTURES Engines ----------------------------------------------- ---------------------- MONTHLY WICHITA PSD WCH MODELS PROTECTION CAPACITY MIX SKIN POLISH SHIPPING PROTECTION CAPACITY --------- ------------- ------------- -------------- ---------------- -------- ----------- --------- 737 [*****] Units [*****] Units [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] = [*****] [*****]=[*****] [*****] [*****] [*****] [*****] [*****]=[*****] [*****] = [*****] [*****]=[*****] [*****] [*****]=[*****] [*****]=[*****] [*****] = [*****] [*****]=[*****] [*****] [*****]=[*****] [*****]=[*****] [*****] [*****] [*****] = [*****] [*****] [*****] [*****] [*****] [*****] [*****] = [*****] [*****] [*****]=[*****] [*****] [*****] = [*****][*****]= [*****] [*****]=[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] Section [*****] Fin & Stab Sub-Assembly ------------------- ------------------- MODELS WICHITA CHINA WICHITA CHINA --------- --------- --------- --------- --------- 737 Commit Contract Commit Contract [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] |
Attachment 15 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
Engine - Protection Rates ---------------------------------- [*****] 747 [*****] UNITS [*****] UNITS [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] |
Engine - Protection Rates ---------------------------------- 767 [*****] UNITS [*****] UNITS [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] |
Engine - Protection Rates ---------------------------------- 777 [*****] UNITS [*****] UNITS [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] TOTAL UNITS [*****] [*****] [*****] [*****] LEGEND [*****] [*****] [*****] [*****] [*****] |
Attachment 15- Page 2 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
[*****] [*****] [*****] [*****] [*****] [*****] |
BOEING LIMITED
Attachment 15 - Page 3 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
BOEING PROVIDED DETAILS (BPD)
AND SUPPLIER BANKED MATERIAL (SBM)
(Reference clause 12.13.1)
A. Supplier Banked Material (SBM):
This SBP currently contains no Supplier Banked Material.
B. Boeing Provided Details (BPD)
This SBP Attachment 16 identifies Boeing Provided Details (parts) and their associated purchase price which are currently being provided to Seller.
Per SBP Attachment 20 the intent is for Seller to re-source all BPD's per the agreed to transfer plan.
Seller shall provide Boeing with discreet schedules (lead-time away) which depicts Seller's requirements for these parts until such time as the parts have been resourced. The identified transfer price for each BPD will be adjusted periodically to reflect Boeing's then current fully burdened cost.
Notwithstanding the foregoing, the prices associated with parts sourced from Boeing's Winnipeg operations will be subject to any subsequent pricing agreement established directly between Seller and Boeing Winnipeg.
Attachment 16 is as of the date specified and will continue to be updated / revised to reflect any additional identified BPD or work transfer activity prior to June 16, 2005
[Note: Attachment 16 Parts list and Prices provided under separate file due to size.]
Attachment 16- Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 17 TO
SPECIAL BUSINESS PROVISIONS
RESERVED
Attachment 17 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 18 TO
SPECIAL BUSINESS
PROVISIONS
RESERVED
Attachment 18 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 19 TO
SPECIAL BUSINESS PROVISIONS
INCREMENTAL RELEASE AND LEAD-TIMES
(SELLER TO PROVIDE WITHIN 60 DAYS OF SIGNING THIS AGREEMENT)
A. Lead Times
Lead times for material procurements, fabrication and assembly are as tabulated below in months prior to delivery of the first Shipset affected, and will be used to calculate incremental release schedules in Paragraph B.1 of this SBP Attachment 19.
MATERIAL Metallic Raw Material tbn Non Metallic Raw Material tbn Castings/Forgings/Extrusions tbn Purchased Parts tbn FABRICATION: Detail Parts tbn ASSEMBLY Rate Tooling (over max protection rate) tbn |
B. Incremental Release Plan
C. In accordance with SBP Section , Seller will release Shipsets as scheduled herein on the dates indicated below.
Material: Qty per s/s Support Point Release Date -------- ------------------------------- ------------ Raw Material Purchased Parts Fabrication Lot 1 Lot 2 Assembly |
Release Dates based on Master Schedule: See attachment 14
Attachment 19 - Page 1 of 1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 20 TO
SPECIAL BUSINESS
PROVISIONS
QUANTITY BASED PRICE ADJUSTMENT FORMULA
This attachment sets forth the methodology used to calculate the annual Unit Billing Prices which shall be reflected along with the Base Prices within Attachment 1.
A) DEFINITIONS:
Airplane Program - refers to Boeing aircraft designation (e.g. 737, 747, 767, and 777).
Part Number - an alpha numeric designation for each unique product manufactured.
Unit Billing Price - Price to be paid for each separate Part Number delivered in a specified calendar year based on the airplane quantities and price reduction tables.
Airplane Production Quantity Tables - A series of tables that outline a "Tier Level" based on airplane production quantities.
Tier Level - A designation given to represent a specific range of airplane program production quantities.
Quantity Based Price Reduction Percentage Table - A table which assigns a discount percentage based on Tier Level.
Base Price - Part Number pricing prior to application of quantity based discount percentage. Base Prices (by calendar year) will be included in Attachment 1 and unlike Unit Billing Prices, will not be updated annually to reflect changes in production quantities.
Firing Order - Boeing published schedules which depict airplane manufacturing, shop completion and delivery dates for each unique aircraft produced.
BPD - Boeing Provided Details are Detailed Part Numbers used by the supplier in the completion of its end-item Statement of Work sold to Boeing under this contract. Seller purchases BPD's from Boeing.
Attachment 20 - Page 1 of 6
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
B) UNIT PRICING - METHODOLOGY
1) Boeing will utilize the Airplane Production Quantity Tables as contained within this Attachment 20 to determine total number of aircraft which fall within each Tier Level and the Quantity Based Price Reduction Percentage Table to determine the price reduction to the base unit prices.
2) Each year, approximately sixty days prior to the anniversary of the first day of the month in which both parties fully execute this SBP, Boeing will use the most recently published Firing Orders to determine the total forecasted airplane production quantities for all Airplane Programs for the 12 month period immediately following the anniversary of the first day of the month in which both parties fully execute this SBP. This total production quantity will include all aircraft scheduled for shop completion at Boeing during the aforementioned 12 month period as reflected in these Firing Orders.
3) Boeing will utilize the Airplane Production Quantity Tables as contained within this Attachment 20 to determine total number of aircraft which fall within each Tier Level.
4) Boeing will utilize the Quantity Based Price Reduction Percentage Table to calculate a weighted average percentage reduction for use in determining Unit Billing Prices.
5) Boeing will update Attachment 1 approximately 30 days prior to the anniversary of the first day of the month in which both parties fully execute this SBP to include new Unit Billing Prices as calculated above for use during the following 12 month period.
6) Updated Attachment 1 Unit Billing Prices will be utilized by Seller for billing throughout this 12 month period.
7) Each year, a review of the actual airplane deliveries will occur approximately 30 days after the anniversary of the first day of the month in which both parties fully execute this SBP. If there is a deviation from forecasted production quantities to actual production quantities, a reconciliation lump sum payment or credit will be processed by Buyer and Seller.
C) UNIT PRICING - CALCULATION TABLES
1) Airplane Production Quantity Tables (TABLE 1):
737 / 747 / 767 / 777 TOTAL AIRPLANE PRODUCTION QUANTITIES PER YEAR TIER 1 TIER 2 TIER 3 --------- ------- ------- [*****] [*****] [*****] |
Attachment 20 - Page 2 of 6
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
2) Quantity Based Price Reduction Percentage Table (TABLE 2):
TIER PERIOD PERIOD PERIOD PERIOD PERIOD PERIOD PERIOD PERIOD LEVEL 1 2 3 4 5 6 7 8 ------- -------- -------- -------- -------- -------- -------- -------- -------- TIER 1 [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] TIER 2 [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] TIER 3 [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] |
Each of the Periods within Table 2 will be of 12 month duration and will immediately succeed the prior period. The combined eight years for these eight periods will be equal to the period of firm fixed pricing identified in SBP 4.1.
Period 1 will begin on the first day of the month in which both parties fully execute this SBP and will end 12 months later. Period 8 will end on the day before the eighth anniversary of the first day of the month in which both parties fully execute this SBP. For example, if Period 1 begins on April 1, 2005 then Period 8 will end on March 31, 2013.
D) UNIT PRICING - BILLING PRICE FORMULA:
The formula to be used in the calculation of the Unit Billing Price for each Part Number is:
P :Unit Billing Price
A :Tier 1 Percent (as reflected Table 2 above)
B :Tier 2 Percent (as reflected in Table 2 above)
C :Tier 3 Percent (as reflected in Table 2 above)
D : Target year Annual Airplane Production Total Quantity
E : Tier 1 airplane quantity (Table 1)
F : Tier 2 airplane quantity (Table 1)
G :Tier 3 airplane quantity (Table 1)
H :Base Unit Price (as reflected in Attachment 1)
[*****]
Note: Discounted Pricing for Part Numbers who's Unit Yearly Billing Price is greater than $200 shall be rounded to the nearest dollar. Discounted Pricing for Part Numbers who's Unit Yearly Billing Price is equal to or less than $200 shall be rounded to the nearest cent.
E) UNIT PRICING - EXAMPLE:
This example will calculate a hypothetical Unit Billing Price for a Part Number with a Base Price of [*****] for Period 3, assuming it is the 12 month period from April 1, 2007 through March 31, 2008.
Attachment 20 - Page 3 of 6
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
1) On February 1, 2007 Boeing reviews the most recently published Firing Orders and determines that a total of [*****] aircraft are scheduled to be Boeing Shop Complete between April 1, 2007 and March 31, 2008.
2) Boeing utilizes the "Attachment 20" Airplane Production Quantity Table to determine that the numbers of aircraft which fall into each Tier Level are as follows:
Tier 1 Airplanes Tier 2 Airplanes Tier 3 Airplanes ---------------- ---------------- ---------------- [*****] [*****] [*****] |
3) Boeing utilizes the Quantity Based Price Reduction Percentage Table to identify the appropriate discount percentages to be used for Period 3 Unit Billing Prices for each Tier Level.
4) Boeing utilizes the Unit Billing Price Formula and the information retrieved from Attachment 1 and Tables 1 and 2 as reflected below to calculate the appropriate Unit Billing Price for this Part Number for Period 3.
H : Base Price (as reflected in Attachment 1) [*****] A : Tier 1 Percent (as reflected in Table 2 above) [*****] B : Tier 2 Percent (as reflected in Table 2 above) [*****] C : Tier 3 Percent (as reflected in Table 2 above) [*****] D : Annual Airplane Production Total Quantity [*****] E : Tier 1 airplane quantity (Table 1) [*****] F : Tier 2 airplane quantity (Table 1) [*****] G : Tier 3 airplane quantity (Table 1) [*****] |
[*****]
[*****]
P : Unit Billing Price = [*****]
5) Boeing will utilize this same methodology to re-calculate Period 3
Unit Billing Prices for all Part Numbers contained within Attachment
1. Attachment 1 will be updated to reflect new Unit Billing Prices
for Period 3 and provided to Seller.
6) Seller will utilize revised Attachment 1 for billing throughout Period 3.
F) BOEING PROVIDED DETAILS (BPD) - COST SAVINGS PROCESS
INTRODUCTION:
Boeing and Seller expect that cost reductions may be accomplished by moving from Boeing facilities the BPD's related to Seller's Products and renegotiating certain outside material and parts supply contracts related to Seller's Products. The BPD's will be transitioned from Boeing to Seller based on a mutually agreed plan.
ITEMS INCLUDED:
Attachment 20 - Page 4 of 6
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
- All BPD parts are identified in SBP Attachment 16, only the following are required to be outsourced:
- All BPD produced in [*****] will be outsourced.
- Only parts that are direct shipped to Wichita/Tulsa are included
BPD SAVINGS AND APPLICATION:
- Boeing will receive an additional [*****] cost reduction per year starting in the year 2006 to the price reduction percentages depicted in the "Quantity Based Price Reduction Percentage Table" (Table 2 above) for Periods 1 through 8.
The application of the [*****] price adjustment shall be made to the "Quantity Based Price Reduction Percentage Table" after the calculation of the quantity based price reduction has occurred, for each of the three tiers.
CALCULATION EXAMPLE:
- Reference above example (section E) resulted in an initial price of:
[*****]
- Additional [*****] cost reduction applied to Initial Unit Billing Price resulting in the Final Unit Billing Price. Final Unit Billing Price = [*****]
BILLING FOR BPD PARTS NOT YET TRANSFERRED FROM BOEING:
- Boeing will debit monthly (against current unpaid Seller invoices) the value of all BPD parts delivered in the prior month. The total value will equal the then current Boeing Unit price as outlined in Attachment 16 multiplied by the quantity of parts delivered to Seller in that month. Attachment 16 will be updated periodically by Boeing to reflect the most current Boeing fully burdened cost.
- This process will remain in effect unless and until an alternate source has been implemented for BPD parts.
- Seller will provide Boeing with a 12 month requirements forecast for BPD parts identified for transfer except for any titanium parts which Seller will provide an 18 month forecast. Seller will also provide no less than four (4) months notification to Boeing prior to alternate source implementation for any BPD part.
- BPD Parts are FOB Boeing-dock and will be shipped at Seller cost.
Attachment 20 - Page 5 of 6
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
TOOLING ASSOCIATED WITH BPD:
Only Single use tooling will be made available to Seller and Seller will have the option to purchase and pay for this tooling and its related costs (including shipping). Single use tooling shall mean any tooling that is used solely for the manufacturing of a single part Number and that is not being utilized by Boeing for any other purpose.
BOEING SUPPORT OF BPD TRANSFER:
Boeing will provide typical supplier technical and outsource support.
Attachment 20 - Page 6 of 6
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 21 TO
SPECIAL BUSINESS PROVISIONS
COMMODITY LISTING AND TERMS OF SALE
(Reference SBP Section 12.13.2)
COMMODITY LISTING
Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding "soft" aluminum alloys.
Aluminum extrusions, all press size or circle size.
Titanium includes all wrought and un-wrought titanium mill products.
TERMS OF SALE
Parties
The Seller is The Boeing Company, acting through its agent, TMX. The Customer is a Boeing subcontractor, at any tier, who is manufacturing a product in support of a Boeing requirement.
Sales
All materials to be furnished by Seller are to be within the limits and the sizes published by Seller and subject to Seller's standard tolerances for variations. Seller will warrant that all materials to be supplied will conform to the descriptions contained herein and on the face of the purchase order and that Seller will convey good title to any such materials free from any security interest, or other lien or encumbrance held by any other party and unknown to the customer. THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS AND SELLER WILL MAKE NO OTHER EXPRESS OR IMPLIED WARRANTIES EXCEPT AS STATED HEREIN. Seller will not be liable for any incidental or consequential damages for any breach of warranty, express or implied. Seller's liability and the Customer's sole and exclusive remedy will be limited at Seller's option either to (a) return of the materials and repayment of the purchase price, or (b) replacement of nonconforming materials upon return thereof to Seller. The Customer shall be required to notify Seller in writing of any claim of breach of warranty and no materials shall be returned to Seller by the Customer without Seller's consent.
Attachment 21 - Page 1 of 3
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
TERMS OF SALE - continued
Payment Terms
The following payment processes will be followed for material sold to Customer by Seller. All payments shall be in United States Dollars.
DEBIT PROCESS
The debit process will be used in all circumstances where the Customer has an account with the Seller. The amount due is the quantity shipped multiplied by the unit price, plus the price for any value added services. The amount due will be collected by the Seller's applying a debit to the Customer's account. Payment is due on the (net) fifteenth (15th) day from the scheduled delivery date. The debit will be applied to the Seller's account on the payment due date. If the debit amount exceeds the amount outstanding on the Customer's account, the Customer will remit to The Boeing Company the amount due beyond the debit payment due date. The foregoing debit process does not apply to Sellers who are only performing under orders issued by the Tulsa Division of the Boeing Commercial Airplanes.
INVOICE PROCESS
The invoice process will be used for Customers not currently making direct sales to Boeing; foreign countries governed by MITI laws and regulations (currently Australia, Brazil, China, India, Japan, and Korea), and orders issued by the Tulsa Division of the Boeing Commercial Airplanes. The amount due is the quantity shipped multiplied by the unit price, plus the price for any value added services. Payment is due on the (net) thirtieth (30th) day after the date of Seller's invoice, which shall be issued on the day following the date of shipment.
DEBIT/INVOICE DISPUTE PROCEDURE
Customer may dispute payment amounts due provided that (1) Customer contacts Seller within 25 days of the date of the debit/ invoice, (2) Customer provides a complete reason as to the dispute. If the action is Seller's to resolve, late payment charges will not be assessed on amounts that are under dispute. Once a dispute has been resolved, payment terms will be (net) fifteen (15) days from the date of resolution.
FAILURE TO PAY
In the event Customer fails to make payments when due, Seller reserves the right to assert whatever remedies it may have under law, including setoffs
Attachment 21 - Page 2 of 3
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
against amounts due from Seller to Customer on other contracts. In such an event, Seller may, with respect to future orders, require full payment in advance or otherwise alter the terms of payment specified earlier.
Attachment 21 - Page 3 of 3
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 22 TO
SPECIAL BUSINESS PROVISIONS
ABNORMAL ESCALATION
(Reference SBP 4.1)
1. Prices for Recurring Products will be adjusted for Abnormal Escalation as provided below. In the event that escalation, as forecast by a composite of the identified below indices, exceeds [*****] for any given calendar year ("Abnormal Escalation"), the Prices for Recurring Products for the subsequent calendar year shall be adjusted by that percentage value which exceeds [*****]. Abnormal Escalation is calculated each year against the Prices for Recurring Products effective for that year and is not cumulative. The adjusted Prices for Recurring Products will revert back to the SBP Attachment 1 Prices for Recurring Products at the beginning of the subsequent calendar year.
Any prolonged extraordinary inflation would be considered by the parties to determine any mutually agreeable proper actions to be taken.
2. Adjustments to the Prices for Recurring Products will be determined by the following economic indices:
A. Material - [*****]
B. Labor - [*****]
Composite - [*****]
3. Special Notes:
In the event the U.S. Bureau of Labor Statistics discontinues or alters its current method of calculating the indices specified above, Boeing and [Partner] shall agree upon an appropriate substitution for or adjustment to the indices to be employed herein.
All calculations will be held to a six (6) decimal place level of precision.
Indices shall be pulled on [November 15th] of each year.
Attachment 22 - Page 1 of 2
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
4. Abnormal Escalation Formula:
Adjustments to the Prices for Recurring Products, if any, for the period 2008 through 2021 shall be calculated as follows:
[*****]
Where [*****]
A = Adjusted Prices for Recurring Products (20X2 Price)
B = Base Prices for Recurring Products
IP = Percentage of composite index as compared to the previous year
MC = Current material index value (September 20X1)
MP = Previous year material index value (September 20X0)
LC = Current labor index value (3rd quarter 20X1)
LP = Previous year labor index value (3rd quarter 20X0)
5. Example: Abnormal Escalation Price Increase
B = $2,000,000
MC = September 2008 material index value = [*****]
MP = September 2007 material index value = [*****]
LC = 3rd quarter 2008 labor index value = [*****]
LP = 3rd quarter 2007 labor index value = [*****]
IP = [*****]
Since IP > [*****] clause is triggered
2009 Unit Price = [*****]
6. Example: Abnormal Escalation Clause Not Triggered
B = $2,000,000
MC = September 2008 material index value = [*****]
MP = September 2007 material index value = [*****]
LC = 3rd quarter 2008 labor index value = [*****]
LP = 3rd quarter 2007 labor index value = [*****]
IP = [*****]
Clause not triggered because (IP < [*****])
Attachment 22 - Page 2 of 2
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
BOEING / Spirit AeroSystems Inc. Special Business Provisions (SBP) MS-65530-0016 Amendment 1
SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS
RESERVED
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Exhibit 10.24
AMENDMENT 1
GENERAL TERMS AGREEMENT
BETWEEN
THE BOEING COMPANY
AND
SPIRIT AEROSYSTEMS INCORPORATED
BCA-65530-0016
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
TABLE OF CONTENTS
TITLE PAGE
TABLE OF CONTENTS
AMENDMENT PAGE
RECITAL PAGE
1.0 DEFINITIONS........................................................................... - 6 - 2.0 ORDERING.............................................................................. - 7 - 2.1 Issuance of Orders.............................................................. - 7 - 2.2 Acceptance of Orders............................................................ - 8 - 2.3 Written Authorization to Proceed................................................ - 8 - 3.0 TITLE AND RISK OF LOSS................................................................ - 8 - 4.0 DELIVERY.............................................................................. - 9 - 4.1 Schedule........................................................................ - 9 - 4.2 Reserved........................................................................ - 9 - 4.3 Notice of Labor Negotiations.................................................... - 9 - 5.0 ON-SITE REVIEW AND RESIDENT REPRESENTATIVES........................................... - 9 - 5.1 Review.......................................................................... - 9 - 5.2 Resident Representatives........................................................ - 10 - 5.3 Indemnification................................................................. - 10 - 6.0 CREDIT OFFICE VISIBILITY.............................................................. - 11 - 7.0 PACKING AND SHIPPING.................................................................. - 11 - 7.1 General ........................................................................ - 11 - 7.1.1 Shipping Documentation................................................... - 12 - 7.1.2 Insurance................................................................ - 12 - 7.1.3 Shipping Container Labels................................................ - 12 - 7.1.4 Carrier Selection........................................................ - 12 - 7.1.5 Invoices................................................................. - 12 - 7.1.6 Noncompliance............................................................ - 12 - 7.1.7 Reserved................................................................. - 13 - 7.2 Barcode Marking and Shipping.................................................... - 13 - 8.0 QUALITY ASSURANCE, INSPECTION, REJECTION, & ACCEPTANCE................................ - 13 - 8.1 Controlling Document............................................................ - 13 - 8.2 Seller's Inspection............................................................. - 13 - 8.2.1 Seller's Disclosure...................................................... - 13 - 8.2.2 Seller's Acceptance...................................................... - 14 - 8.3 Boeing's Inspection and Acceptance or Rejection................................. - 14 - 8.4 Rights of Boeing's Customers and Regulators to Perform Inspections, Surveillance, and Testing.................................. - 15 - 8.5 Retention of Records............................................................ - 16 - 8.6 Inspection...................................................................... - 16 - |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
8.7 Sale of Products Using Boeing Proprietary Information........................... - 16 - 8.8 Regulatory Approvals............................................................ - 17 - 9.0 EXAMINATION OF RECORDS................................................................ - 17 - 10.0 CHANGES............................................................................... - 17 - 10.1 Changes Clause.................................................................. - 17 - 11.0 GENERAL& INTERNATIONAL REQUIREMENTS................................................... - 18 - 11.1 Language........................................................................ - 18 - 11.2 Currency........................................................................ - 18 - 11.3 Import/Export................................................................... - 18 - 12.0 TERMINATION FOR CONVENIENCE........................................................... - 19 - 12.1 Basis for Termination; Notice................................................... - 19 - 12.2 Termination Instructions........................................................ - 19 - 12.3 Seller's Claim.................................................................. - 21 - 12.4 Failure to Submit a Claim....................................................... - 22 - 12.5 Partial Termination............................................................. - 22 - 12.6 Product Price................................................................... - 23 - 12.7 Exclusions or Deductions........................................................ - 23 - 12.8 Partial Payment/Payment......................................................... - 23 - 12.9 Seller's Accounting Practices................................................... - 23 - 12.10 Records......................................................................... - 23 - 13.0 CANCELLATION FOR DEFAULT.............................................................. - 24 - 13.1 Events of Default............................................................... - 24 - 13.2 Remedies........................................................................ - 25 - 14.0 EXCUSABLE DELAY....................................................................... - 27 - 15.0 SUSPENSION OF WORK.................................................................... - 28 - 16.0 TERMINATION OR WRONGFUL CANCELLATION.................................................. - 28 - 17.0 ASSURANCE OF PERFORMANCE.............................................................. - 29 - 18.0 RESPONSIBILITY FOR PROPERTY........................................................... - 30 - 19.0 LIMITATION OF SELLER'S RIGHT TO ENCUMBER ASSETS....................................... - 30 - 20.0 PROPRIETARY INFORMATION AND ITEMS..................................................... - 30 - 21.0 COMPLIANCE............................................................................ - 32 - 21.1 Compliance with Laws............................................................ - 32 - 21.2 Government Requirements......................................................... - 32 - 21.3 Ethic Requirements / Code of Conduct............................................ - 32 - |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
22.0 INTEGRITY IN PROCUREMENT.............................................................. - 33 - 23.0 UTILIZATION OF SMALL BUSINESS CONCERNS................................................ - 33 - 24.0 BOEING'S RIGHTS IN SELLER'S PATENTS, COPYRIGHTS, TRADE SECRETS, AND TOOLING........... - 33 - 25.0 TERMINATION OF AIRPLANE PROGRAM....................................................... - 34 - 25.1 Program Termination............................................................. - 34 - 25.2 Termination Liability........................................................... - 34 - 26.0 PUBLICITY............................................................................. - 35 - 27.0 PROPERTY INSURANCE.................................................................... - 35 - 27.1 Insurance....................................................................... - 35 - 27.2 Certificate of Insurance........................................................ - 35 - 27.3 Notice of Damage or Loss........................................................ - 36 - 28.0 RESPONSIBILITY FOR PERFORMANCE........................................................ - 36 - 28.1 SUBCONTRACTING........................................................................ - 37 - 28.3 Assignment...................................................................... - 37 - 29.0 NON-WAIVER/PARTIAL INVALIDITY......................................................... - 39 - 30.0 HEADINGS.............................................................................. - 39 - 31.0 PRICES................................................................................ - 39 - 32.0 MUTUAL DRAFTING....................................................................... - 39 - 33.0 DISPUTES.............................................................................. - 40 - 34.0 COUNTERPARTS.......................................................................... - 40 - 35.0 TAXES................................................................................. - 40 - 35.1 Inclusion of Taxes in Price........................................................... - 40 - 35.2 Litigation...................................................................... - 41 - 35.3 Rebates......................................................................... - 41 - 36.0 OFFSET CREDITS........................................................................ - 41 - 37.0 NO JOINT VENTURE, AGENCY OR PARTNERSHIP RELATIONSHIP................................. - 41 - 38.0 APPLICABLE LAW........................................................................ - 42 - |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
AMENDMENTS
Amend Number Description Date Approval ------ ------------------------------------------------------ ------ -------- 1 Incorporate name change from Mid-Western Aircraft 4/1/06 Systems Inc. to Spirit AeroSystems Incorporated. Added effective date of June 17, 2005 to agreement, and to sections 12.3 and 16.0. |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
GENERAL TERMS AGREEMENT
RELATING TO
BOEING PRODUCTS
THIS GENERAL TERMS AGREEMENT ("GTA") is entered into as of June 17, 2005, by and between Spirit AeroSystems, Inc., a Delaware corporation, with its principal office in Wichita, Kansas, ("Seller"), and The Boeing Company, a Delaware corporation acting by and through Boeing Commercial Airplanes, McDonnell Douglas Corporation, a Maryland corporation, and Boeing-Oakridge Company, (collectively and individually "Boeing"). Hereinafter, the Seller and Boeing may be referred to jointly as "Parties" hereto.
AGREEMENTS
1.0 DEFINITIONS
The definitions set forth below shall apply to this GTA, any Order, and any related Special Business Provisions ("SBP") (collectively "the Agreement"). Words importing the singular shall also include the plural and vice versa.
A. "Customer" means any owner, lessee or operator of a Boeing aircraft or commodity, or designee of such owner, lessee or operator.
B. "Contract Administrator" means the individual designated by Seller as being the primarily responsible for interacting with Boeing regarding this Agreement, and any applicable SBP or Order.
C. "FAA" means the United States Federal Aviation Administration or any successor agency thereto.
D. "FAR" means the Federal Acquisition Regulations in effect on the date of this Agreement.
E. "Person" means any individual, partnership, corporation, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof or any other entity.
F. "Procurement Representative" means the individual designated by Boeing as being primarily responsible for interacting with Seller regarding this Agreement, and any applicable SBP or Order.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
G. "Order" means each purchase contract and purchase order issued by Boeing and either accepted by Seller under the terms of this GTA and any applicable SBP or issued within Boeing's authority under this GTA and any applicable SBP.
H. "Product" means goods, including components and parts thereof,
Production Articles, services, documents, data, software, software
documentation and other information or items furnished or to be
furnished to Boeing under any Order, including Tooling, except for
Common Use Tooling but does not include Products or Production
Articles used for modification or retrofit of previously delivered
Program Airplanes, other than as provided in sustaining SBP Section
4.3.1. Purchases of Parts or Production Articles for modification or
retrofits, other than those described in sustaining SBP 4.3.1, shall
be governed by SBP number SBP-6-5118-AEC-016.
I. Program Airplane "means a Boeing commercial transport aircraft having a model designation of 737, 747, 767 or 777 for which Seller shall provide Product Definition and Production Articles, pursuant to the applicable SBP.
J. "Tooling" means all tooling, used in production or inspection of Products, either provided to Seller by Boeing or supplied by Seller whereby Boeing agrees to pay Seller for the manufacture of the tooling.
2.0 ORDERING
2.1 ISSUANCE OF ORDERS
Boeing may issue Orders to Seller from time to time in accordance with the applicable SBP. Each Order shall contain a description of the Products ordered, a reference to the applicable specifications, drawings or supplier part number, the quantities and prices, the delivery schedule, the terms and place of delivery and any special conditions.
Each Order shall be governed by and be deemed to include the provisions of this GTA and the applicable SBP. Purchase Order Terms and Conditions, Form D1-4100-4045, 49-5700, GP1, DAC Form 26-915, DAC Form 26-916 and Form P252T do not apply. Any other Order terms and conditions, which conflict with this Agreement or the applicable SBP, do not apply unless specifically agreed to in writing by the Parties.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
2.2 ACCEPTANCE OF ORDERS
Each Order is Boeing's offer to Seller and acceptance is strictly limited to its terms. Unless specifically agreed to in writing by the Procurement Representative of Boeing, Boeing objects to, and is not bound by, any term or condition that differs from or adds to the Order. Similarly, unless specifically agreed to in writing by Seller's Contracts Administrator, Seller objects to, and is not bound by, any term or condition that differs from or adds to the Order. The Order is subject to this GTA, the applicable SBP, including the other provisions as described in the applicable SBP section entitled Order of Precedence. Seller's commencement of performance or acceptance of the Order in any manner shall conclusively evidence Seller's acceptance of the Order as written, provided, however, that if Seller commences work despite a failure to agree as provided in Section 10.1, Seller shall have ten (10) days from commencement of such work to notify Boeing of its objection, or be deemed to have, by performance, accepted such Order.
Any rejection by Seller of an Order shall specify the reasons for rejection and any changes or additions that would make the Order acceptable to Seller; provided, however, that Seller may not reject any Order for reasons inconsistent with the provisions of this Agreement or the applicable SBP.
2.3 WRITTEN AUTHORIZATION TO PROCEED
Boeing's Procurement Representative may give written or electronic authorization to Seller's Contracts Administrator to commence performance before Boeing issues an Order. If Boeing's authorization specifies that an Order will be issued, Boeing and Seller shall proceed, and Boeing shall be obligated, as if an Order had been issued. This Agreement, the applicable SBP and the terms stated in the authorization shall be deemed to be a part of Boeing's offer and the Parties shall promptly and in good faith agree on any open Order terms. If Boeing does not specify in its authorization that an Order shall be issued, Boeing's obligation is strictly limited to the terms of the authorization.
If Seller commences performance before an Order is issued and without receiving Boeing's prior authorization to proceed, such performance shall be at Seller's risk and expense.
3.0 TITLE AND RISK OF LOSS
Except as otherwise agreed to by the Parties, title to and risk of any loss of or damage to the tangible Products shall pass F.O.B.origin, except for loss or damage thereto resulting from Seller's fault or negligence.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
4.0 DELIVERY
4.1 SCHEDULE
Subject to GTA Sections 14.0 and 15.0, Seller shall strictly adhere to the shipment, delivery or completion schedules specified in the Order. In the event of any anticipated or actual delay, including but not limited to delays attributed to labor disputes, Seller shall: (i) promptly notify Boeing in writing of the reasons for the delay and the actions being taken to overcome or minimize the delay; and (ii) provide Boeing with a written recovery schedule. If Boeing requests, Seller shall, if delay is due to Seller's fault or negligence at Seller's expense, and otherwise, at Boeing's expense, ship via air or other expedited routing to avoid the delay or minimize it as much as possible. Seller shall not deliver Products prior to the scheduled delivery dates unless authorized by Boeing in writing.
Boeing shall, at no additional cost to Boeing, retain goods furnished in excess of the specified quantity or in excess of any allowable overage unless, within forty-five (45) days of shipment, Seller requests return of such excess. In the event of such request, Seller shall reimburse Boeing for reasonable costs associated with storage and return of excess.
4.2 RESERVED
4.3 NOTICE OF LABOR NEGOTIATIONS
When requested by Boeing, Seller will use commercially reasonable efforts to provide status on labor contracts and pending negotiations, including that of Seller's subcontractors or suppliers, except as may be prohibited by law or contract.
5.0 ON-SITE REVIEW AND RESIDENT REPRESENTATIVES
5.1 REVIEW
Seller hereby grants, and shall cause any of its subcontractors or suppliers to grant, to Boeing the right to visit the facility of Seller or any of its subcontractors or suppliers during operating hours to review progress and performance with respect to production, schedule, cost, quality and protection of Boeing's proprietary rights under any Order. Any Boeing representative approved by Seller, such approval not to be unreasonably withheld, shall be allowed access to all areas used for the performance of any Order; provided, however, that if Seller believes that the information to which Boeing seeks access is commercially sensitive, the Parties will agree upon a process to protect such information; provided further, that Boeing shall not be entitled to any information which relates to a customer other than Boeing. Access shall be subject to the regulations of any governmental agency regarding admissibility and movement of personnel on the premises of Seller or any of its subcontractors or suppliers.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
Boeing shall notify Seller a period of time that is reasonable given the circumstances prior to any visit. Such notice shall contain the names, citizenship and positions of the visiting personnel and the duration and purpose of such visit.
5.2 RESIDENT REPRESENTATIVES
Boeing may, in its sole discretion and in coordination with Seller, and for such period as Boeing deems necessary, locate resident personnel ("Resident Team") at Seller's facility to assist or support Seller. The Resident Team shall function under the direction of a resident Boeing manager, if appropriate, or a manager located at Boeing who will supervise Resident Team activities.
The Resident Team shall be allowed access to or to review, as the case may be, all work areas, program status reports and management reviews used for or relating to Seller's performance of any Order.
Seller shall supply the Resident Team with office space, desks, facsimile machines, telephones, high-speed access to internet services (if available from local providers), stationery supplies, filing cabinets, communication facilities, secretarial services and any other items reasonably requested by Boeing. A reasonable portion of the Resident Team's working area shall be dedicated to space for private telephone calls, meetings and similar Boeing activities. All costs and expenses for such facilities and services, if required, shall be paid by Seller.
Notwithstanding such access and review, Seller remains solely responsible for performing in accordance with each Order.
5.3 INDEMNIFICATION
Boeing shall indemnify and hold harmless Seller, its officers, agents and employees, from and against any liability, obligation, claim, demand or cause of action for bodily injury, including death, or damage to property, to the extent resulting from the negligent acts or omissions of Boeing, its officers, agents or employees which occurs while on Seller's premises.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
6.0 CREDIT OFFICE VISIBILITY
Seller will cooperate with Boeing's Corporate Credit Office in response to reasonable requests for financial data in a timely manner. If trends remain stable, the data provided will be limited to balance sheets, schedule of aggregate accounts payable and receivable, major lines of credit, creditors, income statements (profit and loss), cash flow statements, firm backlog, and headcount. In the event of material deterioration in financial condition or performance, Boeing may reasonably request additional data to assess potential contract performance risk. Data requested by Boeing may include if reasonable in the circumstances, but may not be limited to, trade account ageing, banking agreements and financial projections, but will not include identifiable information with respect to Customers other than Boeing. All such information will be treated as confidential in accordance with GTA Section 20.0 and shall be used only by Boeing's Corporate Credit Office for the limited purpose of verifying Seller's financial status and capability to perform to contract terms.
7.0 PACKING AND SHIPPING
7.1 GENERAL
Seller shall pack the Products to prevent damage and deterioration taking into account method of shipment, location of shipment and destination of receipt, as well as time associated with shipment. To the extent Seller arranges shipping in accordance with the SBP, Seller shall comply with carrier tariffs. Unless the Order specifies otherwise, the price for Products sold place of destination shall include shipping charges. Unless otherwise specified in the Order, Products sold place of origin or shipment shall be forwarded collect. For Products shipped domestically, Seller shall make no declaration concerning the value of the Products shipped, except on the Products where the tariff rating is dependent upon released or declared value or as otherwise required by law, rule or regulation. In such event, Seller shall release or declare such value at the maximum value within the lowest rating. Boeing may charge Seller for damage to or deterioration of any Products resulting from improper packing or packaging. Seller shall comply with any special instructions stated in the applicable Order subject to the terms of the SBP. Upon Boeing's request, Seller will identify packaging charges showing material and labor costs for container fabrication.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
7.1.1 SHIPPING DOCUMENTATION
Shipments by Seller or its subcontractors or suppliers must include packing
sheets. Each packing sheet must include at a minimum the following: a) Seller's
name, address, phone number; and supplier code number b) Order and item number;
c) ship date for the Products; d) total quantity shipped and quantity in each
container, if applicable; e) legible packing slip number; f) nomenclature; g)
unit of measure; h) "ship to" information if other than Boeing; i) warranty data
and certification, as applicable; j) rejection tag, if applicable; k) Seller's
certification that Products comply with Order requirements; and, l)
identification of optional material used, if applicable. A shipment containing
hazardous and non-hazardous materials must have separate packing sheets for the
hazardous and non-hazardous materials. Items shipped on the same day will be
consolidated on one bill of lading or airbill, unless Boeing's Procurement
Representative authorizes otherwise. The shipping documents will describe the
material according to the applicable classification or tariff rating. The total
number of shipping containers will be referenced on all shipping documents.
Originals of all government bills of lading will be surrendered to the origin
carrier at the time of shipment.
7.1.2 INSURANCE
Seller will not insure any shipment designated origin or place of shipment unless authorized by Boeing.
7.1.3 SHIPPING CONTAINER LABELS
Seller will label each shipping container with the Order number and the number that each container represents of the total number being shipped (e.g., Box 1 of 2, Box 2 of 2).
7.1.4 CARRIER SELECTION
Boeing will select the carrier and mode of transportation for all shipments where freight costs will be charged to Boeing.
7.1.5 INVOICES
Seller will include copies of documentation supporting prepaid freight charges (e.g., carrier invoices or UPS shipping log/manifest), if any, with its invoices.
7.1.6 NONCOMPLIANCE
If Seller is unable to comply with the shipping instructions in an Order, Seller will contact Boeing's Traffic Management Department or Boeing's Authorized Procurement Representative.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
7.1.7 RESERVED
7.2 BARCODE MARKING AND SHIPPING
For Orders from Boeing locations that have approved Seller to utilize barcode labeling for shipping and packaging, Seller shall mark and package such shipments in accordance with the applicable barcode requirements for that location. Where approved and pursuant to applicable specifications, Seller will utilize barcoding technology for part marking Products.
8.0 QUALITY ASSURANCE, INSPECTION, REJECTION, & ACCEPTANCE
8.1 CONTROLLING DOCUMENT
The controlling quality assurance document for Orders shall be as set forth in the applicable SBP.
8.2 SELLER'S INSPECTION
Seller shall inspect or otherwise verify that all Products, including those components procured from or furnished by subcontractors or suppliers or Boeing, comply with the requirements of the Order prior to shipment to Boeing or Customer. Seller shall be responsible for all tests and inspections of the Product during receiving, manufacture and Seller's final inspection. Seller agrees to furnish copies of test and/or control data upon request from Boeing's Procurement Representative.
8.2.1 SELLER'S DISCLOSURE
Seller shall provide written notification to Boeing within one business day
after Seller becomes aware that a nonconformance (i) is determined to exist, or
(ii) is reasonably believed to exist, on Product already delivered to Boeing
under any Order. The following must be included.
- Affected process or Product number and name
- Description of the problem (i.e. what it is and what it should be);
- Quantity and dates delivered;
- Suspect/affected serial number(s) or date codes, when applicable.
The Seller shall notify the Boeing Procurement Representative and the Boeing Procurement Quality Assurance Field Representative for the Boeing location where the Product was delivered.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
If the nonconforming condition has been previously identified by Boeing, using a Nonconformance Record or equivalent means and requesting a corrective action response, the Seller shall notify the Boeing investigator identified on the corrective action request that additional Product is affected.
8.2.2 SELLER'S ACCEPTANCE
Seller shall provide with all shipments the following evidence of acceptance by its quality assurance department: (a) certified physical and metallurgical or mechanical test reports where required by controlling specifications, or (b) a signed, dated statement on the packing sheet certifying that its quality assurance department has inspected the Products and they adhere to all applicable drawings and/or specifications.
8.3 BOEING'S INSPECTION AND ACCEPTANCE OR REJECTION
Seller shall achieve and maintain minimum Boeing requirements for Supplier Code Delegation in accordance with appropriate Boeing policy in order that Seller may source inspect, and accept, Product on Boeing's behalf. If Seller fails to achieve and maintain Supplier Code Delegation, Product shall be source inspected by Boeing, or Boeing's designee, at Seller's facilities, at Seller's cost. Boeing will accept the Products or give Seller's Contract Administrator notice of rejection at Seller's facilities, notwithstanding any payment, prior test or inspection, or passage of title. Nothing in this GTA Section 8.3 shall be construed as limiting Boeing's post acceptance remedies, including the ability to revoke acceptance. No inspection, test delay or failure to inspect or test or failure to discover any defect or other nonconformance shall relieve Seller of any obligations under any Order or impair any right or remedy of Boeing.
Boeing may exercise its right of cancellation for Seller's breach of this
Section 8.3 only as provided in GTA Section 13.2.A.
If Seller delivers non-conforming Products and such Products have not been incorporated in an aircraft delivered to and accepted by a customer, Boeing may at its option and at Seller's expense (i) return the Products for credit or refund; (ii) require Seller to promptly correct or replace the Products; (iii) correct the Products; or, (iv) obtain replacement Products from another source. These remedies are in addition to any remedies Boeing may have at law or equity. Seller shall not redeliver corrected or rejected goods without disclosing the former rejection or requirement for correction. Seller shall disclose any corrective action taken. Repair, replacement and other correction and redelivery shall be completed within the original delivery schedule or such later time as the Procurement Representatives of Boeing may reasonably direct.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
All reasonable costs and expenses incurred and damages suffered by Boeing (including compensation made by Boeing to its customers), in each case as a result of or in connection with nonconformance and repair, replacement or other correction may be recovered from Seller by setoff or credit. Upon making any payment to Boeing pursuant to this Section 8.3, Seller shall be subrogated, solely to the extent of such payment, to any rights which Boeing may have against amounts that may be owed by any third-parties with respect to the nonconforming Product with respect to which such payment was made and Boeing shall assign any such rights to Seller. Boeing shall retain any and all rights to claim against such third-parties for amounts not compensated by Seller. Seller and Boeing shall cooperate in asserting their respective claims against third parties. Provided, that if Boeing determines not to cooperate in a claim by Seller against a third-party, then Boeing shall reimburse to Seller the amount of the payment that Seller has made to Boeing that is attributable to the actions of the third-party.
Acceptance of any Product by Boeing following any repair or rework pursuant to this GTA Section 8.3 shall not alter or affect the obligations of Seller or the rights of Boeing under 16.1 of the applicable SBP.
8.4 RIGHTS OF BOEING'S CUSTOMERS AND REGULATORS TO PERFORM INSPECTIONS, SURVEILLANCE, AND TESTING
Boeing's rights to perform inspections, surveillance and tests and to review procedures, practices, processes and related documents related to quality assurance, quality control, flight safety, and configuration control shall extend to the Customers of Boeing that are departments, agencies or instrumentalities of the United States Government and to the FAA and any successor agency or instrumentality of the United States Government. Boeing may also, at Boeing's option, by prior written notice from Boeing's Procurement Representative to Seller's Contracts Administrator, extend such rights to other Customers of Boeing and to agencies or instrumentalities of other governments equivalent in purpose to the FAA. Seller shall cooperate with any such United States Government or Boeing directed inspection, surveillance, test or review without additional charge to Boeing. Nothing in any Order shall be interpreted to limit United States Government access to Seller's facilities pursuant to law or regulation.
Where Seller is located in or subcontracts with a supplier or subcontractor located in a country which does not have a bilateral airworthiness agreement with the United States, Seller will obtain and maintain on file and require its affected supplier(s) or subcontractor(s) to obtain and maintain on file, subject to review by Boeing, a letter from the applicable government where the Product or subcontracted element is to be manufactured stating that Boeing and the FAA will be granted access to perform inspections, surveillance and tests and to review procedures, practices, processes and related documents related to quality assurance, quality control, flight safety, and configuration control.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
8.5 RETENTION OF RECORDS
For Orders supporting BCA, Seller shall maintain, on file at the Seller's facility, quality records traceable to the conformance of product/part numbers delivered to Boeing. Seller shall make such records available to authorities and to Boeing's authorized representative(s). Seller shall retain such records for a period of not less than seven (7) years from the date of shipment under each applicable Order for all product/part numbers unless otherwise specified on the Order.
At the expiration of such period, if Seller determines not to retain such records, Seller shall notify Boeing in writing, and Boeing shall have the right, within thirty (30) days following receipt of such notice from Seller, to request delivery of such records. In the event Boeing chooses to exercise this right, Seller shall promptly deliver such records or copies thereof to Boeing at no additional cost on media agreed by both parties.
8.6 INSPECTION
At no additional cost to Boeing, Products may be subject to inspection, surveillance and test at reasonable times and places, including Seller's subcontractors' or suppliers' locations. Boeing will perform inspections; surveillance and tests so as not to unduly delay the work. Seller shall maintain an inspection system acceptable to Boeing for the Products purchased under any Order.
If Boeing performs an inspection or test on the premises of Seller or its subcontractors or suppliers, Seller shall furnish and require its subcontractors or suppliers to furnish, without additional charge, reasonable facilities and assistance for the safe and convenient performance of these duties.
Seller's documentation accompanying the shipment must reflect evidence of this inspection.
8.7 SALE OF PRODUCTS USING BOEING PROPRIETARY INFORMATION
Except as set forth in any other agreement between the parties executed on the date hereof, or hereafter executed pursuant to an agreement executed between the parties on the date hereof Seller shall not sell or offer to sell Products manufactured using Boeing Proprietary Information or Materials, to anyone other than Boeing.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
8.8 REGULATORY APPROVALS
For aircraft regulated by the FAA or non-U.S. equivalent agency, regulatory approval may be required for Seller to make direct sales (does not include "direct ship" sale through Boeing) of modification or replacement parts to owners/operators of type-certificated aircraft. Regulatory approval, such as Parts Manufacturer Approval (PMA), is granted by the FAA or appropriate non-U.S. equivalent regulatory agency. Seller agrees not to engage in any such direct sales of Products under this Agreement without any required regulatory approval. For Seller proprietary parts for Boeing aircraft, Seller agrees to notify Boeing of application for PMA or other applicable regulatory approval and subsequent approval or denial of same. Upon receipt of proof of PMA or other applicable regulatory approval, Boeing may list Seller in the Illustrated Parts Catalog as seller of that part.
9.0 EXAMINATION OF RECORDS
Seller shall maintain complete and accurate records. Such records shall support all services performed, allowances claimed and costs incurred by Seller in the performance of each Order, including but not limited to those factors which comprise or affect direct labor hours, direct labor rates, material costs, burden rates and subcontracts. Seller will provide adequate data to support its positions for any cost related issue. Seller shall provide assistance to evaluate and interpret such data if requested by Boeing. Such evaluation shall provide Boeing with complete information regarding Seller's proposal for the purpose of the negotiation of equitable adjustments for changes and termination/obsolescence claims pursuant to GTA Section 10.0. Boeing shall treat all information disclosed under this GTA Section as confidential, in accordance with GTA Section 20.0, unless required by U.S. Government contracting regulation(s).
10.0 CHANGES
10.1 CHANGES CLAUSE
Boeing's Procurement Representative may, without notice to sureties, in writing direct changes within the general scope of this Agreement or an Order in any of the following: (i) technical requirements and descriptions, specifications, statement of work, drawings or designs; (ii) shipment or packing methods; (iii) place of delivery, inspection or acceptance; (iv) reasonable adjustments in quantities or delivery schedules or both; (v) amount of Boeing-furnished property; and, if this contract includes services, (vi) description of services to be performed; (vii) time of performance (i.e., hours of the day, days of the week, etc.); and (viii) place of performance. Seller shall comply immediately with such direction.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
If such change increases or decreases the cost or time required to perform this
contract, Boeing and Seller shall negotiate an equitable adjustment in the price
or schedule, or both, to reflect the increase or decrease. Unless otherwise
agreed in writing, Seller must assert any claim for adjustment to Boeing's
Procurement Representative in writing within twenty-five (25) days and deliver a
fully supported proposal to Boeing's Procurement Representative within sixty
(60) days after Seller's receipt of such direction. Boeing shall modify the
Order in writing accordingly. Boeing may, at its sole discretion, consider any
claim regardless of when asserted. If Seller's claim includes the cost of
property made obsolete or excess by the change, Boeing may direct the
disposition of the property. Boeing may examine Seller's pertinent books and
records to verify the amount of Seller's claim. Failure of the Parties to agree
upon any adjustment shall not excuse Seller from performing in accordance with
Boeing's direction.
If Seller considers that Boeing's conduct constitutes a change, Seller shall notify Boeing's Procurement Representative immediately in writing as to the nature of such conduct and its effect upon Seller's performance. Pending direction from Boeing's Procurement Representative, Seller shall take no action to implement any such change.
11.0 GENERAL& INTERNATIONAL REQUIREMENTS
11.1 LANGUAGE
The Parties hereto have agreed that this Agreement be written in American English only. All contractual documents and all correspondence, invoices, notices and other documents shall be submitted in American English. Any necessary conversations shall be held in English. Boeing shall determine whether measurements will be in the English or Metric system or a combination of the two systems. When furnishing documents to Boeing, Seller shall not convert measurements, which Boeing has stated in an English measurement system into the Metric system.
11.2 CURRENCY
Unless specified elsewhere herein, all prices shall be stated in and all payments shall be made in the currency of the United States of America (U.S. Dollars). No adjustments to any prices shall be made for changes to or fluctuations in currency exchange rates.
11.3 IMPORT/EXPORT
(a) In performing the obligations of this Agreement, both Parties will comply with United States export control and sanctions laws, regulations, and orders, as they may be amended from time to time, applicable to the export and re-export of goods, software, technology, or technical data ("Items") or services, including without limitation the Export Administration Regulations ("EAR"), International Traffic in Arms Regulations ("ITAR"), and regulations and orders administered by the Treasury Department's Office of Foreign Assets Control (collectively, "Export Control Laws").
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
(b) The Party conducting the export shall be responsible for obtaining the required authorizations. The Party conducting the re-export shall be responsible for obtaining the required authorizations. Each Party shall reasonably cooperate and exercise reasonable efforts to support the other Party in obtaining any necessary licenses or authorizations required to perform its obligations under this Agreement.
(c) The Party providing any Items under this Agreement shall, upon request, notify the other Party of the Items' Export Control Classification Numbers ("ECCNs") as well as the ECCNs of any components or parts thereof if they are different from the ECCN of the Item at issue.
(d) Each Party represents that (i) the Items, and the parts and components
thereof, it is providing under this Agreement are not "defense articles" as that
term is defined in 22 C.F.R. Section 120.6 of the ITAR. and (ii) the services it
is providing under this Agreement are not "defense services" as that term is
defined in 22 C.F.R. Section 120.9 of the ITAR. The Parties acknowledge that
this representation means that an official capable of binding the Party
providing such Items knows or has otherwise determined that such Items, and the
parts and components thereof, are not on the ITAR's Munitions List at 22 C.F.R.
Section 121.1. Each Party agrees to reasonably cooperate with the other in
providing, upon request of the other Party, documentation or other information
that supports or confirms this representation
(e) To the extent that such Items, or any parts or components thereof, were specifically designed or modified for a military end use or end user, the Party providing such Items shall notify the other Party of this fact and shall also provide the other Party with written confirmation from the United States Department of State that such Items, and all such parts or components thereof, are not subject to the jurisdiction of the ITAR.
12.0 TERMINATION FOR CONVENIENCE
12.1 BASIS FOR TERMINATION; NOTICE
Boeing may, from time to time terminate all or part of any Order issued hereunder, by written notice to Seller's Contract Administrator. Any such written notice of termination shall specify the effective date and the extent of any such termination.
12.2 TERMINATION INSTRUCTIONS
On receipt of a written notice of termination pursuant to GTA Section 12.1, unless otherwise directed by Boeing, Seller shall:
A. Promptly stop work as specified in the notice;
B. Promptly terminate its subcontracts and purchase orders relating to work terminated;
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
C. Use commercially reasonable efforts to settle any termination claims made by its subcontractors or suppliers. It is advisable that Seller review such claims with Boeing prior to settlement, however Seller shall not be required to obtain pre-approval from Boeing, provided, that with respect to any payments made by Seller without Boeing's prior approval, Boeing shall be obligated to pay Seller only that portion of such termination claims as are compensable pursuant to GTA 12.3.;
D. Preserve and protect all terminated inventory and Products;
E. At Boeing's request, transfer title (to the extent not previously transferred) and deliver to Boeing or Boeing's designee all supplies, materials and work-in-process, produced or acquired by Seller for the performance of the terminated Order, and to the extent not used, permitted to be used according to the terms of the applicable SLA or required by Seller for performance under this Agreement, any Order or any other agreement with Boeing, Tooling and manufacturing drawings and data produced or acquired by Seller for the performance of the Order, all in accordance with the terms of such request;
F. Be compensated by Boeing for such items to the extent provided in GTA Section 12.3 below; and
G. To the extent not used or required by Seller for performance under this Agreement, any Order or any other agreement with Boeing, take all reasonable steps required to return, or at Boeing's option and with prior written approval to destroy, all Boeing Proprietary Information and Materials, as set forth in GTA Section 20.0, associated with the terminated Order, in the possession, custody or control of Seller or any of its subcontractors or suppliers, which Boeing reasonably believes are necessary.
H. Take such other action as, in Boeing's reasonable opinion, may be necessary, and as Boeing shall direct in writing, to facilitate termination of the Order; and
I. Complete performance of the work not terminated.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
12.3 SELLER'S CLAIM
If Boeing terminates an Order in whole or in part pursuant to GTA Section 12.1
above, Seller shall have the right to submit a written termination claim to
Boeing in accordance with the terms of this GTA Section 12.3. Such termination
claim shall be asserted to Boeing within forty-five (45) days (to the extent
then known but not later than six (6) months after the notice of termination)
and all documentation supporting said claim must be asserted not later than six
(6) months after Seller's receipt of the termination notice and shall be in the
form prescribed by Boeing. Such claim must contain sufficient detail (to the
extent then reasonably available) to explain the amount claimed, including
detailed inventory schedules and a detailed breakdown of all costs claimed
separated into categories (e.g., materials, purchased parts, finished
components, labor, burden, general and administrative), and to explain the basis
for allocation of all other costs. In no event shall claims for non-recurring
engineering be considered or paid by Boeing to Seller.
If Boeing terminates an Airplane Program according to the terms of GTA 25.0 within [*****] of June 17, 2005, then Seller shall further have the right to receive from Boeing an inconvenience fee equal to the [*****] determined without regard to any write-off or other adjustment by reason of such termination, for the Tooling in support of the terminated Airplane Program.
Boeing shall have ninety (90) days from receipt of Seller's claim to dispute such claim by delivering to Seller a written notice setting forth Boeing's grounds for dispute. If Boeing does not deliver such a notice to Seller or reach agreement with Seller regarding Seller's claim within such ninety (90) day period, Seller may by written notice, seek resolution of its claim through the Senior Vice President Supplier Management or that person's equivalent (the "Senior Executive") as provided in Section 33. If no response from such Senior Executive is received by Seller within 30 days of such Senior Executive's receipt of Seller's notice, Boeing shall pay Seller the amount claimed by Seller within fifteen (15) days thereafter. Provided, however, that such payment shall be subject to full or partial recovery by Boeing by setoff, credit or otherwise, to the extent Seller's claim is determined by Boeing to not be (x) in compliance with the terms of Section 12 or Attachment 1 to this GTA or (y) compensable under the regulations cited below; provided however, that Boeing's determination shall remain subject to the provisions of Section 33. With regard to the amount compensable to Seller under a termination pursuant to GTA Section 12.1 above, Seller shall be entitled to compensation in accordance with and to the extent allowed under the terms of FAR 52-249-2 paragraphs (e)-(i), (Sept 96) (as published in 48 CFR Section 52.249-2 approval 1996; without Alternates, unless alternate clause date is called out on the Order) which is incorporated herein by reference except "Government" and "Contracting Officer" shall mean Boeing, "Contractor" shall mean Seller and "Contract" shall mean Order.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
Following payment by Boeing in accordance with the preceding paragraph, Seller shall indemnify Boeing and hold Boeing harmless from and against (i) any and all claims, suits and proceedings against Boeing by any subcontractor or supplier of Seller in respect of any such termination and (ii) any and all reasonable costs, expenses, losses and damages incurred by Boeing in connection with any such claim, suit or proceeding.
With respect to claims by any subcontractor or supplier of Seller, within thirty
(30) days after receipt by Boeing of a claim or notice of the commencement of
any suit or proceeding against Boeing, Boeing will, if a claim is to be made by
Boeing against Seller, give notice to Seller adequate to apprise Seller of the
nature of the claim or the commencement of such suit or proceeding, specifying
the factual basis of the claim and the amount thereof in reasonable detail to
the extent then known by Boeing. Failure of Boeing to give such notice will not
relieve Seller from liability under this GTA Section 12.3, except if and to the
extent that Seller is actually prejudiced thereby. If any subcontractor or
supplier brings a claim, suit or proceeding against Boeing as a result of such
termination, and Boeing gives notice thereof to Seller. Seller may within twenty
(20) days of that notice assume the claim and its defense. After notice from
Seller to Boeing of Seller's election to assume the defense of such claim, suit
or proceeding, Seller will not be liable to Boeing for any fees of other counsel
or any other expenses with respect to the defense of such claim, suit or
proceeding, in each case subsequently incurred by Boeing in connection with the
defense of such claim, suit or proceeding. If Seller assumes the defense of a
claim, suit or proceeding: (i) no compromise or settlement of such claims may be
effected by Seller without Boeing's consent (which shall not be unreasonably
withheld or delayed) unless (A) there is no finding or admission of any
violation by Boeing of any law or any violation by Boeing of the rights of any
Person, and (B) the sole relief provided is monetary damages that are paid in
full by Seller; (ii) Seller will have no liability with respect to any
compromise or settlement of such claims, suits or proceedings effected by Boeing
without Seller's consent (which shall not be unreasonably withheld or delayed);
and (iii) Boeing will cooperate as Seller may reasonably request in
investigating, defending and (subject to clause (i)) settling such claim, suit
or proceeding.
12.4 FAILURE TO SUBMIT A CLAIM
Notwithstanding any other provision of this GTA Section 12.0, if Seller fails to submit a termination claim within the time period set forth in GTA Section 12.3, Seller shall be barred from submitting a claim and Boeing shall have no obligation for payment to Seller under this GTA Section 12.0 except for those Products previously delivered and accepted by Boeing.
12.5 PARTIAL TERMINATION
Any partial termination of an Order shall not alter or affect the terms and conditions of the Order or any Order with respect to Products not terminated.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
12.6 PRODUCT PRICE
Termination under this GTA Section 12.0 shall not result in any change to unit prices for Products not terminated, except as may be provided in an applicable SBP.
12.7 EXCLUSIONS OR DEDUCTIONS
The following items shall be excluded or deducted from any claim submitted by Seller:
A. All unliquidated advances or other payments made by Boeing to Seller pursuant to a terminated Order;
B. Any settled claim which Boeing has against Seller;
C. The agreed price for scrap allowance;
D. Except for normal spoilage and any risk of loss assumed by Boeing, the agreed fair value of property that is lost destroyed, stolen or damaged.
12.8 PARTIAL PAYMENT/PAYMENT
Payment, if any, to be paid under this GTA Section 12.0 shall be made fifteen
(15) days after settlement between the parties or as otherwise agreed to between
the parties in accordance with the terms outlined in GTA Section 12.3. Boeing
may make partial payments and payments against costs incurred by Seller for the
terminated portion of the Order. If the total payments exceed the final amount
determined to be due, Seller shall repay the excess to Boeing upon demand.
12.9 SELLER'S ACCOUNTING PRACTICES
For purposes of GTA Section 12.0 and subsections within it, Boeing and Seller agree that Seller's "normal accounting practices" used in developing the price of the Product(s) shall also be used in determining the allocable costs at termination. For purposes of this GTA Section 12.9, Seller's "normal accounting practices" refers to Seller's method of charging costs as a direct charge, overhead expense, general administrative expense, etc.
12.10 RECORDS
Unless otherwise provided in this Agreement or by law, Seller shall maintain all financial records and documents relating to the terminated portion of the Order for three (3) years after final settlement of Seller's termination claim.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****]. Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1 13.0 CANCELLATION FOR DEFAULT 13.1 EVENTS OF DEFAULT |
The occurrence of any one or more of the following events shall constitute an "Event of Default".
A. Any failure by Seller to deliver, when and as required by this
Agreement or any Order, any Product, except as provided in GTA
Section 14.0; or
B. Any failure by Seller to provide an acceptable Assurance of Performance within the time specified in GTA Section 17.0, or otherwise in accordance with applicable law; or,
C. Seller knowingly, willfully, or negligently fails to perform or comply with any material obligation set forth in GTA Section 20.0; or,
D. Seller knowingly, willfully, or negligently has participated in the sale, purchase or manufacture of airplane parts without the required approval of the FAA or appropriate non-U.S. equivalent regulatory agency; or
E. Boeing revokes Seller's Quality Assurance System approval, if applicable; or,
F. Any failure by Seller to perform or comply with any obligation (other than as described in GTA Sections (13.1.A, 13.1.B, 13.1.C, 13.1.D, 13.1.E, and 13.1.H) set forth in this Agreement and such failure shall continue unremedied for a period of ten (10) days or more following receipt by Seller of notice from Boeing specifying such failure; or
G. (a) the suspension, dissolution or winding-up of Seller's business,
(b) Seller's inability to pay debts, or its nonpayment of debts,
generally as they become due, (c) the institution of reorganization,
liquidation or other such proceedings by or against Seller or the
appointment of a custodian, trustee, receiver or similar Person for
Seller's properties or business, (d) an assignment by Seller for the
benefit of its creditors, or (e) any action of Seller for the
purpose of effecting or facilitating any of the foregoing; or
H. Any assignment by Seller in contravention of Section 28.3 and such breach shall continue unremedied for a period of ten (10) days or more following receipt by Seller of notice from Boeing specifying such failure.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
13.2 REMEDIES
If any Event of Default shall occur:
A. Cancellation
Boeing may, by giving written notice ("Cancellation Notice") to Seller, immediately cancel any Order, and any SBP or the Agreement and Boeing shall not be required after delivery of such Cancellation Notice to accept the tender by Seller of any Products subject to the cancellation.
Provided that in the case of Sections 13.1.A, 13.1.B and 13.1.F
Boeing may only cancel any or all Orders associated with any
material Event of Default that has an operational or financial
impact on Boeing. Provided further that in the case of Sections
13.1.A, 13.1.B and 13.1.F, Boeing may only cancel any SBP or the
Agreement after (i) repeated and material Events of Default that are
having operational or financial impact on Boeing; and (ii) failure
by the parties within thirty (30) days of Seller's receipt of the
Cancellation Notice, to reach an agreement on a recovery plan that
is satisfactory to Boeing and Seller. At the end of such thirty (30)
day period absent such agreement, Boeing has the right to
immediately cancel any SBP affected by the Event of Default,
provided that within each SBP, such cancellation shall apply only to
the extent of the models of Program Airplanes (e.g. 737, 747)
affected by the Event of Default. If two or more models of Program
Airplanes are affected by such Events of Default, then Boeing has
the right to cancel the Agreement. Boeing agrees that it shall
exercise the right of cancellation with respect to any SBP or the
Agreement only in the case of an Event of Default as defined in
Section 13.1, and to the extent permitted in this Section 13.2.A.
For the avoidance of doubt, it is agreed that in the case of any Event of Default, Boeing shall have all the remedies set forth in this Section 13.2, except that with respect to Events of Default under 13.1.A, 13.1.B and 13.1.F, Boeing's right to exercise cancellation of an SBP or the Agreement shall be exclusively pursuant to this Section 13.2.A) as limited by the immediately preceding paragraph.
B. Cover
Boeing may manufacture, produce or provide, or may engage any other persons to manufacture, produce or provide, any Products in substitution for the Products to be delivered or provided by Seller which Boeing reasonably believes may be affected by the Event of Default. In addition to any other remedies or damages available to Boeing hereunder or at law or in equity, Boeing may recover from Seller the difference between the price for each such Product and the aggregate expense, including, without limitation, administrative and other indirect costs, paid or incurred by Boeing to manufacture, produce or provide, or engage other persons to manufacture, produce or provide, each such Product.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
C. Rework or Repair
Where allowed by the applicable regulatory authority, Boeing or its
designee may rework or repair any Product in accordance with GTA
Section 8.3;
D. Setoff
Boeing shall, at its option, have the right to set off against and apply to the payment or performance of any obligation, sum or amount owing at any time to Boeing hereunder or under any Order, all deposits, amounts or balances held by Boeing for the account of Seller and any amounts owed by Boeing to Seller, regardless of whether any such deposit, amount, balance or other amount or payment is then due and owing.
E. Tooling and other Materials
Upon the cancellation of any Order, any SBP or the Agreement, in whole or in part, pursuant to Section 13.2.A, or as necessary to exercise the cover remedy under Section 13.2.B and as partial compensation for the additional costs which Boeing will incur as a result of the transfer of production capabilities from Seller to Boeing or Boeing's designee, Seller shall upon the request of Boeing, transfer and deliver to Boeing or Boeing's designee title to any or all (i) Tooling, (ii) Boeing-furnished material, (iii) raw materials, parts, work-in-process, incomplete or completed assemblies, and all other Products or parts thereof in the possession or under the effective control of Seller or any of its subcontractors or suppliers (iv) Proprietary Information and Materials of Boeing including without limitation planning data, drawings and other Proprietary Information and Materials relating to the design, production, maintenance, repair and use of Tooling, in the possession or under the effective control of Seller or any of its subcontractors or suppliers, in each case free and clear of all liens, claims or other rights of any person. Transfer and delivery with respect to clauses (i)-(iv) above shall apply upon either (a) cancellation of an Order, SBP or Agreement or (b) cancellation of the Order(s) with respect to which Boeing is exercising its cover remedy. Seller shall be entitled to receive from Boeing market value for any item accepted by Boeing which has been transferred to Boeing pursuant to this GTA Section 13.2.E (except for any item which Boeing owns (including but not limited to Existing Tooling) or the price of which has been paid to Seller prior to such transfer); provided, however, that such compensation shall not be paid directly to Seller, but shall be accounted for as a setoff against any damages payable by Seller to Boeing as a result of any Event of Default.
F. Assistance in Operation of Facility
Boeing may, in the case of an Event of Default involving an Order, the SBP
or this Agreement under Sections 13.1.A., 13.1.B., 13.1.E and 13.1.F, by
giving notice to Seller, have unencumbered access to Seller's facility to
operate or assist in operating the facility in order to assure completion
of the requirements for the Order, SBP or Agreement subject to the Event
of Default. Provided that in the case of Section 13.1.A, 13.1.B and
Section 13.1.F, Boeing may exercise this remedy only: (a) after repeated
and material Events of Default that are having operational
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
or financial impact on Boeing; and (b) failure by the parties with in thirty (30) days of Seller's receipt of Cancellation Notice, to reach an agreement on a recovery plan that is satisfactory to Boeing and Seller.
G. Remedies Generally
No failure on the part of Boeing in exercising any right or remedy hereunder, or as provided by law or in equity, shall impair, prejudice or constitute a waiver of any such right or remedy, or shall be construed as a waiver of any Event of Default or as an acquiescence therein. No single or partial exercise of any such right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy. No acceptance of partial payment or performance of any of Seller's obligations hereunder shall constitute a waiver of any Event of Default or a waiver or release of payment or performance in full by Seller of any such obligation. All rights and remedies of Boeing hereunder and at law and in equity shall be cumulative and not mutually exclusive and the exercise of one shall not be deemed a waiver of the right to exercise any other. Nothing contained in this Agreement shall be construed to limit any right or remedy of Boeing now or hereafter existing at law or in equity, except for the right of cancellation under Section 13.2.A, which Section nevertheless shall not otherwise affect other remedies or damages available to Boeing hereunder or at law or equity.
14.0 EXCUSABLE DELAY
If delivery of any Product is delayed by circumstances beyond Seller's
reasonable control (and despite Seller's commercially reasonable efforts to
mitigate such circumstances) and without the error or negligence of Seller or of
its suppliers or subcontractors or by any material act or failure to act by
Boeing (any such delay being hereinafter referred to as "Excusable Delay"), the
delivery of such Product shall be extended for a period to be determined by
Boeing after an assessment by Boeing of alternative work methods. 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
Seller's noncompliance with any rule, regulation or order promulgated by any
governmental agency for or with respect to environmental protection. However,
the above notwithstanding, Boeing expects Seller to continue production, recover
lost time and support all schedules as established under this Agreement or any
Order. Therefore, it is understood and agreed that (i) delays of less than two
(2) days duration shall not be considered to be Excusable Delays unless such
delays shall occur within thirty (30) days preceding the scheduled delivery date
of any Product and (ii) if delay in delivery of any Product is caused by the
default of any of Seller's subcontractors or suppliers, such delay shall not be
considered an Excusable Delay unless the supplies or services to be provided by
such subcontractor or supplier are not obtainable from other sources that meet
Boeing's specifications in sufficient time to permit Seller to meet the
applicable delivery schedules.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
If delivery of any Product is delayed by an Excusable Delay for more than three (3) months, and:
(a) the Excusable Delay is due to a strike, Boeing may, without any additional extension, cancel all or part of any Order with respect to the delayed Products, and may exercise its rights and remedies of cover in respect of such Products in accordance with GTA Section 13.2.B, or
(b) the Excusable Delay is due to reasons other than a strike, Boeing may, without any additional extension, cancel all or part of any Order, with respect to the delayed Products, and may exercise its right of cover in respect of such Products, but at its own expense.
If delivery of Product(s) constituting more than 25% of the shipset
value for one or more models of Program Airplanes is delayed by an
Excusable Delay for more than five (5) months, Boeing may without
any additional extension, cancel the SBP as it applies to such
models of Program Airplanes, and neither Party shall have any
liability to the other with respect to such cancellation, except
Section 13.2.E shall apply.
15.0 SUSPENSION OF WORK
Boeing may at any time, by written order to Seller setting forth in reasonable detail the reasons for the order and the projected duration of the order, require Seller to stop all or any part of the work called for by any Order for up to one hundred twenty (120) days hereafter referred to as a "Stop Work Order" issued pursuant to this GTA Section 15.0. On receipt of a Stop Work Order, Seller shall promptly comply with its terms and take all reasonable steps to minimize the occurrence of costs arising from the work covered by the Stop Work Order during the period of work stoppage. Within the period covered by the Stop Work Order (including any extension thereof) Boeing shall either (i) cancel the Stop Work Order or (ii) terminate or cancel the work covered by the Stop Work Order in accordance with the provisions of GTA Section 12.0 or 13.0. In the event the Stop Work Order is canceled by Boeing or the period of the Stop Work Order (including any extension thereof) expires, Seller shall promptly resume work in accordance with the terms of the Agreement, provided that the delivery schedule affected by such Stop Work Order shall be extended by a mutually agreeable period and Boeing will compensate Seller for its reasonable direct costs incurred as a result of such Stop Work Order.
16.0 TERMINATION OR WRONGFUL CANCELLATION
Boeing shall not be liable for any loss or damage resulting from any termination of an Order in accordance with GTA Section 12.1 and the applicable SBP, except as expressly provided in GTA Section 12.3 or any cancellation in accordance with GTA Section 13.0, except to the extent that such cancellation shall have been determined to have been wrongful, in which case such wrongful cancellation shall be deemed a termination pursuant to GTA Section 12.1 and therefore, Boeing's liability shall be limited to the payment to Seller of the amount or amounts identified in GTA Section
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
12.3, plus an amount for [*****], if any. Notwithstanding the foregoing, if Boeing wrongfully cancels or terminates all orders with respect to a model of Program Airplane ("Cancelled Program Airplane") and such cancellation or termination results in or has the effect of a cancellation or termination of this Agreement or SBP MS-65530-0016 in its entirety with respect to the Cancelled Program Airplane, or if Boeing wrongfully cancels or terminates SBP MS-65530-0016 with respect to a Cancelled Program Airplane, then Seller shall be entitled to all remedies available at law or in equity, except that the monetary damages that Seller may recover shall not exceed [*****].
17.0 ASSURANCE OF PERFORMANCE
A. Seller to Provide Assurance
If Boeing reasonably determines, at any time or from time to time, that it is not sufficiently assured of Seller's full, timely and continuing performance hereunder, or if for any other reason Boeing has reasonable grounds for insecurity, Boeing may request, by notice to Seller setting forth in reasonable detail the basis for concern, written assurance (hereafter an "Assurance of Performance") with respect to any specific matters affecting Seller's performance hereunder, that Seller is able to perform all of its respective obligations under any Order when and as specified herein. Each Assurance of Performance shall be delivered by Seller to Boeing as promptly as possible, but in any event no later than ten (10) calendar days following Boeing's request therefore and each Assurance of Performance shall be accompanied by any information, reports or other materials, prepared by Seller, as Boeing may reasonably request. Except as to payment for accepted goods, Boeing may to the extent permitted under GTA Section 13.2 suspend all or any part of Boeing's performance hereunder until Boeing receives an Assurance of Performance from Seller satisfactory in form and substance to Boeing.
B. Meetings and Information
Either Party may request one or more meetings with senior management or other employees of the other Party for the purpose of discussing any request by Boeing for Assurance of Performance or any Assurance of Performance provided by Seller. Each of Seller and Boeing (Boeing Commercial Airplanes) shall make such persons available to meet with representatives of the other Party as soon as may be reasonably practicable following a request for any such meeting by such other Party and Seller and Boeing shall make available to each other any additional information, reports or other materials in connection therewith as such other Party may reasonably request.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
18.0 RESPONSIBILITY FOR PROPERTY
Seller shall clearly mark, maintain an inventory of, and keep segregated or identifiable all of Boeing's property and all property to which Boeing has acquired an interest. Seller assumes all risk of loss, destruction or damage of such property while in Seller's or its subcontractors' or suppliers' possession, custody or control. Upon request, Seller shall provide Boeing with adequate proof of insurance against such risk of loss. Nothing in this Agreement shall authorize Seller to use such property other than in performance of an Order without prior written consent from Boeing. Seller shall notify Boeing's Procurement Representative if Boeing's property is lost, damaged or destroyed. As directed by Boeing , Seller shall deliver, as and to the extent provided in Sections 12, 13, and 25, as the case may be, such property reasonably necessary in Boeing's judgment to carry out terminated, cancelled or completed GTA, Programs or Orders, to the extent not incorporated in delivered end products. Such property shall be delivered to Boeing in substantially the same condition as provided to Seller, subject to ordinary wear and tear and normal manufacturing losses. Nothing in this GTA Section 18.0 limits Seller's use, in its direct contracts with the Government, of property in which the Government has an interest.
19.0 LIMITATION OF SELLER'S RIGHT TO ENCUMBER ASSETS
Seller warrants to Boeing that it has good title to all inventory, work-in-process, Tooling (other than Tooling owned by Boeing) and materials to be supplied by Seller in the performance of its obligations under any Order. If required pursuant to the provisions of such an Order, Seller will transfer to Boeing title to such inventory, work-in-process, Tooling and materials whether transferred separately or as part of any Product delivered under the Order, free of any liens, charges, encumbrances or rights of others.
20.0 PROPRIETARY INFORMATION AND ITEMS
Boeing and Seller shall each keep confidential and protect from disclosure all
(a) confidential, proprietary, and/or trade secret information; including
editorial revisions, annotations, elaborations, or any other forms in which such
confidential, proprietary, and/or trade secret information may be modified,
recast, transformed, translated, condensed, or otherwise adapted; (b) tangible
items containing, conveying, or embodying such information; and (c) Tooling
obtained from and/or belonging to the other in connection with this Agreement or
any Order (collectively referred to as "Proprietary Information and Materials").
Except as set forth in any other agreement between the parties executed on the
date hereof, or hereafter executed pursuant to an agreement executed between the
parties on the date hereof. Boeing and Seller shall each use Proprietary
Information and Materials of the other only in the performance of and for the
purpose of this Agreement and/or any Order. Provided, however, that despite any
other obligations or restrictions imposed by this GTA Section 20.0, Boeing shall
have the right to use, disclose and copy Seller's Proprietary Information and
Materials for the purposes of testing, certification, use, sale, or support of
any item delivered under this Agreement, an Order, or any airplane including
such an item; and
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
any such disclosure by Boeing shall, whenever appropriate, include a restrictive legend suitable to the particular circumstances. Each party shall maintain restrictive legends placed by the other party on Proprietary Information and Materials of the other party on all copies made of the other party's Proprietary Information and Materials. The provisions of this Article 20 shall also apply to all materials derived from the Proprietary Information and Materials of Boeing or Seller.
Except as set forth in any other agreement between the parties executed on the date hereof, or hereafter executed pursuant to an agreement executed between the parties on the date hereof, upon Boeing's request at any time, and in any event upon the completion, termination or cancellation of a Program or this Agreement, Seller shall return all of Boeing's Proprietary Information and Materials, and all materials derived from Boeing's Proprietary Information and Materials to Boeing unless specifically directed otherwise in writing by Boeing. Except as set forth in any other agreement between the parties executed on the date hereof, or hereafter executed pursuant to an agreement executed between the parties on the date hereof, Seller shall not, without the prior written authorization of Boeing, sell or otherwise dispose of (as scrap or otherwise) any parts or other materials containing, conveying, embodying, or made under this GTA or applicable SPB in accordance with or by reference to any Proprietary Information and Materials of Boeing. .
Prior to disposing of such parts or materials as scrap, Seller shall render them
unusable. Boeing shall have the right to audit Seller's compliance with this GTA
Section 20.0. Seller may disclose Proprietary Information and Materials of
Boeing to its subcontractors or suppliers as required for the performance of an
Order, provided that each such subcontractor first assumes, by written
agreement, the same obligations imposed upon Seller under this GTA Section 20.0
relating to Proprietary Informations and Materials; and Seller shall be liable
to Boeing for any breach of such obligation by such subcontractor. The
provisions of this GTA Section 20.0 are effective in lieu of, and will apply
notwithstanding the absence of, any restrictive legends or notices applied to
Proprietary Informations and Materials; and the provisions of this GTA Section
20.0 shall survive the performance, completion, termination or cancellation of
this Agreement or any Order
The requirements of this Article 20 shall not restrict Seller's or Boeing's use or disclosure of Independently Available Materials. For the purpose of this Article the following definitions shall apply, (i) "Independently Available Materials" means items that contain, convey, or embody Independently Available Information, and that Seller or Boeing knows or reasonably should know are not Proprietary Information or Materials of the other, and (ii). "Independently Available Information" means information that: (a) Seller or Boeing lawfully obtains from a third party who has the right to disclose such information to Seller or Boeing without restriction; (b) Seller or Boeing independently develops without reference to, or incorporation of Proprietary Information or Materials of the other, or (c) that Seller or Boeing obtains from publicly accessible sources; except, in each case, for information that Seller or Boeing knows or reasonably should know are derived from Proprietary Information and Materials of the other.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
For the avoidance of doubt, Seller's obligations with respect to Boeing Proprietary Information and Materials shall not be reduced even if such Boeing Proprietary Information and Materials contain Independently Available Information.
21.0 COMPLIANCE
21.1 COMPLIANCE WITH LAWS
Seller shall be responsible for complying with all laws, including, but not limited to, any statute, rule, regulation, judgment, decree, order, or permit applicable to its performance under this Agreement, including those pertaining to United States Export Controls. Seller shall notify Boeing at the earliest practicable opportunity of any aspect of its performance which becomes subject to additional regulation after the date of execution of this Agreement or which Seller reasonably believes will become subject to additional regulation during the term of this Agreement, in each case if such additional regulation could reasonably be expected to materially affect the Seller's or Boeing's performance under this Agreement.
Boeing shall be responsible for complying with all laws, including, but not limited to, any statute, rule, regulation, judgment, decree, order, or permit applicable to its performance under this Agreement, including those pertaining to United States Export Controls.
21.2 GOVERNMENT REQUIREMENTS
If any of the work to be performed under this Agreement is performed in the
United States, Seller shall, via invoice or other form satisfactory to Boeing,
certify that the Products covered by the Order were produced in compliance with
Sections 6, 7, and 12 of the Fair Labor Standards Act (29 U.S.C. 201-291), as
amended, and the regulations and orders of the U.S. Department of Labor issued
there under. In addition, the following Federal Acquisition Regulations are
incorporated herein by this reference except "Contractor" shall mean "Seller":
Other Government clauses, if any, are incorporated herein either by attachment
to this document or by some other means of reference.
FAR 52.222-26 "Equal Opportunity" FAR 52.222-35 "Affirmative Action for Disabled Veterans and Veterans of the Vietnam Era" FAR 52.222-36 "Affirmative Action for Workers with Disabilities" FAR 52.247-64 "Preference for Privately Owned U.S.-Flagged Commercial Vessels" |
21.3 ETHIC REQUIREMENTS / CODE OF CONDUCT
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****]. Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1 |
Boeing is committed to conducting its business fairly, impartially, and in an ethical and proper manner. Boeing's expectation is that Seller will also conduct its business fairly, impartially and in an ethical and proper manner, and that Seller will have (or will develop) and adhere to a code of ethical standards. In the event that Seller has cause to believe that Boeing or any Boeing employee or agent has acted improperly or unethically under this contract, Seller shall report such conduct to the Boeing Ethics hotline. Copies of Boeing's Code of Conduct and contacts for such reports are available on www.boeing.com under "Ethics and Business Conduct." Although Boeing will not use the failure to make such a report as a basis for claiming breach of contract by Seller, Seller is encouraged to exert reasonable efforts to make such reports when warranted.
22.0 INTEGRITY IN PROCUREMENT
Seller warrants that; to its knowledge, neither it nor any of its employees, agents or representatives have offered or given, or will offer or give any gratuities to Boeing's employees, agents or representatives for the purpose of securing any Order or securing favorable treatment under any Order.
23.0 UTILIZATION OF SMALL BUSINESS CONCERNS
Seller will use commercially reasonable efforts to actively seek out and provide commercially reasonable opportunities for small businesses, small disadvantaged businesses, women-owned small businesses, minority business enterprises, historically black colleges and universities and minority institutions, historically underutilized business zone small business concerns and U.S. veteran and service-disabled veteran owned small business concerns to participate in the subcontracts Seller awards to the fullest extent consistent with the efficient performance of this contract.
24.0 BOEING'S RIGHTS IN SELLER'S PATENTS, COPYRIGHTS, TRADE SECRETS, AND TOOLING
Seller hereby grants to Boeing an irrevocable, nonexclusive, paid-up worldwide license to practice and/or use, and license others to practice and/or use on Boeing's behalf, all of Seller's patents, copyrights, trade secrets (including, without limitation, designs, processes, drawings, technical data and tooling), industrial designs, semiconductor mask works, and Tooling related to the development, production, maintenance or repair of Products (collectively hereinafter referred to as "Licensed Property"). Boeing shall not exercise the license granted to Boeing in this GTA Section 24.0 except in connection with the making, having made, using and selling of Products or products of the same kind provided that , (i) such undelivered quantity of Product cannot, in Boeing's sole determination, be reasonably obtained in the required time frame at a reasonable price from commercially available sources (including Boeing) without the use of Seller's Licensed Property, and (ii) one or more of the following situations occur:
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
A. Boeing cancels this Agreement or any Order for cause pursuant to GTA
Section 13.0 herein;
B. In Boeing's judgment it becomes necessary, in order for Seller to comply with the terms of this Agreement or any Order, for Boeing to provide support to Seller (in the form of design, manufacturing, or on-site personnel assistance) substantially in excess of that which Boeing normally provides to its suppliers;
C. Seller's trustee in bankruptcy (or Seller as debtor in possession) fails to assume this Agreement and all Orders by formal entry of an order in the bankruptcy court within sixty (60) days after entry of an order for relief in a bankruptcy case of the Seller, or Boeing elects to retain its rights to Licensed Property under the bankruptcy laws;
As a part of the license granted under this GTA Section 24.0, Seller shall, at the written request of Boeing and at no additional cost to Boeing, promptly deliver to Boeing any and all Licensed Property considered by Boeing to be necessary to exercise Boeing's rights under this Section 24.0.
25.0 TERMINATION OF AIRPLANE PROGRAM
25.1 PROGRAM TERMINATION
The parties acknowledge and agree that Boeing may, in its sole discretion, terminate any model of Program Airplane or Derivative from this Agreement including any Order issued hereunder, by written notice to Seller, if Boeing does not initiate or terminates production of such model of Program Airplane or Derivative involving the Product, by reason of Boeing's determination that there is insufficient business basis for proceeding with such model of Program Airplane or Derivative. In the event of such a termination, Boeing shall have no liability to Seller except as expressly provided in GTA Section 25.2 below.
25.2 TERMINATION LIABILITY
In the event of a termination of any model of Program Airplane or Derivative as described in 25.1 above, Boeing shall have no liability whatsoever to Seller, except to the extent of (i) any guaranteed minimum purchase, if any, as set forth in an applicable SBP, (ii) any Orders issued prior to the date of the written notice to Seller identified in 25.1 above; and (iii) in accordance with GTA Section 25.1. Termination of such model of Program Airplane or Derivative or Orders shall be governed by GTA Section 12.0 herein.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
26.0 PUBLICITY
Except as required by law, rule or regulation, without Boeing's prior written approval, Seller shall not, and shall require that its subcontractors or suppliers shall not, release any publicity, advertisement, news release or denial or confirmation of the same, regarding any Order or Products, or the Program Airplane to which they may pertain. Seller shall be liable to Boeing for any breach of such obligation by any subcontractor or supplier.
27.0 PROPERTY INSURANCE
27.1 INSURANCE
Seller shall obtain and maintain continuously in effect a property insurance policy covering loss or destruction of or damage to all property in which Boeing does or could have an insurable interest pursuant to this Agreement, including but not limited to Tooling, Boeing-furnished property, raw materials, parts, work-in-process, incomplete or completed assemblies and all other products or parts thereof, and all drawings, specifications, data and other materials relating to any of the foregoing in each case to the extent in the possession or under the effective care, custody or control of Seller or any agent, employee, affiliate, subcontractor or supplier of Seller, in the amount of full replacement value thereof providing protection against all perils normally covered in an "all risk" property insurance policy (including without limitation fire, windstorm, explosion, riot, civil commotion, aircraft, earthquake, flood or other acts of God). Any such policy shall be with insurers reasonably acceptable to Boeing and shall (i) provide for payment of loss there under to Boeing, as loss payee, as its interests may appear and (ii) contain a waiver of any rights of subrogation against Boeing, its subsidiaries, and their respective directors, officers, employees and agents
27.2 CERTIFICATE OF INSURANCE
Upon written request from Boeing, Seller shall provide to Boeing's Procurement Representative certificates of insurance reflecting full compliance with the requirements set forth in GTA Section 27.1. Such certificates shall be kept current and in compliance throughout the period of this Agreement and shall provide for thirty (30) days advanced written notice to Boeing's Procurement Representative in the event of cancellation, non-renewal or material change adversely affecting the interests of Boeing.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
27.3 NOTICE OF DAMAGE OR LOSS
Seller shall give prompt written notice to Boeing's Procurement Representative of the occurrence of any damage or loss to any property required to be insured herein. If any such property shall be damaged or destroyed, in whole or in part, by an insured peril or otherwise, and if no Event of Default shall have occurred and be continuing, then Seller may, upon written notice to Boeing, settle, adjust, or compromise any and all such loss or damage not in excess of Two Hundred Fifty Thousand Dollars ($250,000) in any one occurrence and Five Hundred Thousand Dollars ($500,000) in the aggregate. Seller may settle, adjust or compromise any other claim by Seller only after Boeing has given written approval, which approval shall not be unreasonably withheld or delayed.
28.0 RESPONSIBILITY FOR PERFORMANCE
Seller shall be responsible for performance of its obligations under this
Agreement. Seller shall bear all risks of providing adequate facilities and
equipment to perform each Order in accordance with the terms thereof. Seller may
use its facilities and equipment (which shall not include any of Boeing's
Proprietary Information and Materials, the use of which shall be governed by GTA
Section 20.0, the HMSGTA and any applicable SLAs, or such other requirements as
may be agreed to between Boeing and Seller) for any lawful purposes in addition
to performing Orders. If any use of any facilities or equipment contemplated by
Seller for use in performing Orders will not be available for any reason, Seller
shall be responsible for arranging for alternative facilities and equipment at
no cost to Boeing, and any failure to do so shall not relieve Seller from its
obligations.
Seller shall notify and obtain written approval from Boeing prior to moving work to be performed under this Agreement between Seller's or its subcontractors various facilities. Seller shall include as part of its subcontracts those elements of the Agreement that protect Boeing's rights including but not limited to right of entry provisions, proprietary information and rights provisions and quality control provisions. In addition, Seller shall provide to its subcontractor's sufficient information to document clearly that the work being performed by Seller's subcontractor is to facilitate performance under this Agreement or any Order. Sufficient information may include but is not limited to Order number, GTA number or the name of Boeing's Procurement Representative.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
28.1 SUBCONTRACTING
Seller shall maintain complete and accurate records regarding all subcontracted items and/or processes. Seller's use of subcontractors shall comply with Seller's quality assurance system approval for said subcontractors. Unless Boeing's prior written authorization or approval (which shall not be unreasonably withheld or delayed) is obtained, Seller may not purchase completed or substantially completed Products. For purposes of this GTA Section and this GTA Section only, completed or substantially completed Products shall not include components of assemblies or subassemblies. No subcontracting by Seller shall relieve Seller of its obligation under the applicable Order.
28.2 RELIANCE
Entering into this Agreement is in part based upon Boeing's reliance on Seller's ability, expertise and awareness of the intended use of the Products. Seller agrees that Boeing and Boeing's Customers may rely on Seller as an expert, and Seller will not deny any responsibility or obligation hereunder to Boeing or Boeing's Customers on the grounds that Boeing or Boeing's Customers provided recommendations or assistance in any phase of the work involved in producing or supporting the Products, including but not limited to Boeing's acceptance of specifications, test data or the Products.
28.3 ASSIGNMENT
Seller shall not assign any of its rights or interest in this Agreement or any Order, or subcontract all or substantially all of its performance of this Agreement or any Order, without Boeing's prior written consent, which shall not be unreasonably withheld, except that Boeing may withhold its consent to an assignment to a Disqualified Person (as defined below) for any reason and at its sole discretion. Seller shall provide Boeing with thirty (30) days notice prior to any proposed assignment. Seller shall not delegate any of its duties or obligations under this Agreement; provided that this shall not prohibit Seller from subcontracting as permitted pursuant to the applicable SBP. Seller may assign its right to monies due or to become due. No assignment, delegation or subcontracting by Seller, with or without Boeing's consent, shall relieve Seller of any of its obligations under this Agreement or Order or prejudice any rights of Boeing against Seller whether arising before or after the date of any assignment. This article does not limit Seller's ability to purchase standard commercial supplies or raw material.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
The prohibition set forth in this GTA Section 28.3 includes, without limitation (and the following shall, subject to the immediately following sentence, be deemed to be "assignments"): (i) a consolidation or merger of Seller in which a Disqualified Person directly or indirectly holds, immediately after consummation of the transaction more than fifty percent (50%) of the voting power of the issued and outstanding voting stock of the corporation resulting from or surviving such transaction; (ii) the acquisition directly or indirectly by a Disqualified Person of voting stock of any corporate Seller having more than fifty percent (50%) of the voting power of the issued and outstanding voting stock of Seller; (iii) the sale, assignment or transfer of all or substantially all of the assets of Seller to a Disqualified Person; and (iv) where Seller is a partnership, acquisition of control of such partnership by a Disqualified Person. Any consolidation, merger, acquisition of voting stock or sale, assignment or transfer of all or substantially all of the assets of Seller that is not prohibited by the immediately preceding sentence shall not constitute an "assignment" for purposes of this GTA and shall not be prohibited by, or require Boeing's consent under, this Section 28.3.
A Disqualified Person is:
(i) a Person, a principal business of which is as an original equipment manufacturer of commercial aircraft, defense systems, satellites, space launch vehicles or space vehicles;
(ii) a Person that Boeing reasonably believes is unable to perform this Agreement, for reasons, including but not limited to, financial viability, export and import laws, and demonstrated past performance failures;
(iii) a Person, that after giving effect to the transaction , would be the supplier of more than forty percent (40%) by value of the major structural components of any model of Boeing aircraft then in production, unless it is mutually agreed that significant identifiable benefits will accrue to Boeing as a result of the transaction; or;
(iv) a Person who is one of the following companies or a parent, subsidiary or affiliate of one of the following companies: Lufthansa Technique; Israeli Aircraft Industries; HAECO; PEMCO Aeroplex, EADS/Airbus, or who is an airline or an operator of commercial aircraft in revenue service or a parent, subsidiary or affiliate of an airline or an operator of commercial aircraft in revenue service..
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
Seller shall not permit any Person described in clause (iv) of the definition of Disqualified Person to hold any voting stock of Seller at any time that Seller is not a Public Company. Seller shall not enter into any agreement under which any Person described in clause (iv) of the definition of Disqualified Person is entitled to designate one or more members of Seller's board of directors at any time that Seller is a Public Company. A Public Company is any Person (i) with equity securities registered under Section 12 of the Securities Exchange Act of 1934 or which is subject to the reporting requirements of Section 15(d) of the Securities Exchange Act of 1934 or (ii) with equity securities traded or quoted in a domestic or foreign securities exchange or market.
For the avoidance of doubt, Boeing and Seller agree that HMSGTA MWS and Supplemental License Agreements WS-001/-002/-003 and -004 may be assigned to the third party receiving assignment of this GTA and its corresponding SBP's. Any other Supplemental License Agreement between Boeing and Seller will be subject to the assignment terms of HMSGTA MWS.
28.4 RESERVED
29.0 NON-WAIVER/PARTIAL INVALIDITY
Any failures, delays or forbearances of Boeing in insisting upon or enforcing any provisions of any Order, or in exercising any rights or remedies under this Agreement, shall not be construed as a waiver or relinquishment of any such provisions, rights or remedies; rather, the same shall remain in full force and effect. If any provision of any Order is or becomes void or unenforceable by law, the remainder shall be valid and enforceable.
30.0 HEADINGS
Section headings used in this Agreement are for convenient reference only and do not affect the interpretation of the Agreement.
31.0 PRICES
Boeing and Seller agree that the prices have been negotiated on an arms-length basis and represent the fair market value of the Products as of the date hereof.
32.0 MUTUAL DRAFTING
The parties hereto are sophisticated and have been represented by lawyers who have carefully negotiated the provisions hereof. As a consequence, the parties do not intend that the presumptions of any laws or rules relating to the interpretation of contracts against the drafter of any particular clause should be applied to this GTA and therefore waive their effects.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
33.0 DISPUTES
Boeing and Seller shall use their best reasonable efforts to resolve any and all disputes, controversies, claims or differences between Boeing and Seller, arising out of or relating in any way to this GTA, any applicable SBP or Order or the performance, including, but not limited to, any questions regarding the existence, validity or termination hereof ("Disputes"), through negotiation. If either party determines that a Dispute cannot be resolved by the functional representatives of Boeing and Seller, such party may refer the Dispute through management channels of the Parties or their respective designees, for further negotiation by senior management representatives of the Parties. Depending on the seriousness of the dispute and prior attempts to resolve the dispute as appropriate, the senior representatives will be the Senior Vice President Supplier Management or that person's equivalent.
Any dispute that arises under or is related to this Agreement that cannot be settled by mutual agreement of the parties shall be resolved only as provided in SBP Section 15. Pending final resolution of any dispute, Seller and Boeing shall proceed with performance of this Agreement so long as the other party continues to perform its obligations hereunder.
34.0 COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other party.
35.0 TAXES
35.1 INCLUSION OF TAXES IN PRICE
Unless this Agreement, specifies otherwise, the price of this contract includes, and Seller is liable for and shall pay, all taxes, impositions, charges and exactions imposed on or measured by this Agreement and the Orders issued hereunder, except for sales or use taxes on sales to Boeing ("Sales Taxes"), which Boeing specifically agrees to pay provided such Sales Taxes are separately stated on Seller's invoice. Prices shall not include any taxes, impositions, charges or exactions for which Boeing has furnished a valid exemption certificate or other evidence of exemption.
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
35.2 LITIGATION
In the event that any taxing authority has claimed or does claim payment for Sales Taxes, Seller shall promptly notify Boeing, and Seller shall take such action as Boeing may direct to pay or protest such taxes or to defend against such claim, provided, that Seller shall not be required to take any action which it reasonably determines may be criminal or may subject any officer, director, employee or agent to liability. The actual and direct costs and expenses, without the addition of profit and overhead, of such defense and the amount of such taxes as ultimately determined as due and payable shall be paid directly by Boeing or reimbursed to Seller. If Seller or Boeing is successful in defending such claim, the amount of such taxes recovered by Seller, which had previously been paid by Seller and reimbursed by Boeing or paid directly by Boeing, shall be immediately refunded to Boeing, less any costs incurred by Seller in defending such claim which have not theretofore been reimbursed by Boeing.
35.3 REBATES
If any Sales Taxes paid by Boeing are subject to rebate or reimbursement, Seller shall use commercially reasonable efforts (which need not include litigation), to secure such rebates or reimbursement and shall promptly refund to Boeing any amount recovered by Seller on account of any such rebate or reimbursement.
36.0 OFFSET CREDITS
To the exclusion of all others, Boeing or its assignee shall be entitled to all industrial benefits or offset credits which might result from this Agreement or Order. Seller shall provide documentation or information, which Boeing or its assignee may reasonably request to substantiate claims for industrial benefits or offset credits. Seller agrees to use reasonable efforts to identify the foreign content of goods, which Seller either produces itself or procures from other companies for work directly related to this Agreement. Promptly after selection of a non-U.S. subcontractor or supplier for work under this Agreement, Seller shall notify Boeing of the name, address, subcontract point of contact (including telephone number) and dollar value of the subcontract.
37.0 NO JOINT VENTURE, AGENCY OR PARTNERSHIP RELATIONSHIP
This Agreement shall not constitute, give effect to, or otherwise imply a joint venture, partnership, agency or formal business organization of any kind between Boeing and Seller
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Boeing / Spirit AeroSystems, Inc. General Terms Agreement (GTA) BCA-65530-0016 Amendment 1
38.0 APPLICABLE LAW
This contract shall be governed by the laws of the State of Washington No consideration shall be given to Washington's conflict of law rules. This contract excludes the application of the 1980 United Nations Convention on Contracts for the International Sale of Goods. Boeing and Seller hereby irrevocably consent to and submit themselves exclusively to the jurisdiction of the applicable courts of King County, Washington and the federal courts of Washington State for the purpose of any suit, action or other judicial proceeding arising out of or connected with any Order or the performance or subject matter thereof. Boeing and Seller hereby waive and agree not to assert by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that (a) Boeing and Seller are not personally subject to the jurisdiction of the above-named courts, (b) the suit, action or proceeding is brought in an inconvenient forum or (c) the venue of the suit, action or proceeding is improper.
39.0 ORDER OF PRECEDENCE
The order of precedence of the terms and conditions of this GTA when compared to the terms and conditions of other documents is determined by the Order of Precedence section in the relevant SBP.
EXECUTED in duplicate as of the date and year first written above by the duly authorized representatives of the parties.
BOEING SELLER THE BOEING COMPANY Spirit AeroSystems , Inc. By and Through its Division Boeing Commercial Airplanes /s/ Bryan Gerard /s/ Seth Mersky -------------------------------------- -------------------------- Name: Bryan Gerard Name: Seth Mersky Title: Director-New Business Ventures Title: President Date: June 16, 2005 Date: June 16, 2005 |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Exhibit 10.25
Final Draft
HARDWARE MATERIAL SERVICES
GENERAL TERMS AGREEMENT
Relating to
BOEING AIRCRAFT
This Hardware Material Services General Terms Agreement No. MWS (HMSGTA) is entered into as of June 16, 2005 by and between The Boeing Company, a Delaware corporation, including its wholly-owned subsidiaries, Boeing Management Company and McDonnell Douglas Corporation (Boeing), and Mid-Western Aircraft Systems, Inc., a Delaware corporation, (Customer). This HMSGTA will be applicable prospectively from this date and be incorporated into orders entered into on or after this date.
Accordingly, Customer and Boeing agree as follows:
Boeing will provide and Customer will purchase, lease or license the spare parts, standards, tools, Materials (as defined in Part 1 herein), services, and other things described herein in accordance with the attached terms and conditions and in accordance with the ordering provisions of the Spares Catalog, and the Materials and Services Listing, as applicable. Except as set forth in an SLA, Boeing is under no obligation to provide spare parts, standards, tools, Materials, services or any other things to Customer once this HMSGTA is signed. However, any spare parts, standards, tools, Materials, services or any other things provided to Customer will be done so under the terms and conditions of this HMSGTA, including any SLAs thereto.
Part 1, Article 11, relating to DISCLAIMER AND RELEASE and the EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES, and the provisions relating to indemnity and insurance, have been the subject of discussion and negotiation and are fully understood by the parties, and the other provisions set forth in this HMSGTA were, and each SLA and Order will be made, in consideration of such provisions.
THE BOEING COMPANY MID-WESTERN AIRCRAFT SYSTEMS, INC. Signature: /s/ Bryan Gerard Signature: /s/ Seth Mersky -------------------------- -------------------------- Printed Name: Bryan Gerard Printed Name: Seth Mersky Title: Director-New Business Ventures Title: President |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
HARDWARE MATERIAL SERVICES
GENERAL TERMS AGREEMENT
PART 1
COMMON TERMS AND CONDITIONS
PAGE CONTENTS NUMBER -------- ------ 1. Scope of HMSGTA and Ordering.................................................................. 1-1 2. Definitions................................................................................... 1-1 3. Payment....................................................................................... 1-4 4. Taxes......................................................................................... 1-5 5. Delivery...................................................................................... 1-5 6. Cancellation of Orders........................................................................ 1-5 7. Inspection and Acceptance..................................................................... 1-6 8. Excusable Delay............................................................................... 1-6 9. Right to Stop Work............................................................................ 1-6 10. Notices....................................................................................... 1-7 11. EXCLUSION OF LIABILITIES...................................................................... 1-7 12. Indemnity..................................................................................... 1-8 13. Insurance..................................................................................... 1-9 14. Termination for Insolvency.................................................................... 1-10 15. Assignment.................................................................................... 1-10 16. Amendments.................................................................................... 1-11 17. Term.......................................................................................... 1-11 18. Miscellaneous................................................................................. 1-11 |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
HARDWARE MATERIAL SERVICES
GENERAL TERMS AGREEMENT
PART 2
SPECIFIC TERMS AND CONDITIONS
PAGE CONTENTS NUMBER -------- ------ 1. Purchase of Spare Parts and Standards...................................................... 2-1 2. Lease of Parts and Tools................................................................... 2-2 3. Provision of Services ..................................................................... 2-4 4. Provision of Materials..................................................................... 2-4 5. Provision of Repair/Overhaul/Exchange parts................................................ 2-8 |
PART 3
WARRANTY TERMS AND CONDITIONS
PAGE CONTENTS NUMBER -------- ------ 1. Boeing Spare Parts Warranty................................................................ 3-1 2. Supplier Warranty Commitment............................................................... 3-6 3. Warranty of Leased Tools and Leased Parts.................................................. 3-6 4. Warranty of Technical Assistance and Technical Consulting.................................. 3-6 5. Warranty for Repair/Overhaul/Exchange Parts................................................ 3-6 6. Indemnities Against Patent and Copyright Infringement...................................... 3-7 |
APPENDICES
1. Appendix I - Form of Insurance Broker's Letter............................................. A-1 2. Appendix II - Form of Contractor Confidentiality Agreement................................. A-3 |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
PART 1
COMMON TERMS AND CONDITIONS
1. Scope of HMSGTA and Ordering.
This HMSGTA provides common terms and conditions (Part 1), specific terms and conditions (Part 2), and warranty terms and conditions (Part 3), which apply to the provision to Customer of Spare Parts, Standards, Leased Parts, Leased Tools, Materials, Services (including, but not limited to, Technical Assistance and Technical Consulting) and other things as Boeing and Customer may agree. Ordering of such items from Boeing will be as set forth in the Spares Catalog, and the Materials and Services Listing, as applicable, or as agreed between Customer and Boeing.
2. Definitions.
The following is a list of capitalized terms and their definitions as used and not otherwise defined in this HMSGTA.
2.1 "Aircraft" means a Boeing commercial transport aircraft but does not include derivatives of such aircraft developed, modified or operated for military or government missions.
2.2 "Aircraft Software" means software intended to fly with and be utilized in the operation of an Aircraft, but excludes software furnished by Customer.
2.3 "Authentication Mechanism" means a mechanism used to verify the identity of a system user including but not limited to user identifications and passwords, tokens, smart cards, or biometrics.
2.4 "Average Direct Hourly Labor Rate" means the average hourly rate (excluding all fringe benefits, premium-time allowances, social charges, business taxes and the like) paid by Customer to its Direct Labor employees.
2.5 "Boeing Spare Parts" means materials (including, among other things, gaskets, grease, sealants and adhesives), spare parts (including, among other things, copies of Aircraft Software), tools and other items that are manufactured by Boeing or pursuant to Boeing's detailed design with Boeing's authorization.
2.6 "Boeing Warranty Regional Manager" means the manager within the Boeing organization responsible for administration of Warranties between Boeing and Customer.
2.7 "Contractor" means any Third Party having the necessary regulatory approvals, that is appointed by Customer to perform work on behalf of Customer. The term includes, but is not limited to, entities partially or wholly-owned by Customer, but which are separately incorporated or otherwise established as separate legal entities.
2.8 "Correct" means to repair, modify, provide modification kits or replace with a new product.
Page 1-1
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
2.9 "Correction" means a repair, a modification, a modification kit or a new product.
2.10 "Corrected Boeing Spare Part" means a Boeing Spare Part which is free of defect as a result of a Correction.
2.11 "Direct Labor" means labor spent by direct labor employees to remove, disassemble, modify, repair, inspect and bench test a defective Boeing Spare Part, and to reassemble, reinstall a Corrected Boeing Spare Part and perform final inspection or to perform similar acts to Correct Services.
2.12 "Direct Materials" means items such as parts, gaskets, grease, sealant and adhesives, installed or consumed in performing a Correction, excluding allowances for administration, overhead, taxes, customs duties and the like.
2.13 "Electronic Access" means access to Materials by way of electronic transmission, including but not limited to, access through the World Wide Web, Internet or private data transmission lines from Boeing's internal computing systems.
2.14 "Leased Parts" means Boeing Spare Parts leased from Boeing by Customer, but excludes tools that are Boeing Spare Parts.
2.15 "Leased Tools" means tools leased from Boeing by Customer.
2.16 "Lessor" means the entity that is leasing an Aircraft either directly or indirectly to the Operator.
2.17 "Materials" means items that are created by Boeing or a Third Party, are provided directly or indirectly from Boeing, and serve primarily to contain, convey, or embody information. Materials may include either tangible forms or intangible embodiments (for example, software and other electronic forms) of information, but excludes Aircraft Software and software furnished by Customer.
2.18 "Materials and Services Listing" means any list of available Materials and Services offered by Boeing in a catalog or other medium, that identifies ordering provisions and prices.
2.19 "Operator" means the entity that operates the Aircraft.
2.20 "Order" means a contract created pursuant to this HMSGTA. An Order is not a SLA as defined herein.
2.21 "Owner" means the entity that has legal title to the Aircraft.
2.22 "Proprietary Information" means proprietary, confidential, and/or trade secret information owned by Boeing or a Third Party which is contained, conveyed or embodied in Materials.
Page 1-2
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
2.23 "Proprietary Materials" means Materials that contain, convey, or embody Proprietary Information.
2.24 "Repair/Overhaul/Exchange Parts" means goods repaired, overhauled, modified, remanufactured or provided as exchange goods under a Repair/Overhaul/Exchange order.
2.25 "Services" means services that may be provided by Boeing, including, but not limited to, Technical Assistance and Technical Consulting.
2.26 "Spare Parts" means Supplier Spare Parts and Boeing Spare Parts that may be provided by Boeing.
2.27 "Spares Catalog" means the applicable Boeing Spare Parts Price Catalog, published by Boeing, listing Boeing Spare Parts and Standards, prices, reorder lead times and ordering provisions.
2.28 "Standards" means parts available through the Spares Catalog or those items considered as aircraft standards by the industry that are sold to Customer by Boeing.
2.29 "Supplemental License Agreement (SLA)" means one or more license agreements created pursuant to this HMSGTA and entered into by the parties. A Supplemental License Agreement is not an Order as defined herein.
2.30 "Supplier Spare Parts" means materials (including among other things, gaskets, grease, sealants and adhesives), spare parts (including, but not limited to, copies of Aircraft Software), tools and other items that are not manufactured by Boeing or not manufactured pursuant to Boeing's detailed design with Boeing's authorization.
2.31 "Technical Assistance" means the providing of Boeing personnel to Customer during Customer's repair, maintenance or modification of an Aircraft. Technical Assistance may be of an advisory nature or of a hands-on nature.
2.32 "Technical Consulting" means engineering or other technical services provided by Boeing.
2.33 "Third Party" means anyone not a party to this HMSGTA.
2.34 "Warranties" means the Boeing warranties and related terms and conditions contained in this HMSGTA.
2.35 "Warranty Labor Rate" is the greater of the standard labor rate paid
by Boeing to its customers which is established and published annually or
[*****] of Customer's Average Direct Hourly Labor Rate.
Page 1-3
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
3. Payment.
3.1 Invoice.
3.1.1 Boeing will submit invoices to Customer upon delivery of Spare Parts, Standards, Repair/Overhaul/Exchange Parts, or Materials, or upon completion of Services called for by the SLA or Order. Advance payments will be credited against Boeing's invoice issued against such SLA or Order.
3.1.2 Boeing will submit invoices to Customer for Leased Parts and Leased Tools upon the return of such Leased Parts and Leased Tools to Boeing. If Customer exercises the option to purchase such Leased Parts, Boeing will submit an invoice to Customer upon Boeing's receipt of notification of option exercise.
3.2 Payment Due. Payment will be net 30 days after the date of Boeing's
invoice. Other terms of payment may be required if (i) Customer does not have an
account with Boeing, (ii) Customer has not established credit with Boeing, or
(iii) otherwise specified in Boeing's offer.
3.3 Advance Payment and Insurance Proceeds. Boeing's offer will specify when partial or full payment in advance and/or assignment of insurance proceeds are required.
3.4 Failure to Pay. In the event Customer fails to make payments when due, Boeing reserves the right to assert whatever remedies it may have under this HMSGTA, SLA or an Order, or at law. In such event, Boeing may, with respect to future SLAs or Orders, require full payment in advance or otherwise alter the terms of payment specified in Part 1, Article 3.2.
3.5 Late Payment Charge.
3.5.1 Payments due Boeing not paid within 45 days after the date of Boeing's invoice will be subject to a late payment charge. Such charge will be computed monthly using the prime rate in effect as published and defined in the Wall Street Journal on the 15th day of the month, as adjusted month to month, plus 2%. If the 15th day of the month falls on either a Saturday, Sunday, or a United States federal holiday, Boeing will use the rate published on the next business day. Such rate will be applied on the basis of a 365-day year against the past-due amount, commencing on the 46th day after the invoice date and continuing until payment is received by Boeing.
3.5.2 Payments due Boeing under any SLA to this HMSGTA and not paid within 45 days after each calendar quarter will be subject to a late payment charge. Such charge will be computed monthly using the prime rate in effect as published and defined in the Wall Street Journal on the 15th day of the month, as adjusted month to month, plus 2%. If the 15th day of the month falls on either a Saturday, Sunday, or a United States federal holiday, Boeing will use the rate published on the next business day. Such rate will be applied on the basis of a 365-day year against the past-due amount, commencing on the 46th day after each calendar quarter and continuing until payment is received by Boeing. Boeing will be entitled to apply any
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amounts paid by Customer towards the payment of interest due prior to applying the amount paid to reduce the amount of royalties due.
3.6 Currency. All payments and amounts listed in this HMSGTA, any SLA or any Order will be in United States Dollars. The United States currency amount of any sum payable to Boeing under a SLA will be computed at the lawful exchange rate most favorable to Boeing prevailing on the last day of each calendar quarter for which such sum is due.
3.7 Supplemental License Agreement Payment Address. All payments required under any SLA will be sent postage prepaid to the address specified in writing by Boeing, or with prior written notice to Boeing, Customer may wire transfer its payments to an account specified in writing by Boeing.
4. Taxes.
"Taxes" are defined as all taxes, fees, charges or duties and any interest, penalties, fines, or other additions to tax, including, but not limited to, sales, use, value-added, gross receipts, stamp, excise, transfer and similar taxes imposed by any domestic or foreign taxing authority arising out of or in connection with this HMSGTA, an SLA or an Order. Except for U.S. federal and U.S. state income taxes and Washington State business and occupation tax imposed on Boeing, Customer will be responsible for and pay all Taxes.
5. Delivery.
Delivery of Spare Parts, Repair/Overhaul/Exchange Parts, Leased Parts, Leased Tools, Materials and other items will be Free on Board (F.O.B.) Boeing's plant, Seattle, Washington, or such other Boeing shipping point or distribution center from which the item is shipped in fulfillment of an SLA or an Order and is made upon placing an item in the possession of the carrier.
6. Cancellation of Orders.
6.1 Spare Parts, Repair/Overhaul/Exchange Parts, and Standards. Customer may cancel an Order for Spare Parts, Repair/Overhaul/Exchange Parts, or Standards at any time prior to delivery, provided that Boeing will be entitled to receive a cancellation charge in accordance with the following:
6.1.1 If work accomplished has been limited to Boeing's Spares Department, no cancellation charge will be made.
6.1.2 If production planning has been completed, but no time or material charges have been made, the cancellation charge will be [*****] of the price.
6.1.3 If time or material charges have been made, the cancellation charge will be based on such charges, but will not exceed the price of the Spare Parts ordered, or in the case of Repair/Overhaul/Exchange Parts, the charges will not exceed the current price of the returned part.
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6.1.4 If the Spare Parts or Standards are listed in the Spares Catalog, or can be absorbed into Boeing's inventory without increasing that inventory beyond Boeing's normal maximum stock level, no cancellation charge will be made.
6.2 Materials, Services, Leased Tools, and Leased Parts. Customer may cancel an Order for Materials, Services, Leased Tools or Leased Parts at any time prior to delivery of such items or completion of Services, provided that Boeing will be entitled to receive a cancellation charge. The cancellation charge will be, at a minimum, Boeing's normal charges for time and materials for work performed under the Order prior to receipt of the cancellation. At a maximum, the cancellation charge will be the agreed price/fee for the canceled item. Any cancellation charge relating to Spare Parts provided or to be provided as part of Services will be determined as set forth in Part 1, Article 6.1.
7. Inspection and Acceptance.
All Spare Parts, Standards, Repair/Overhaul/Exchange Parts, and Materials, will be subject to inspection by Customer at destination. Use of any of the above, or failure of Customer to give notice of rejection within 10 weeks after receipt of any of the above, whichever first occurs, will constitute Customer's acceptance.
8. Excusable Delay.
Boeing will not be liable for any delay in performance of an SLA or an Order caused by (i) acts of God, (ii) war or armed hostilities, (iii) government acts or priorities; (iv) fires, floods or earthquakes, (v) strikes or labor troubles causing cessation, slow-down or interruption of work, (vi) delivery to anyone pursuant to an Aircraft on Ground (AOG) or critical request affecting any aspect of Boeing's performance identified to an SLA or an Order, or (vii) inability, after due and timely diligence, to procure materials, systems, accessories, equipment, or parts; (viii) any other cause to the extent such cause is beyond Boeing's control and not occasioned by Boeing's fault or negligence. A delay resulting from any such cause is defined as an Excusable Delay and the date for completion of Boeing's performance will be equitably extended.
9. Right to Stop Work.
9.1 Boeing will not be required to provide or to continue Services at a non-Boeing facility during any period in which:
9.1.1 There is a labor dispute or stoppage in progress;
9.1.2 There exist war or warlike operations, riots or insurrections in the country where such Services are to be performed;
9.1.3 There exist conditions which, in the opinion of Boeing, are detrimental to the general health, welfare or safety of the Boeing employees; or
9.1.4 The Government of the United States refuses Boeing permission of entry to the country where the Services are to be performed or recommends that the Boeing employees
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leave the country, or refuses Boeing permission to export Materials, Spare Parts, Aircraft Software or Services to such country.
10. Notices.
10.1 Notices regarding the terms of this HMSGTA or an SLA will be in English and may be transmitted by any customary written means of communication addressed as follows:
Customer: Mid-Western Aircraft Systems, Inc. 3801 South Oliver Wichita, KS 67210 Attention: Director of Contracts Boeing: Boeing Commercial Airplanes P.O. Box 3707 Seattle, WA 98124-2207 Attention: Director Special Services - Contracts Mail Code 21-35 10.2 Notices regarding any Order will be in English, and will be |
transmitted as directed in the Order, or if not so directed, then as set forth in either (i) the Spares Catalog, or (ii) the Materials and Services Listing, as appropriate.
10.3 The effective date of any notice will be the date on which it is received by the addressee.
11. EXCLUSION OF LIABILITIES.
11.1 DISCLAIMER AND RELEASE. THE WARRANTIES, OBLIGATIONS AND LIABILITIES OF BOEING AND THE REMEDIES OF CUSTOMER SET FORTH IN THIS HMSGTA ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND CUSTOMER HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF CUSTOMER AGAINST BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY SPARE PARTS, AIRCRAFT SOFTWARE, STANDARDS, REPAIR/OVERHAUL/ EXCHANGE PARTS, LEASED PARTS, LEASED TOOLS, MATERIALS AND INFORMATION, SERVICES (INCLUDING, BUT NOT LIMITED TO, TECHNICAL ASSISTANCE AND TECHNICAL CONSULTING) OR ANY OTHER THINGS PROVIDED UNDER ANY SLA OR ANY ORDER, OR IN ANY BOEING SPARE PARTS, AIRCRAFT SOFTWARE, STANDARDS AVAILABLE THROUGH THE SPARES CATALOG, REPAIR/OVERHAUL/EXCHANGE PARTS, OR MATERIALS AND INFORMATION PROVIDED TO CUSTOMER BY A THIRD PARTY, INCLUDING BUT NOT LIMITED TO:
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11.1.1 ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;
11.1.2 ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
11.1.3 ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING; AND
11.1.4 ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO ANY AIRCRAFT OR SPARE PART.
11.2 EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. BOEING WILL HAVE NO OBLIGATION OR LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING WARRANTY), TORT (WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING) OR OTHERWISE, FOR LOSS OF USE, REVENUE OR PROFIT OR FOR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY SPARE PARTS, AIRCRAFT SOFTWARE, STANDARDS, REPAIR/OVERHAUL/EXCHANGE PARTS, LEASED PARTS, LEASED TOOLS, MATERIALS AND INFORMATION, SERVICES (INCLUDING, BUT NOT LIMITED TO, TECHNICAL ASSISTANCE AND TECHNICAL CONSULTING) OR ANY OTHER THINGS PROVIDED UNDER ANY SLA OR ANY ORDER, OR IN ANY BOEING SPARE PARTS, AIRCRAFT SOFTWARE, STANDARDS AVAILABLE THROUGH THE SPARES CATALOG, REPAIR/OVERHAUL/EXCHANGE PARTS, OR MATERIALS AND INFORMATION PROVIDED TO CUSTOMER BY A THIRD PARTY.
11.3 EXCLUSION OF LIABILITIES - OWNERS. CUSTOMER WILL CAUSE THE OWNER (OR LESSOR OR OPERATOR, IF AGREED BY BOEING) TO ACCEPT THE PROVISIONS OF THIS ARTICLE 11 TO THE SAME EXTENT AS CUSTOMER.
11.4 For the purpose of this Article 11, "BOEING" is defined as The Boeing Company, its divisions, subsidiaries and affiliates, the assignees of each, and their respective directors, officers, employees and agents.
12. Indemnity.
12.1 Customer will indemnify and hold harmless Boeing from and against all claims and liabilities, including costs and expenses (including attorneys' fees), incident thereto or incident to successfully establishing the right to indemnification, for injury to or death of any person or persons, including employees of Customer but not employees of Boeing, or for loss of or damage to any property, including any aircraft, arising out of or in any way relating to the use, lease or shipping of any Leased Tool, the performance of Services (including, but not limited to, Technical Assistance and Technical Consulting), the providing or use of any Materials and information, or any other things provided under any SLA or any Order (except with respect to Spare Parts, Standards, Repair/Overhaul/Exchange Parts and Leased Parts), or the use by Boeing of Customer's technical instructions, whether or not arising in tort or occasioned by the negligence of Boeing. Customer's obligations under this indemnity will survive the expiration,
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termination, completion or cancellation of this HMSGTA, any SLA or any Order. Nothing in this provision shall require Customer to indemnify or hold Boeing harmless for claims arising out of defects in Spare Parts, Standards, Repair/Overhaul/Exchange Parts and Leased Parts as originally manufactured by Boeing.
12.2 For the purpose of this Article 12, "Boeing" means The Boeing Company, its divisions, subsidiaries and affiliates, the assignees of each, and their respective directors, officers, employees and agents.
13. Insurance.
13.1 Insurance Requirements. Upon execution of this HMSGTA, Customer will provide to Boeing a certificate of insurance, renewable on an annual basis, evidencing that the contractual liabilities assumed by Customer under this HMSGTA and any SLAs are insured. The form of the insurance certificate, attached as Appendix I, states the terms, limits, provisions and coverages required by this Article 13.1. Boeing reserves the right to deny the provision of Services or Materials pursuant to this HMSGTA if any insurance certificate provided by Customer fails to meet the requirements of this Article 13.1 or Appendix I, or if in Boeing's opinion Customer's insurers are unacceptable to Boeing. The failure of Boeing to demand strict compliance with this Article 13.1 in any year will not in any way relieve Customer of its obligation to provide insurance coverage nor constitute a waiver by Boeing of such obligation.
13.2 Insurance for Test Aircraft. In the event that Customer uses, hires, charters, rents, contracts for, or operates an aircraft in testing, demonstration, efforts to obtain a supplemental type certification, or for any other purpose in connection with or based on Materials or Services:
13.2.1 Customer will cause the test aircraft's hull insurer to waive all rights of subrogation against Boeing.
13.2.2 Customer will cause the test aircraft's comprehensive liability insurer's to name Boeing as an additional insured for any liabilities claims, losses or damages arising out of or in any way connected with operation of the test aircraft.
13.2.3 Customer will cause the insurers of the above coverages to issue a certificate of insurance evidencing the extension of protection to Boeing at least 30 days prior to any flight test and will provide such certificate to Boeing.
13.3 Insurance for Leased Parts and Leased Tools. During any periods of lease, Customer will, at Customer's expense, insure Leased Parts and Leased Tools and promptly reimburse Boeing for any loss or destruction of, or damage to, such Leased Parts or Leased Tools. If requested by Boeing, Customer will provide proof of insurance referencing this HMSGTA and naming Boeing as a loss payee.
13.4 For the purpose of this Article 13, "Boeing" is defined as The Boeing Company, its divisions, subsidiaries and affiliates, the assignees of each, and their respective directors, officers, employees and agents.
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14. Termination for Insolvency.
14.1 Terminating Events. This HMSGTA, any SLA, or any Order may be terminated with regard to undelivered Spare Parts, Standards or Materials, unexpired lease terms for Leased Parts and Leased Tools, and unperformed Services, by notice in writing by either party hereto if the other party:
14.1.1 Ceases doing business, suspends all or substantially all its business operations, makes an assignment for the benefit of creditors, generally does not pay its debts in the ordinary course of business, or admits in writing its inability to pay its debts; or
14.1.2 Petitions for or acquiesces in the appointment of any receiver, trustee or similar officer to liquidate or conserve its business or any substantial part of its assets; commences any legal proceeding such as bankruptcy, reorganization, readjustment of debt, dissolution or liquidation available for the relief of financially distressed debtors; or becomes the object of any such proceeding, unless such proceeding is dismissed or stayed within 60 days.
14.2 Effect of Termination of Leases. Upon termination of all Orders for Leased Parts or Leased Tools under this Article 14, Customer will promptly assemble all Leased Parts or Leased Tools and deliver them to Boeing at a time and place designated by Boeing. If Customer fails to so return such Leased Parts or Leased Tools, Boeing may repossess the Leased Parts or Leased Tools and may enter at any time Customer's premises to effect such repossession. Customer will pay all costs and expenses incurred by Boeing in connection with repossession of any Leased Parts or Leased Tools, including reasonable attorneys' fees. Boeing will invoice Customer for such costs and expenses and payment will be due pursuant to Part 1, Article 3. Notwithstanding any such termination, Customer will remain liable for and will pay to Boeing all lease charges calculated to the date on which the Leased Parts or Leased Tools are returned to Boeing.
15. Assignment.
15.1 Assignment. This HMSGTA, each SLA and each Order is for the benefit of and is binding upon each of the parties hereto and their respective successors and permitted assigns. No rights or duties of either party under this HMSGTA, any SLA or any Order may be assigned, delegated or contracted to be assigned or delegated by either party except that:
15.1.1 Upon written authorization by Boeing, Customer may assign its interest to a corporation that (i) results from any merger or reorganization of such party or (ii) acquires substantially all the assets of such party;
15.1.2 Boeing may assign its interest to a corporation that (i) results from any merger or reorganization of Boeing or (ii) acquires substantially all the assets of Boeing;
15.1.3 Boeing may assign any of its rights to receive money; and
15.1.4 Boeing may assign all or any part of its rights and obligations under this HMSGTA, any SLA or any Order, to any wholly-owned subsidiary of Boeing provided that
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Boeing will remain responsible for all obligations and liabilities and Customer will continue to deal exclusively with Boeing.
15.2 In the interest of maintaining accurate records, Customer will give notice to Boeing, as soon as practicable, of any change in Customer's name or corporate structure. The notice will include the new name of the entity, the nature of the change of the corporate structure if any, and the effective date of the change.
15.3 No action taken by Customer or Boeing relating to the assignment of Customer's or Boeing's rights under this HMSGTA, any SLA or any Order will subject Boeing or Customer to any liability beyond that in this HMSGTA, the applicable SLA or the applicable Order.
16. Amendments.
Except as provided in this HMSGTA, all amendments to this HMSGTA, any SLA, or any Order will be in writing, signed by an authorized representative of each party.
17. Term.
Except as provided in Part 1 Article 14, Termination for Insolvency, this HMSGTA will be effective as of the date first written above and will remain in full force and effect thereafter unless and until terminated by written notice from either party to the other. Unless specified otherwise in a specific SLA, termination or cancellation of this HMSGTA shall terminate or cancel all SLAs. Any notice of termination given pursuant to this Article 17 will specify the effective date of termination, which must be 60 days or more after the date the notice is sent. All Orders in good standing at the time of termination of the HMSGTA will be performed in accordance with their terms, unless said Orders provide or license Materials, in which case said Orders may, at Boeing's option, be terminated.
18. Miscellaneous.
18.1 Survival of Obligations. The Articles of this HMSGTA relating to Materials, Proprietary Materials, Proprietary Information, Exclusion of Liabilities, Indemnity, Insurance, and Warranties will survive termination or cancellation of this HMSGTA.
18.2 Order of Precedence. In the event of any conflicting terms, the following order of precedence will prevail (i) the HMSGTA, (ii) the SLA, (iii) the Order, and (iv) the applicable catalog. For the avoidance of doubt, the parties agree that certain SLA's may contain terms which are prefaced with "Notwithstanding Article X.Y.Z of the HMSGTA..." which terms specifically shall take precedence over or revise the terms of this HMSGTA, the parties further agree that such terms are not considered to be conflicting terms for the purpose of this Article 18.2.
18.3 Headings. Article headings used in this HMSGTA, any SLA or any Order are for convenient reference only and are not intended to affect the interpretation of this HMSGTA, any SLA or any Order.
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18.4 Supervision of Employees. Boeing employees performing work under an SLA or an Order will at all times remain under the exclusive direction and control of Boeing.
18.5 Waiver and Severability. Failure by either party to enforce any of the provisions of this HMSGTA, SLA, or any Order will not be construed as a waiver of such provisions. If any of the provisions of this HMSGTA, SLA, or any Order are held unlawful or otherwise ineffective by a court of competent jurisdiction, the remainder of the HMSGTA, SLA, or Order will remain in full force.
18.6 Compliance with Laws and Export.
18.6.1 Each party shall comply with all laws, including, but not limited to, any statute, rule, regulation, judgment, decree, order, or permit applicable to its performance under this HMSGTA or any SLA or Order.
18.6.2 Each party will comply with all United States export laws and regulations. If an export license is required by United States law or regulation for any Spare Part, Aircraft Software, Materials, Service or any other thing delivered under this HMSGTA, SLA or any Order, it is Customer's obligation to obtain such license. Boeing shall cooperate with Customers request for relevant information in support of Customer's application for such license.
18.7 Use of Company Name, Trade Names, Trademarks and Service Marks.
18.7.1 Customer agrees not to use the name "Boeing" or its equivalent, or any other trade name, trademark or service mark of Boeing in any manner whatsoever without Boeing's prior written consent.
18.7.2 Customer agrees to allow Boeing to use Customer's name in various documents or lists for the sole purpose of informing Third Parties that Customer is authorized to use certain Boeing Materials.
18.8 Entire Agreement. This HMSGTA, the applicable SLA and the applicable Order contain the entire agreement between the parties with respect to the subject matter hereof and supersede all previous proposals, understandings, commitments or representations whatsoever, oral or written. Any purchase order provided or issued by Customer will be used solely for purposes of administration and financial controls.
18.9 GOVERNING LAW. THIS HMSGTA, SLA, AND ALL ORDERS WILL BE INTERPRETED UNDER AND GOVERNED BY THE LAW OF THE STATE OF WASHINGTON, U.S.A., EXCEPT THAT WASHINGTON'S CONFLICTS OF LAWS RULES SHALL NOT BE INVOKED FOR THE PURPOSES OF APPLYING THE LAW OF ANOTHER JURISDICTION. THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS WILL NOT APPLY TO THIS HMSGTA, SLA, AND ANY ORDER.
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PART 2
SPECIFIC TERMS AND CONDITIONS
1. Purchase of Spare Parts and Standards.
1.1 Ordering. From time to time, Customer may submit an order for Spare Parts or Standards. For Spare Parts or Standards listed in the Spares Catalog, Boeing's receipt of Customer's order will establish an Order. For Spare Parts or Standards not listed in the Spares Catalog, Boeing will acknowledge receipt and either (i) accept Customer's order, or (ii) advise Customer of any Spare Parts or Standards listed in the order that Boeing cannot provide. Boeing's acceptance of Customer's order will establish an Order.
1.2 Price. The purchase price of a Boeing Spare Part or Standard will be as set forth in the Spares Catalog at the time Boeing receives a Customer's order or, if not in the Spares Catalog, as quoted to Customer by Boeing. Boeing will release the Spares Catalog annually. Prices in the Spares Catalog will be firm and in effect for 12 months after the effective date of the Spares Catalog. The Spares Catalog will be released 90 days prior to its effective date to provide Customer with notice of any price revisions applicable to the Boeing Spare Parts identified in the Spares Catalog prior to the effective date of such revisions. Boeing may, however, at any time correct major errors in the Spares Catalog. If Customer requests accelerated deliveries or special handling, the price may be increased to cover Boeing's additional costs.
1.3 Title and Risk of Loss. Title and risk of loss will pass from Boeing to Customer upon delivery pursuant to Part 1, Article 5. Boeing will convey to Customer good title, free and clear of all liens, claims, charges and encumbrances. Title and risk of loss of Spare Parts or Standards rejected by Customer will remain with Customer until redelivered to Boeing.
1.4 Resale or Lease. When, in the performance of repair, maintenance or modification services, Customer sells Spare Parts or Standards purchased from Boeing, all rights and benefits conferred under this HMSGTA upon Customer with respect to such Spare Parts or Standards will transfer to the purchaser, but only if purchaser has or obtains from Customer sufficient information to substantiate a claim, and has executed its own Customer Services General Terms Agreement with Boeing or HMSGTA with Boeing.
1.5 Changes to Orders. Unless otherwise agreed in writing, Boeing may without Customer's consent make necessary corrections or changes in the design, part number and nomenclature of Spare Parts, substitute Spare Parts and adjust prices accordingly, provided that interchangeability is not affected and the unit price is not increased by more than [*****]. Boeing will promptly give Customer written notice of corrections, changes, substitutions and price adjustments. Corrections, changes, substitutions and price adjustments that affect interchangeability or exceed the price limitations set forth above may be made only with Customer's consent, which consent will conclusively be deemed to have been given unless Customer gives Boeing written notice of objection within 15 business days after receipt of Boeing's notice.
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1.6 Customer Spare Parts Transactions. Nothing in this HMSGTA, SLA, or any Order will prohibit Customer, Owners, Lessors and Operators from buying or selling or otherwise disposing of stocks of Boeing Spare Parts among themselves either directly or through transactions involving dealers, distributors, agents or brokers who buy or sell stocks of Boeing Spare Parts either for their own account or for the account of others. Nothing in any provision of this HMSGTA, SLA, or any Order will prohibit Customer, Owner, Lessor and Operators from purchasing spare parts that have been manufactured pursuant to appropriate regulatory approvals.
2. Lease of Parts and Tools.
2.1 Ordering. Boeing will advise Customer of the daily lease charge for any Leased Parts or Leased Tools upon request. From time to time, Customer may submit an order for lease of parts or tools. If previously quoted to Customer, and subject to the terms of that quote and to availability, Boeing's receipt of such order will constitute an Order. If not previously quoted, or such quote has expired, or such part or tool is not available, Boeing will acknowledge receipt and either (i) accept Customer's order, (ii) advise Customer of any part or tool listed in the order that Boeing cannot provide, or (iii) provide an offer that contains a description of the tool, lease charge, lease term and other applicable terms and conditions. Under (i) above, Boeing's acknowledgment of Customer's order will establish an Order. Under (iii) above, Customer's acceptance of Boeing's offer will establish an Order.
2.2 Stock of Leased Parts. Boeing will select and maintain a limited stock of parts for lease to Customer. Lease of such parts is subject to availability.
2.3 Lease Term and Return. Unless otherwise stated in Boeing's offer, the lease term starts upon delivery of a Leased Part or Leased Tool to Customer pursuant to Part 1, Article 5, and ends upon return by Customer of such Leased Part or Leased Tool to Boeing at the Boeing distribution center from which it was shipped, or other mutually agreed to distribution center in accordance with instructions provided by Boeing. All Leased Parts and Leased Tools are to be returned to Boeing in the shipping containers in which they were shipped by Boeing.
2.4 Unexpected Return of Leased Tools. Unusual circumstances, such as an AOG from an Operator, may require a Leased Tool be sent back to Boeing prior to Customer's intended return of the Leased Tool. Accordingly, within 48 hours of Customer's receipt of written or telegraphic notice from Boeing that a Leased Tool is required for an AOG, Customer will ship such Leased Tool to Boeing air freight prepaid, unless Boeing and Customer agree that the return of the Leased Tool would create an AOG situation for Customer. As soon as a tool is available and providing that Customer still needs the tool, the original lease will be continued by Boeing shipping the tool back to Customer freight prepaid and reimbursing Customer for the freight charges incurred by Customer when the tool was returned at Boeing's request.
2.5 Leased Tool Use Days. Within 10 days after Customer's return of any Leased Tool to Boeing, Customer will advise Boeing of the actual number of days such Leased Tool was used.
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2.6 Leased Part Flight Hours. Within 10 days after Customer's return of a Leased Part, Customer will advise Boeing of all flight hours accumulated by Customer on such Leased Part.
2.7 Sublease. Customer will not sublease Leased Parts or Leased Tools.
2.8 Lease Charges.
2.8.1 Basic Charges. The daily lease charge for a Leased Tool will apply to the actual number of days the Leased Tool is used. The daily lease charge for a Leased Part will apply to each day of the lease term.
2.8.2 Additional Charges. Customer will also pay (i) a Boeing inspection charge for each Leased Tool, and (ii) charges, as necessary, for damage or deterioration other than normal wear and tear resulting from Customer's use of a Leased Part or Leased Tool, including costs of repair, overhaul and repackaging as required to place the Leased Part or Leased Tool in a condition satisfactory for lease or sale to another party.
2.8.3 Suspension. If a Leased Part or Leased Tool is found to be defective, Customer's obligation to pay lease charges will be suspended from the date Boeing receives Customer's notice of such defect until the date on which Boeing has repaired, corrected or replaced the defective Leased Part or Leased Tool. Boeing will reimburse Customer for freight charges connected with the initial delivery to Customer and the return to Boeing of such defective Leased
Part or Leased Tool.
2.8.4 Option to Purchase Leased Parts. Upon written notice to Boeing, Customer may purchase any Leased Part. If Customer exercises such option within 60 days after commencement of the lease term, Customer will be invoiced for the purchase price of the part and no lease charges will accrue. If Customer exercises such option more than 60 days after commencement of the lease term, Customer will be invoiced for the purchase price of the part and 50% of the accrued lease charges.
2.9 Title to and Risk of Loss.
2.9.1 Title to each Leased Part or Leased Tool will remain with Boeing. At Boeing's request, Customer will take any reasonable action to sign and deliver such instruments as may be required to preserve and protect Boeing's right, title and interest in and to each Leased Part or Leased Tool. Risk of loss of each Leased Part or Leased Tool will pass from Boeing to Customer upon delivery. Risk of loss or damage to Leased Parts or Leased Tools will remain with Customer until such Leased Parts or Leased Tools are returned to Boeing.
2.9.2 If Customer exercises its option to purchase a Leased Part, title will pass to Customer upon receipt by Boeing of Customer's written notice under Part 2, Article 2.8.4.
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3. Provision of Services.
3.1 Ordering.
3.1.1 Upon receipt of a Customer's request for Services, Boeing will evaluate the request and, if offerable, provide an offer that contains a statement of work, price, period of performance and other applicable terms and conditions. Each offer accepted by Customer will establish an Order.
3.1.2 From time to time Boeing may perform Services as requested by Customer, at no charge and without requiring a Boeing offer. Performance by Boeing in response to Customer's request will constitute acceptance and establish an Order.
3.2 Price. The price for Services and any other charges related thereto will be as set forth in the Boeing offer.
4. Provision of Materials.
4.1 Ordering.
4.1.1 From time to time, Customer may submit an order for Materials. However, one or more SLAs must be executed prior to Boeing accepting Customer orders for Proprietary Materials pursuant to this HMSGTA. The SLA(s) will establish additional terms and conditions under which particular Proprietary Materials must be protected, obtained, disclosed and/or used. Once the appropriate SLA has been executed, for Materials listed in the Materials and Services Listing and as related to such SLA, Boeing's receipt of Customer's order will establish an Order. For Materials not listed in the Materials and Services Listing, Boeing will acknowledge receipt and either (i) accept Customer's order, or (ii) advise Customer of any Materials listed in the order that Boeing cannot provide. Boeing's acceptance of Customer's order will establish an Order.
4.1.2 Upon receipt of a Customer's written request for either (i) the use of Proprietary Materials or Proprietary Information other than as specified in this HMSGTA or a SLA, or (ii) the disclosure or use of Proprietary Materials or Proprietary Information beyond that permitted by this HMSGTA or a SLA, Boeing will evaluate the request. Boeing may provide an offer that contains a description of the Proprietary Materials or Proprietary Information, fee, delivery schedule and other applicable terms and conditions. Each offer accepted by Customer will establish an Order.
4.1.3 From time to time Boeing may provide Materials, Proprietary Materials, or Proprietary Information as requested by Customer, at no charge and without requiring a Boeing offer. The provision of such items or information by Boeing in response to Customer's request will constitute acceptance and establish an Order.
4.1.4 Unless specified otherwise in a specific SLA, upon cancellation or termination of this HMSGTA or SLA thereto, (a) Customer will not use or cause to be used any
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Materials, Proprietary Information and Proprietary Materials that were licensed pursuant to such SLA, and (b) within ten days of written notice to Customer by Boeing, and in accordance with the direction received by Boeing, Customer will either (i) return all copies of the Proprietary Materials including partial copies or modifications to Boeing postage prepaid, or (ii) certify to Boeing, by a duly authorized officer of Customer, that all copies of the Proprietary Materials including partial copies or modifications have been destroyed.
4.2 Provision of Materials by Electronic Transmission
4.2.1 From time to time, Boeing may offer to provide Customer access to Materials by way of Electronic Access. However, one or more SLAs must be executed prior to Boeing providing Customer Electronic Access pursuant to this HMSGTA. Any Electronic Access so granted by Boeing will be subject to the following provisions:
4.2.2 Boeing requires Customer to identify each of Customer's employees who have Electronic Access and to have on file for each such employee an agreement between Customer and each such employee wherein the employee agrees to (a) maintain in confidence, all Proprietary Information and Proprietary Materials received by means of Electronic Access, (b) maintain in confidence any Authentication Mechanism used to verify the identity of a system user or access proceeding to facilitate access, and (c) to use such information and materials pursuant to the HMSGTA and SLA
4.2.3 Customer is responsible for communicating to all of Customer's employees who have Electronic Access the terms and conditions contained in the HMSGTA and any SLAs applicable to such Electronic Access. Customer will include in such communications the provisions set forth in the HMSGTA and any SLA relating to the use, disclosure and protection of Proprietary Materials obtained through Electronic Access, along with the consequences of failing to comply with those provisions.
4.2.4 Customer acknowledges that any attempts by Customer or its employees to access any Materials, other than the Materials licensed in SLAs with Customer, or any attempts to circumvent any security measures designed to prevent unauthorized access to Materials, may be in violation of the United States federal Computer Fraud and Abuse Act, and other applicable United States federal and state statutes, and may subject the violator to criminal and civil penalties.
4.2.5 Customer will maintain a complete and accurate listing of Customer's employees who are granted Electronic Access and to provide such listing to Boeing every three months, or upon request. Customer will identify to Boeing a specific employee(s) (Focal) responsible for the initiation and administration of all Authentication Mechanisms requested on behalf of Customer. Customer further agrees to notify Boeing immediately when an individual having been granted Electronic Access no longer requires Electronic Access (e.g. when an employee changes job responsibilities, or when an employee leaves the company).
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4.2.6 Unless otherwise authorized by Boeing in writing, all Authentication Mechanisms will be provided to Customer's employees for their individual use only, and are not transferable.
4.2.7 Boeing has the right to monitor all Electronic Access by Customer, and immediately discontinue Electronic Access to any of Customer's employees or to Customer, in the event Boeing determines that Customer or Customer's employees have breached any provisions of the HMSGTA or applicable SLAs relating to use, disclosure and protection of Materials.
4.2.8 All Materials provided by Electronic Access are Proprietary Materials whether or not they are marked as such, and are subject to the provisions of the License Grant of the applicable SLA(s) and the provisions of the Use and Disclosure of Proprietary Materials section of the HMSGTA.
4.2.9 All Materials provided by Electronic Access are owned by Boeing or a Third Party and Customer will obtain no rights, title, or interest in the Materials except as expressly provided in the HMSGTA and applicable SLA.
4.2.10 Customer will comply with the terms of this HMSGTA and applicable SLAs and all U.S. laws, including U.S. export regulations, in the distribution of user accounts and passwords to its employees.
4.3 Fees.
4.3.1 In addition to any fees that may be specified in any SLAs to this HMSGTA, the following fees will apply:
4.3.1.1 The fee for the provision of any Materials or information for which such Materials or information are specified by Boeing and which are provided from the Materials and Services Listing, will be at the then-current listed price or, if there is no listed price, as quoted to Customer. 4.3.1.2 The fee for the provision of any Materials or information for which such Materials or information are not specified by Boeing will be as quoted to Customer.
4.4 Grant.
4.4.1 Any grant to Customer for the right to use Proprietary Materials and Proprietary Information, is provided in a SLA to this HMSGTA. There may be more than one SLA granting Customer the right to use particular Proprietary Materials and Proprietary Information depending upon the work Customer performs.
4.4.2 The individual copies of all Materials and Aircraft Software are provided to Customer subject to copyrights therein, and all such copyrights are retained by Boeing or, in some cases, by Third Parties.
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4.4.3 Customer will not attempt to gain access to information by reverse engineering, decompiling, or disassembling any portion of any software or Aircraft Software provided to Customer pursuant to an SLA or an Order or otherwise by Boeing.
4.5 Use and Disclosure of Proprietary Materials.
4.5.1 Customer is authorized to use and disclose Proprietary Materials and Proprietary Information only as specifically authorized herein, or in an applicable SLA incorporating this HMSGTA. Customer will preserve and protect all Proprietary Materials and all Proprietary Information in confidence.
4.5.2 When specific authorization is provided in the SLA, Customer is authorized to provide Proprietary Materials and disclose Proprietary Information to a Contractor for the sole purpose of assisting Customer's activities as related to such SLA.
4.5.3 Before providing Proprietary Materials or Proprietary Information to a Contractor, Customer will obtain a written agreement from that Contractor (i) to use the Proprietary Materials and Proprietary Information only on behalf of Customer, (ii) to be bound by all of the restrictions and limitations of this Article 4, and (iii) that Boeing is an intended third-party beneficiary under such agreement. Customer agrees to provide copies of all such written agreements to Boeing upon request, and to be liable to Boeing for any breach of those agreements by Contractor. A form of agreement, acceptable to Boeing, is attached as Appendix II.
4.5.4 When and to the extent required by a government regulatory agency having jurisdiction over the Aircraft being maintained, repaired or modified by Customer or otherwise required by law (e.g., pursuant to a subpoena), Customer is authorized to provide and disclose Proprietary Materials and Proprietary Information, owned by Boeing, to the agency for the agency's use in connection with the Customer's maintenance, repair, or modification of that Aircraft or to the extent otherwise required by law, provided that Boeing shall be notified sufficiently in advance of such requirement so that it may seek an appropriate protective order (or equivalent) with respect to such disclosure, with which Customer shall fully comply; and provided further that in the event such a protective order or other remedy is not obtained by Boeing or Boeing waives compliance with the terms hereof, Customer shall disclose only that portion of Proprietary Materials and Proprietary Information that it is legally required to disclose and shall exercise its reasonable best efforts to assure that confidential treatment will be accorded such Proprietary Materials and Proprietary Information and shall promptly notify Boeing of the extent and circumstances of such disclosure. Notwithstanding the foregoing to the contrary, if Customer is prohibited by an order of a court or governmental regulatory agency from notifying Boeing in advance of Customer's disclosure of Proprietary Materials or Proprietary Information owned by Boeing to a governmental agency, then Customer shall (A) notify the court or governmental regulatory agency that the information required to be disclosed is or may be Proprietary Materials and Proprietary Information of Boeing and request the court or governmental regulatory agency to hold the information required to be disclosed in confidence pending appropriate proceedings affording Boeing an opportunity at its expense to seek a protective or other appropriate order, (B) notify Boeing as soon as Customer is legally
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permitted to do so that Proprietary Materials and Proprietary Information owned by Boeing is or may be required to be or has been disclosed pursuant to such process, together with the extent and circumstances of such disclosure, and (C) disclose only that portion of the Proprietary Materials and Proprietary Information that is legally required to be disclosed. Unless prohibited by applicable law or court order, Boeing shall be given an opportunity to review the Proprietary Materials and Proprietary Information prior to its disclosure. Customer agrees to take reasonable steps to prevent such agency or other entity to which Customer is required to disclose Proprietary Materials and/or Proprietary Information (e.g., a court) from making any distribution or disclosure, or additional use of the Proprietary Materials and Proprietary Information so provided or disclosed. Customer further agrees to promptly notify Boeing upon learning of any (i) distribution, disclosure, or additional use by such agency or other entity, (ii) request to such agency or other entity for distribution, disclosure, or additional use, or (iii) intention on the part of such agency or other entity to distribute, disclose, or make additional use of the Proprietary Materials or Proprietary Information.
4.5.5 The requirements of Article 4.5.1 through Article 4.5.4 shall not restrict Customer's use or disclosure of Independently Available Materials. For the purpose of this Article the following definitions shall apply, (i) "Independently Available Materials" means items that contain, convey, or embody Independently Available Information, and that Customer knows or reasonably should know are not Boeing Source Materials or derivatives thereof, (ii) "Independently Available Information" means information that: (a) Customer lawfully obtains from a Third Party who has the right to disclose such information to Customer without restriction; (b) Customer independently develops without reference to, or incorporation of Boeing Source Materials; or (c) that Customer obtains from publicly accessible sources; except, in each case, for information that Customer knows or reasonably should know are derived from Boeing Source Materials, and (iii) "Boeing Source Materials" means Materials obtained, directly or indirectly, from Boeing, including editorial revisions, annotations, elaborations, or any other forms in which such Materials may be modified, recast, transformed, translated, condensed, or otherwise adapted. For the avoidance of doubt, Customer's obligations with respect to Boeing Source Materials shall not be reduced even if such Boeing Source Materials contain Independently Available Information.
4.6 Customer Responsibility.
4.6.1 Customer agrees that it shall establish, maintain, and take all reasonable measures to protect the secrecy of and avoid disclosure or use of Proprietary Information other than as authorized under this HMSGTA. Such measures shall include, without limitation, the same degree of care that Customer utilizes to protect its own confidential or proprietary information of a similar nature, which shall be no less than reasonable care.
4.6.2 Customer will be solely responsible for ascertaining and ensuring that all Materials are appropriate for the use to which they are put and that all uses of Materials by Customer conform to the terms of this HMSGTA.
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4.7 Records and Audit Rights.
4.7.1 No more than once every twelve (12) months and upon reasonable prior written notice to Customer, Boeing will have the right to audit pertinent records of Customer and to make reasonable inspection of Customer's premises for the purpose of verifying compliance with the:
(i) use of Materials as specified in any SLA; and
(ii) obligations to protect Materials; and
(iii) any royalty reporting and payment provisions that may be specified in any SLA.
4.7.2 In the event Customer and Boeing enter into a SLA to this HMSGTA containing terms or conditions related to license fees, royalties or other compensation to Boeing, Customer agrees to maintain true and accurate records relating to any such SLA. Such records will be prepared in accordance with generally accepted accounting principles and will be available for audit no more than once every three (3) months by Boeing or its duly authorized representative at all reasonable times during business hours. Boeing will provide at least five (5) days written notice to Customer prior to such audits. Boeing will have access to, and the right to copy pertinent portions of, such accounting information and other records to the extent necessary to permit an examination in accordance with the requirements of any SLA to this HMSGTA. Boeing will bear any costs and expenses associated with such audit, except that in the event the results of any audit shows the amounts payable to Boeing are greater than one hundred-ten percent (110%) of the amounts reported and paid to Boeing for the audited period, then Customer will (i) pay Boeing for its reasonable out-of-pocket costs and expenses associated with such audit, and (ii) pay Boeing all amounts found owed to Boeing with interest as calculated in this HMSGTA Part 1, Article 3.5. Customer will pay such amounts to Boeing within thirty (30) days of Customer's receipt of written notice from Boeing.
4.7.3 Boeing will have the right to conduct audits of Customer's records for a period of up to twelve (12) months subsequent to the effective date of termination or cancellation of any SLA.
4.7.4 Notwithstanding Article 4.7.1 above, Boeing will have the right to conduct quarterly audits if a previous audit has found amounts payable to Boeing greater than one hundred-ten percent (110%) of the amounts reported and paid to Boeing for the audited period.
4.7.5 Boeing shall maintain in confidence Customer's confidential information obtained as a result of an audit, conducted pursuant to this Part 2 Article 4.7, according to the protections that Boeing uses for Boeing's own confidential information, and Boeing shall use and disclose such confidential information only in connection with its agreements with Customer or in connection with enforcement Boeing's rights against Customer.
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4.8 Offset Credits.
4.8.1 To the exclusion of all others, Boeing or its assignees will be entitled to all industrial benefits or offset credits which might result from any SLA. Customer will provide documentation or information that Boeing or its assignees may reasonably request to substantiate claims for industrial benefits or offset credits.
4.8.2 Customer agrees to use reasonable efforts to identify the foreign content of goods that Customer either produces itself or procures from subcontractors for work directly related to any SLA. Promptly after selection of a foreign subcontractor for work under any SLA, Customer will notify Boeing of the name, address, subcontract point of contact (including telephone number) and dollar value of the subcontract.
5. Provision of Repair/Overhaul/Exchange Parts.
5.1 Ordering. Boeing will advise Customer of the price to
repair/overhaul/exchange any Boeing Spare Parts upon request. From time to time,
Customer may submit an order for the repair/overhaul/exchange of Boeing Spare
Parts. Boeing will acknowledge receipt and either (i) accept Customer's order,
(ii) advise Customer of any Boeing Spare Part listed in the order that Boeing
cannot repair, overhaul or exchange. Boeing's acknowledgment of Customer's order
will establish an Order.
5.2 Non-repairable Repair/Overhaul/Exchange Parts. Unless previously agreed, Boeing considers any part non-repairable, i.e., Beyond Economical Repair (BER) if a repair will exceed [*****] of Boeing's then current sales price for a new replacement part. Boeing will promptly notify Customer if, in Boeing's discretion, a Repair/Overhaul/Exchange Part is non-repairable, and Customer will instruct Boeing to either:
5.2.1 continue the repair with an approved budgetary quote
5.2.2 ship the nonrepairable Repair/Overhaul/Exchange Parts to Customer at Customer's expense, or
5.2.3 destroy the Repair/Overhaul/Exchange Part at Boeing's facility. In the event Customer requests disposition of a part pursuant to this clause, Customer will pay Boeing a handling charge of a minimum of [*****].
5.3 Title and Risk of Loss. Title to and risk of loss of any Repair/Overhaul/Exchange Parts returned to Boeing will at all times remain with Customer or any other title holder of such Boeing Spare Part, except that components of such Repair/Overhaul/Exchange Parts removed and replaced will pass to Boeing upon replacement. Title to replacement components will pass to Customer upon redelivery to Customer. Title to Repair/Overhaul/Exchange Parts delivered to Boeing for exchange with remanufactured, modified or overhauled Repair/Overhaul/Exchange Parts will pass to Boeing upon delivery to Customer of the remanufactured, modified or overhauled Repair/Overhaul/Exchange Parts. Title to such remanufactured, modified or
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overhauled Repair/Overhaul/Exchange Parts will pass to Customer upon delivery to Customer. While Boeing has possession of the returned Repair/Overhaul/Exchange Parts, Boeing will have only such liabilities as a bailee for mutual benefit would have, but will not be liable for loss of use.
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PART 3
WARRANTY TERMS AND CONDITIONS
1. Boeing Spare Parts Warranty.
1.1 Coverage. Boeing warrants that, at the time of delivery, each Boeing Spare Part purchased by Customer will:
(i) conform to the applicable drawing and specification;
(ii) be free from defects in material and workmanship, including process of manufacture; and
(iii) be free from defects in design including selection of materials and process of manufacture, in view of the state-of-the-art at the time of design.
1.2 Exceptions.
1.2.1 The following conditions do not constitute a defect under this warranty:
(i) conditions resulting from normal wear and tear;
(ii) conditions resulting from acts or omissions of Customer; and
(iii) conditions resulting from failure to properly service and maintain a Boeing Spare Part.
1.2.2 The warranties set forth in Part 3 of this HMSGTA will not apply to any Boeing Spare Parts manufactured pursuant to any SLA.
1.3 Warranty Periods.
1.3.1 Warranty. The warranty period begins on the date of delivery of the Boeing Spare Part and ends (i) after 48 months for a Boeing Spare Part manufactured for installation on Aircraft models 777-200, -300 or 737-600, -700, -800, -900, or new Aircraft models designed and manufactured with similar, new technology; or (ii) after 36 months for a Boeing Spare Part manufactured for installation on any other Aircraft model. Notwithstanding, in the case of any Boeing Spare Part that is subject to the 48 month warranty and the 36 month warranty, the 48 month warranty will apply in every instance.
1.3.2 Warranty on Corrected Boeing Spare Parts. The warranty period applicable to a Corrected Boeing Spare Part resulting from a defect in material or workmanship is the remainder of the initial warranty period for the defective Boeing Spare Part it replaced. The warranty period for a Corrected Boeing Spare Part resulting from a defect in design is 18 months or the remainder of the initial warranty period, whichever is longer. The 18 month
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period begins on the date of delivery of the Corrected Boeing Spare Part or date of delivery of the kit or kits furnished to Correct the Boeing Spare Part.
1.4 Remedies.
1.4.1 Defect Correction. At Customer's option, Boeing will either Correct or reimburse Customer to Correct defects in Boeing Spare Parts discovered during the warranty period.
1.4.2 Warranty Labor Rate. If Customer Corrects a defective Boeing Spare Part, Boeing will reimburse Customer for Direct Labor hours at Customer's established Warranty Labor Rate at the time of Correction. Prior to or concurrently with submittal of Customer's first claim for Direct Labor reimbursement, Customer may notify Boeing of Customer's then-current Average Direct Hourly Labor Rate, and thereafter notify Boeing of any material change in such rate. Boeing will require information from Customer to substantiate such rates.
1.4.3 Warranty Inspections. In addition to the remedies to Correct defects in Boeing Spare Parts, Boeing will reimburse Customer for the cost of Direct Labor to perform certain inspections of the Aircraft to determine the occurrence of a condition Boeing has identified as a covered defect, provided:
1.4.3.1 the inspections are recommended by a service bulletin or service letter issued by Boeing during the warranty period; and
1.4.3.2 such reimbursement will not apply to any inspections performed after a Correction is available to Customer.
1.4.4 Credit Memorandum Reimbursement. Boeing will make all reimbursements by credit memoranda which may be applied toward the purchase of Boeing goods and services.
1.4.5 Maximum Reimbursement. Unless previously agreed, the maximum reimbursement for Direct Labor and Direct Materials used to Correct a defective Boeing Spare Part will not exceed [*****] of Boeing's then-current sales price for a new replacement Boeing Spare Part.
1.5 Discovery and Notice.
1.5.1 For a claim to be valid:
(i) the defect must be discovered during the warranty period; and
(ii) Boeing Warranty Regional Manager must receive written notice of the discovery no later than 90 days after expiration of the warranty period. The notice must include sufficient information to substantiate the claim.
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1.5.2 Receipt of Customer's notice of the discovery of a defect secures Customer's rights to remedies under this Part 3, even though a Correction is performed after the expiration of the warranty period.
1.5.3 Once Customer has given valid notice of the discovery of a defect, a claim should be submitted as soon as practicable after performance of the Correction.
1.5.4 Boeing may release service bulletins or service letters advising Customer of the availability of certain warranty remedies. When such advice is provided, Customer will be deemed to have fulfilled the requirements for discovery of the defect and submittal of notice under this Part 3 as of the date specified in the service bulletin or service letter.
1.6 Filing a Claim.
1.6.1 Authority to File. Claims may be filed by Customer.
1.6.2 Claim Information.
1.6.2.1 Claimant is responsible for providing sufficient information to substantiate Customer's rights to remedies under this Part 3. Boeing may reject a claim for lack of sufficient information. At a minimum, such information must include:
(i) identity of claimant;
(ii) part number and nomenclature of defective Boeing Spare Part;
(iii) purchase order number and date of delivery of a defective Boeing Spare Part;
(iv) description and substantiation of the defect;
(v) date the defect was discovered;
(vi) date the Correction was completed;
(vii) the total flight hours or cycles accrued, if applicable;
(viii)an itemized account of direct labor hours expended in performing the Correction; and
(ix) an itemized account of any direct materials incorporated in the Correction.
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1.6.2.2 Additional information may be required based on the nature of the defect and the remedies requested.
1.6.3 Boeing Claim Processing.
1.6.3.1 Any claim for a Boeing Spare Part returned by Customer to Boeing for Correction must accompany the Boeing Spare Part. Any claim not associated with the return of a Boeing Spare Part must be signed and submitted in writing directly by Customer to Boeing Warranty Regional Manager.
1.6.3.2 Boeing will promptly review the claim and will give notification of claim approval or rejection. If the claim is rejected, Boeing will provide a written explanation.
1.7 Corrections Performed by Customer.
1.7.1 Facilities Requirements. Customer may at its option Correct defective Boeing Spare Parts at its facilities or may subcontract Corrections to a Contractor. A Contractor must be certified by Customer's Civil Aviation Authority or the Federal Aviation Administration.
1.7.2 Technical Requirements. All Corrections done by Customer, or Contractor must be performed in accordance with Boeing's applicable service manuals, bulletins or other written instructions, using parts and materials furnished or approved by Boeing.
1.7.3 Reimbursement.
1.7.3.1 Boeing will reimburse Customer's reasonable costs of Direct Materials and Direct Labor (excluding time expended for overhaul) at Customer's established Warranty Labor Rate to Correct a defective Boeing Spare Part. Claims for reimbursement must contain sufficient information to substantiate Direct Labor hours expended and Direct Materials consumed. Customer or Contractor may be required to produce invoices for materials.
1.7.3.2 Reimbursement for Direct Labor hours to perform a Correction stated in a service bulletin will be based on the labor estimates in the service bulletin.
1.7.3.3 Boeing will reimburse Customer for freight charges associated with Correction of defects performed by its Contractor.
1.7.4 Disposition of Defective Boeing Spare Parts Beyond Economical Repair.
1.7.4.1 Defective Boeing Spare Parts that are found to be beyond economical repair will be retained for a period of 60 days from the date Boeing receives Customer's claim. Boeing may request return of such Boeing Spare Parts during the 60 day period for inspection and confirmation of a defect.
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1.7.4.2 After the 60 day period, a defective Boeing Spare Part with a value of U.S. $2,000 or less may be scrapped without notification to Boeing. If such Part has a value greater than U.S. $2,000, Customer must obtain confirmation of unrepairability by Boeing's on-site Customer Services Representative prior to scrapping. Confirmation may be in the form of the Representative's signature on Customer's claim or through direct communication between the Representative and Boeing Warranty Regional Manager.
1.8 Corrections Performed by Boeing.
1.8.1 Freight Charges. Customer will pay shipping charges to return a Boeing Spare Part to Boeing. Except for Boeing Spare Parts applicable to Boeing Models 707, 727 and DC-8 Aircraft, Boeing will reimburse Customer for reasonable incoming shipping charges. Boeing will pay shipping charges to return the Corrected Boeing Spare Part.
1.8.2 Customer Instructions. The documentation shipped with the returned defective Boeing Spare Part may include specific technical instructions for additional work to be performed on the Boeing Spare Part. The absence of such instructions will evidence Customer's authorization for Boeing to perform all necessary Corrections and work required to return the Boeing Spare Part to a serviceable condition.
1.8.3 Correction Time Objectives.
1.8.3.1 Boeing's objective for making Corrections is 10 working days for avionics and electronic Boeing Spare Parts, 30 working days for Corrections of other Boeing Spare Parts performed at Boeing's facilities, and 40 working days for Corrections of other Boeing Spare Parts performed at Boeing subcontractor's facilities. The objectives are measured from the date Boeing receives the defective Boeing Spare Part and a valid claim to the date Boeing ships the Correction.
1.8.3.2 Except for Boeing Spare Parts applicable to Boeing Models 707, 727 and DC-8 Aircraft, if Customer has a critical parts shortage because Boeing has exceeded a Correction time objective and Customer has procured spare Boeing Spare Parts for the defective Boeing Spare Part in quantities shown in Boeing's Recommended Spare Parts List (RSPL), or Spares Planning and Requirements Evaluation Model (M-SPARE), or as otherwise agreed between the parties, then Boeing will either expedite the Correction or provide an interchangeable Boeing Spare Part on a no charge loan or lease basis until the Corrected Boeing Spare Part is returned.
1.8.4 Title Transfer and Risk of Loss.
1.8.4.1 Title to and risk of loss of any Boeing Spare Part returned to Boeing will at all times remain with Customer or any other title holder of such Boeing Spare Part. While Boeing has possession of the returned Boeing Spare Part, Boeing will have only such liabilities as a bailee for mutual benefit would have, but will not be liable for loss of use.
1.8.4.2 If a Correction requires delivery of a new Boeing Spare Part,
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then at the time Boeing delivers the new Boeing Spare Part, title to and risk of loss for the returned Boeing Spare Part will pass to Boeing, and title to and risk of loss for the new Boeing Spare Part will pass to Customer.
2. Supplier Warranty Commitment.
Supplier Spare Parts purchased from Boeing are purchased "as is" and Boeing makes no warranty whatsoever with regard to them.
3. Warranty of Leased Tools and Leased Parts.
Each Leased Tool and Leased Part leased hereunder is leased "as is" and Boeing makes no warranty whatsoever with regard to them. A Leased Part purchased by Customer is a Boeing Spare Part and as such the warranty is contained in Part 3, Article 1.
4. Warranty of Technical Assistance and Technical Consulting.
4.1 Coverage. Boeing warrants that Technical Assistance and Technical Consulting will be performed in a workmanlike manner.
4.2 Warranty Period and Claims. The warranty period with respect to the performance of Technical Assistance and Technical Consulting is 36 months after the completion date of the applicable Service. Boeing Warranty Regional Manager must receive written notice of the discovery no later than 90 days after expiration of the warranty period. The notice must include sufficient information to substantiate the claim.
4.3 Remedy. Customer's remedy and Boeing's sole obligation and liability for deficient Services are limited to the no-charge reperformance by Boeing for that portion of the Services determined to be deficient.
5. Warranty for Repair/Overhaul/Exchange Parts.
5.1 Coverage and Warranty Period. Boeing warrants that, at the time of delivery, each Repair/Overhaul/Exchange Part processed by Boeing under a Repair/Overhaul/Exchange Order will be free from defects in material and workmanship for a period of 12 months after such delivery. There are no warranties as to any parts not manufactured to Boeing's detail design, whether or not such parts are installed or incorporated in the Repair/Overhaul/ Exchange Part delivered to Customer.
5.2 Claims. The claimed defect must be discovered by Customer within the applicable warranty period, and Boeing Warranty Regional Manager must receive written notice of such defect at the earliest practicable time after discovery of the defect by Customer, but in no event later than 90 days after expiration of the applicable warranty period. Such claim must include reasonable evidence that the claimed defect is covered by one of the above warranties and, if requested by Boeing, that such defect did not result from:
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(i) conditions resulting from normal wear and tear;
(ii) conditions resulting from acts or omissions of Customer; and
(iii) conditions resulting from failure to properly service and maintain a Repair/Overhaul/Exchange Part.
5.3 Remedy. Customer's remedy for a defect in material and workmanship in the Repair/Overhaul/Exchange Part is repair or replacement, at Boeing's option, of the defective Repair/Overhaul/Exchange Part. If a replacement Repair/Overhaul/Exchange Part is provided, such replacement will be interchangeable with the replaced part and be free from defect. Boeing's liability and Customer's remedy under this Article 5.3 are conditioned upon the return, as soon as practicable, of the defective Repair/Overhaul/Exchange Part, with all shipping charges prepaid, to Boeing's location, from which such part was previously delivered to Customer, or other mutually agreeable location. Upon confirmation of the defect, Boeing will reimburse Customer's reasonable incoming shipping charges. Return of the repaired or replacement Repair/Overhaul/Exchange Part will be at Boeing's expense.
5.4 Warranty of Title. Boeing warrants that it will convey good title to any replaced or exchanged component part provided with the Repair/Overhaul/Exchange Part delivered to Customer from Boeing, and such part will be free and clear of all liens, claims, charges and encumbrances. Boeing's liability and Customer's remedy under this Article 5.4 are limited to the removal of any defect in title or the replacement of any part having such a defect.
6. Indemnities Against Patent and Copyright Infringement.
6.1 Indemnity Against Patent Infringement. Boeing will defend and indemnify Customer with respect to all claims, suits, and liabilities arising out of any actual or alleged patent infringement through Customer's use or resale of any Boeing Spare Part purchased by Customer from Boeing pursuant to an Order.
6.2 Indemnity Against Copyright Infringement. Boeing will defend and indemnify Customer with respect to all claims, suits, and liabilities arising out of any actual or alleged copyright infringement through Customer's (i) use or resale of any Boeing-created Aircraft Software purchased by Customer from Boeing pursuant to an SLA or an Order or (ii) use of any Boeing-created Materials provided to Customer pursuant to an SLA or an Order.
6.3 Exceptions, Limitations, and Conditions.
6.3.1 Boeing's obligation to indemnify Customer for actual or
alleged patent infringement will extend only to infringements in countries
which, at the time of the infringement, were party to and fully bound by either
(i) Article 27 of the Chicago Convention on International Civil Aviation of
December 7, 1944, or (ii) the International Convention for the Protection of
Industrial Property (Paris Convention).
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6.3.2 Boeing's obligation to indemnify Customer for copyright infringement is limited to infringements in countries which, at the time of the infringement, are members of The Berne Union and, with respect to copyright infringement related to computer software, recognize computer software as a "work" under The Berne Convention.
6.3.3 The indemnities provided under this Article 6 will not apply to any (i) Boeing Spare Part, Aircraft Software, or Materials used other than for its intended purpose, or (ii) Aircraft Software not created by Boeing or Materials not created by Boeing; provided, however, Boeing shall indemnity Customer to the extent Boeing holds contractual rights to indemnification from third parties that cover or extend to Customer with respect to Aircraft Software not created by Boeing or Materials not created by Boeing.
6.3.4 Customer must deliver prompt written notice to Boeing of any notice received by Customer of any suit or other formal action against Customer or any other written allegation or written claim of infringement covered by this Article 6; provided, however, Customer shall provide written notice to Boeing no less than seven (7) days after service to Customer of a summons or complaint for any suit or formal action unless the date that response or any other action in defense must be taken within such seven (7) day period, in which case Customer must give notice no less than three (3) days after such service to Customer, or if the response or other action in defense must be taken within such three (3) day period, immediately upon such service to Customer.
6.3.5 At any time, Boeing will have the right at its option and expense to (i) negotiate with any party claiming infringement, (ii) assume or control the defense of any infringement allegation, claim, suit or formal action, (iii) intervene in any infringement suit or formal action, and/or (iv) attempt to resolve any claim of infringement by replacing an allegedly infringing Boeing Spare Part, or Boeing-created Aircraft Software or Materials, with a noninfringing equivalent.
6.3.6 Upon receipt of Boeing written request, Customer will promptly furnish to Boeing all information, records, and assistance within Customer's possession or control which Boeing considers relevant or material to any alleged infringement covered by this Article 6.
6.3.7 Except as required by a final judgment entered against Customer by a court of competent jurisdiction from which no appeals can be or have been filed, Customer will obtain Boeing's written approval prior to paying, committing to pay, assuming any obligation, or making any concession relative to any infringement covered by these indemnities. If Customer has provided notice as specified in Article 6.3.4 and keeps Boeing reasonably informed of the progress of the defense of any such claim relative to any infringement covered by these indemnities and settlement discussions related thereto, then, Boeing shall bear the cost of any bond required by Court order as a prerequisite to such appeal (but not a bond for cost of litigation or cost of appeal) if (1) Customer has also delivered to Boeing a written request for Boeing's determination of whether to appeal a judgment, together with notice of the date that is seven (7) business days prior to the date the notice of appeal must be filed with the appellate court and (2) Boeing thereafter instructs Customer to appeal or fails to provide a determination on or before such deadline; provided, however, in no event shall Boeing be responsible for such
Page 3-8
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
cost if Customer fails to give Boeing at least seven (7) business day's prior notice. For the avoidance of doubt, the foregoing does not require Boeing to post a bond to ensure Boeing's payment of amounts that may become owing to Customer if Boeing is unsuccessful on appeal (including without limitation Newco's costs of litigation or costs of appeal).
6.3.8 BOEING WILL HAVE NO OBLIGATION OR LIABILITY UNDER THIS ARTICLE 6 FOR LOSS OF USE, REVENUE, OR PROFIT, OR FOR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES. THE OBLIGATIONS OF BOEING AND REMEDIES OF CUSTOMER IN THIS ARTICLE 6 ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND CUSTOMER HEREBY WAIVES, RELEASES, AND RENOUNCES, ALL OTHER INDEMNITIES, OBLIGATIONS, AND LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS, AND REMEDIES OF CUSTOMER AGAINST BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY ACTUAL OR ALLEGED PATENT, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY INFRINGEMENT BY ANY SPARE PARTS, AIRCRAFT SOFTWARE, STANDARDS, REPAIR/OVERHAUL/EXCHANGE PARTS, LEASED PARTS, LEASED TOOLS, MATERIALS AND INFORMATION, SERVICES (INCLUDING, BUT NOT LIMITED TO, TECHNICAL ASSISTANCE AND TECHNICAL CONSULTING), OR ANY OTHER THINGS PROVIDED UNDER THIS HMSGTA AND THE APPLICABLE ORDER.
6.3.9 For the purpose of this Article 6, "Boeing" or "BOEING" is defined as The Boeing Company, its divisions, subsidiaries and affiliates, the assignees of each, and their respective directors, officers, employees and agents.
Page 3-9
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
APPENDIX I
BROKER'S LETTERHEAD
[ date ]
CERTIFICATE OF INSURANCE
ISSUED TO: The Boeing Company Post Office Box 3707 Mail Code 13-57 Seattle, Washington 98124-2207 U.S.A. Attn: Manager - Aviation Insurance CC: Boeing Commercial Airplane Company Post Office Box 3707 Mail Code 21-35 Seattle, Washington 98124-2207 U.S.A. Attn: Director Special Services - Contracts |
NAMED INSURED:
We hereby certify that in our capacity as Brokers to the Named Insured, the following described insurance is in force at this date:
INSURER POLICY NO PARTICIPATION ------- --------- ------------- POLICY PERIOD: From [date and time of inception of the Policy(ies)] to [date and time of expiration]. |
COVERAGES:
AVIATION OR AIRLINE LIABILITY INSURANCE
Including, but not limited to, Premises/Operations Liability, Completed Operations/Products Liability, Contractual Liability, Personal Injury, Bodily Injury and Property Damage.
LIMITS OF LIABILITY:
To the fullest extent of the Policy limits that the Named Insured carries from the time of execution of the HMSGTA referenced herein and thereafter at the inception of each policy period, but in any event no less than two hundred million dollars (US$200,000,000); combined single limit, any one occurrence (with aggregates as applicable).
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
APPENDIX I
SPECIAL PROVISIONS APPLICABLE TO BOEING:
It is certified that Insurers are aware of the terms and conditions of the Hardware Material Services General Terms Agreement No. MWS dated ______________________ (HMSGTA), and that Insurers have agreed to the following:
(1) To include Boeing as an additional insured in accordance with Customer's undertaking in Part 1, Article 13.1 of the HMSGTA;
(2) To provide that such insurance will be primary and not contributory nor excess with respect to any other insurance available for the protection of Boeing;
(3) To provide that with respect to the interests of Boeing, such insurance shall not be invalidated or minimized by any action or inaction, omission or misrepresentation by the Insured or any other person or party (other than Boeing) regardless of any breach or violation of any warranty, declaration or condition contained in such policies;
(4) To provide that all provisions of the insurance coverages referenced above, except the limits of liability, will operate to give each Insured or additional insured the same protection as if there were a separate Policy issued to each;
(5) Boeing will not be responsible for payment, set-off, or assessment of any kind or any premiums in connection with the policies, endorsements or coverages described herein;
(6) If a policy is canceled for any reason whatsoever, or any substantial change is made in the coverage which affects the interests of Boeing or if a policy is allowed to lapse for nonpayment of premium, such cancellation, change or lapse shall not be effective as to Boeing for thirty (30) days (in the case of war risk and allied perils coverage seven (7) days after sending, or such other period as may from time to time be customarily obtainable in the industry) after receipt by Boeing of written notice from the Insurers or their authorized representatives or Broker of such cancellation, change or lapse; and
(7) For the purposes of the Certificate, "Boeing" is defined as The Boeing Company, its divisions, subsidiaries, affiliates, the assignees of each and their respective directors, officers, employees and agents.
SUBJECT TO THE TERMS, CONDITIONS, LIMITATIONS AND EXCLUSIONS OF THE RELATIVE POLICIES.
(signature)
(typed name)
(title)
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
APPENDIX II
CONTRACTOR CONFIDENTIALITY AGREEMENT
This agreement (Agreement) is entered into between _______________________ (Contractor) and Mid-Western Aircraft Systems, Inc. (Customer) and will be effective as of the date set forth below.
In connection with Customer's provision to Contractor of certain Materials, Proprietary Materials and Proprietary Information, reference is made to Hardware Material Services General Terms Agreement No. MWS dated as of ________________________ between The Boeing Company, including its wholly-owned subsidiaries, Boeing Management Company and McDonnell Douglas Corporation (Boeing) and Customer (the HMSGTA).
Capitalized terms used herein without definition will have the same meaning as in the HMSGTA.
Boeing has agreed to permit Customer to make certain Materials, Proprietary Materials and Proprietary Information relating to [Boeing Model ________ aircraft - Manufacturer's Serial Number ______ / Registration No. ________ ][(the Aircraft)] [the Project] available to Contractor in connection with Customer's contract with Contractor (the Contract) to assist Customer in the [maintenance repair/modification of the Aircraft]. In consideration of the Contract, and as a condition of receiving the Proprietary Materials and Proprietary Information, Contractor agrees as follows:
1. For purposes of this Agreement:
"Aircraft Software" means software intended to fly with and be utilized in the operation of an Aircraft, but excludes software furnished by Customer.
"Materials" means any and all items that are created by Boeing or a Third Party, are provided to Contractor from Boeing or from Customer, and serve primarily to contain, convey, or embody information. Materials may include either tangible forms or intangible embodiments (for example, software and other electronic forms) of information, but excludes Aircraft Software and software furnished by Customer.
"Proprietary Information" means any and all proprietary, confidential and/or trade secret information owned by Boeing or a Third Party which are contained, conveyed or embodied in Materials.
"Proprietary Materials" means Materials that contain, convey, or embody Proprietary Information.
"Third Party" means anyone other than Boeing, Customer and Contractor.
2. Boeing has authorized Customer to grant to Contractor a worldwide, non-exclusive, personal and nontransferable license to use Proprietary Materials and Proprietary Information, owned by Boeing, internally in connection with performance of the Contract or as may otherwise
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
APPENDIX II
be authorized by Boeing in writing. Contractor will keep confidential and protect from disclosure to any person, entity or government agency, including any person or entity affiliated with Contractor, all Proprietary Materials and Proprietary Information. Individual copies of all Materials and Aircraft Software are provided to Contractor subject to copyrights therein, and all such copyrights are retained by Boeing or, in some cases, by Third Parties. Contractor is authorized to make copies of Materials (except for Materials bearing the copyright legend of a Third Party) provided, however, Contractor preserves the restrictive legends and proprietary notices on all copies. All copies of Proprietary Materials will belong to Boeing and be treated as Proprietary Materials under this Agreement.
3. Other than in support of work conducted under this Agreement or a separate agreement with Customer pursuant to a Boeing supply agreement, Contractor specifically agrees not to use Proprietary Materials or Proprietary Information in connection with the manufacture or sale of any part or design. Unless otherwise agreed with Boeing in writing, Proprietary Materials and Proprietary Information may be used by Contractor only for work on the [Aircraft] [Project] for which such Proprietary Materials have been specified or licensed by Boeing. Customer and Contractor recognize and agree that they are responsible for ascertaining and ensuring that all Materials are appropriate for the use to which they are put.
4. Contractor will not attempt to gain access to information by reverse engineering, decompiling, or disassembling any portion of any software or Aircraft Software provided to Contractor pursuant to this Agreement.
5. If Boeing reasonably believes that the Contractor is not complying with the terms of this Agreement, Boeing may request, and Contractor will promptly return to Boeing (or, at Boeing's option, destroy) all Proprietary Materials, together with all copies thereof and will certify to Boeing that all such Proprietary Materials and copies have been so returned or destroyed.
6. When and to the extent required by a government regulatory agency having jurisdiction over Contractor, Customer or Customer's [Aircraft][Project], Contractor is authorized to provide Proprietary Materials and disclose Proprietary Information to the agency for the agency's use in connection with Contractor's authorized use of such Proprietary Materials and/or Proprietary Information in connection with Contractor's work on the [Aircraft] [Project]. Contractor agrees to take reasonable steps to prevent such agency from making any distribution or disclosure, or additional use of the Proprietary Materials and Proprietary Information so provided or disclosed. Contractor further agrees to promptly notify Boeing upon learning of any (i) distribution, disclosure, or additional use by such agency, (ii) request to such agency for distribution, disclosure, or additional use, or (iii) intention on the part of such agency to distribute, disclose, or make additional use of the Proprietary Materials or Proprietary Information.
7. Boeing is an intended third-party beneficiary with respect to this Agreement, and Boeing may enforce any and all of the provisions of the Agreement directly against Contractor. Contractor hereby submits to the jurisdiction of the Washington state courts and the United States District Court for the Western District of Washington with regard to any Boeing claims under this Agreement. It is agreed that Washington law (excluding Washington's conflict-of-law
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
APPENDIX II
rules) will apply to this Agreement and with regard to any claim or dispute under this Agreement.
8. No disclosure or physical transfer by Boeing or Customer to Contractor, of any Proprietary Materials or Proprietary Information covered by this Agreement will be construed as granting a license, other than as expressly set forth in this Agreement or any ownership right in any patent, patent application, copyright or proprietary information.
9. The provisions of this Agreement will apply notwithstanding any markings, or legends or the absence thereof, on any Proprietary Materials.
10. This Agreement is the entire agreement of the parties regarding the ownership and treatment of Proprietary Materials and Proprietary Information, and no modification of this Agreement will be effective as against Boeing unless embodied in a writing signed by authorized representatives of Contractor, Customer and Boeing.
11. Failure by either party to enforce any of the provisions of this Agreement will not be construed as a waiver of such provisions. If any of the provisions of this Agreement is/are held unlawful or otherwise ineffective by a court of competent jurisdiction, the remainder of the Agreement will remain in full force.
12. This Agreement will remain in effect indefinitely.
ACCEPTED AND AGREED TO this Date: ________________________________ CONTRACTOR CUSTOMER ______________________________________ ______________________________________ By ___________________________________ By ___________________________________ Its __________________________________ Its __________________________________ |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Exhibit 10.26
Final Draft
Ancillary Know-How Supplemental License Agreement No. 05-031
To
Hardware, Material, Services General Terms Agreement No. MWS
Between
The Boeing Company
And
Mid-Western Aircraft Systems, Inc.
Entered into as of June 16, 2005
This Ancillary Supplemental License Agreement (SLA) incorporates the terms and conditions of the HMSGTA. All capitalized terms used but not defined in this SLA have the same meaning as in the HMSGTA. Notwithstanding the phrase "Supplemental License Agreement" as defined in the HMSGTA, the term "SLA" used herein applies to this specific agreement.
Boeing has entered into an Asset Purchase Agreement (the "APA") with Customer, dated as of February 22, 2005 pursuant to which Boeing will sell, and Customer will purchase, the Wichita Business. As of the date of Closing the Boeing employees which will become Customer employees after Closing have Know-How relative to the Wichita Business.
Accordingly, Boeing and Customer agree as follows:
Boeing hereby grants to Customer the right to use the Know-How, in accordance with the terms and conditions of this SLA and HMSGTA.
BOEING MANAGEMENT COMPANY MID-WESTERN AIRCRAFT SYSTEMS, INC. Signature: /s/ Bryan Gerard Signature: /s/ Seth Mersky --------------------------- --------------------------- Printed Name: Bryan Gerard Printed Name: Seth Mersky Title: Director-New Business Ventures Title: President |
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
1. DEFINITIONS.
The following capitalized term and definition is used and not otherwise defined in this SLA:
"Know-How" means the knowledge and experience of a technical, commercial, administrative, or financial nature which has been practically applicable in operating the Boeing Wichita Site business up to the date hereof, whose application is not protected by means of patents, and specifically excludes Proprietary Information and Proprietary Materials.
2. LICENSE GRANT.
2.1 Boeing hereby grants to Customer a non-exclusive, perpetual, fully-paid, irrevocable, worldwide license to use Know-How, for any purpose whatsoever.
2.2 Notwithstanding Part 1 Article 17 - Term - of the HMSGTA, if the HMSGTA is terminated by Boeing for any reason other than its Part 1 Article 14 - Termination for Insolvency - during the term of this SLA, the parties agree that the SLA shall continue under the terms of the HMSGTA.
3. ROYALTIES
This license is a [*****] license.
4. CONFIDENTIAL TREATMENT.
Customer understands that certain commercial and financial information contained in this SLA are considered by Boeing as confidential. Customer will treat this SLA and the information contained herein as confidential and will not, without the prior written consent of Boeing, disclose this SLA or any information contained herein to any other person or entity.
Exhibit 10.27
SUBLEASE AGREEMENT
(BUYER SUBLEASE)
THIS SUBLEASE AGREEMENT (this "Agreement") is made as of the 16th day of June, 2005, by and between THE BOEING COMPANY, a Delaware corporation ("Boeing"), BOEING IRB ASSET TRUST, a Delaware statutory trust ("Sublessor"), and MID-WESTERN AIRCRAFT SYSTEMS, INC., a Delaware corporation ("Sublessee").
WITNESSETH:
WHEREAS, The Boeing Company, a Delaware corporation ("Boeing") and Sublessee have entered into that certain Asset Purchase Agreement dated as of February 22, 2005 (the "Purchase Agreement"), which contemplates that Sublessee will sublease a portion of the assets (the entirety of such assets, including both the "Retained Assets" and "Transferred Assets" as hereinafter defined, the "IDB Assets") financed through the issuance by the City of Wichita, Kansas (the "Issuer") of the Issuer's Industrial Revenue Bonds (as identified by Schedule I hereto, collectively, the "Bonds"), and the provision of the proceeds of the Bonds to Boeing pursuant to each Lease Agreement listed in Schedule II hereto, as each such Lease Agreement (except the Lease Agreement dated as of December 1, 2004) was amended by the Master Amendment to Lease Agreement dated as of December 1, 2004 (collectively and as so amended, the "Lease Agreement") between the Issuer, as Lessor, and Boeing, as Lessee; and
WHEREAS, Boeing has assigned the Lease Agreement to Sublessor pursuant to that certain Assignment Agreement of even date herewith (the "Lease Assignment"); and
WHEREAS, Sublessee desires to sublease from Sublessor, and Sublessor desires to sublease to Sublessee, that portion of the IDB Assets listed in Schedule III hereto, including without limitation the real property described on Schedule IV hereto (collectively, the "Transferred Assets") for the rentals and upon the terms and conditions hereinafter set forth; and
WHEREAS, Sublessor has subleased to Boeing that portion of the IDB Assets other than the Transferred Assets (the "Retained Assets") upon the terms and conditions set forth in that certain Sublease Agreement of even date herewith between Sublessor and Boeing (the "Boeing Sublease"); and
WHEREAS, the Lease Agreement at Section 8.1 or Section 8.01, as the case may be, provides as follows:
"This Lease may be assigned and the Project subleased, as a whole or in part, by Lessee without the necessity of obtaining the consent of either Issuer or Trustee, subject, however, to all of the following conditions:
(a) No assignment shall relieve Lessee from primary liability for any obligations hereunder, and in the event of any such assignment Lessee shall continue to remain primarily liable for payment of the amounts specified in Section 5.02 hereof and for performance and observance of the other agreements on its part
herein provided to be performed and observed by Lessee to the same extent as though no assignment had been made.
(b) The assignee or sublessee shall assume the obligations of Lessee hereunder to the extent of the interest assigned or subleased.
(c) Lessee shall, within 30 days after the delivery thereof, furnish or cause to be furnished to Issuer and Trustee a true and complete copy of each assignment, assumption of obligation or sublease, as the case may be."; and
WHEREAS, pursuant to the Lease Assignment, Boeing shall retain primary liability for its obligations under the Lease Agreement (the "IDB Obligations"); and
WHEREAS, the payment of the principal of and interest on each issue of the Bonds is unconditionally guaranteed by The Boeing Company, as Guarantor (the "Guarantor"), pursuant to each related Guaranty Agreement listed in Schedule II hereto (collectively, the "Guaranty") between the Guarantor and The Bank of New York Trust Company, N.A. (in its own name and as successor to each other Trustee named as such by a particular Guaranty Agreement), which Guaranty will remain in full force and effect while any Bonds remain outstanding; and
WHEREAS, Boeing agreed in connection with the issuance of the Bonds, among other things, not to take any action that would violate the IDB Obligations; and
WHEREAS, Boeing, Sublessor and Sublessee desire that the Bonds, including the Bonds related to the Transferred Assets, remain outstanding in order that the Retained Assets and the Transferred Assets shall continue to qualify under applicable State of Kansas law for the ten calendar year ad valorem tax exemption (the "Exemption") as provided thereby; and
WHEREAS, Sublessee henceforth will have entire operational control of the Transferred Assets and Boeing and Sublessor will have no further rights to enter, possess or otherwise operate, control or maintain the Transferred Assets; and
WHEREAS, Boeing and Sublessee have agreed that any rent payable for the Transferred Assets has been paid as part of the purchase price under the Purchase Agreement;
WHEREAS, Boeing's primary liability will terminate upon the respective termination of each Lease Agreement and the Guarantor's obligations under each Guaranty will terminate once the related Bonds no longer are outstanding; and
WHEREAS, Boeing, Sublessor and Sublessee desire to provide for the purchase from time to time of the Transferred Assets, the termination of each Lease Agreement and related Guaranty and the conveyance of full legal title to the Transferred Assets from the Issuer to Boeing and from Boeing to Sublessee upon the respective terminations of each Lease Agreement.
NOW, THEREFORE, in consideration of the premises, and other good and valuable consideration, the receipt of which is hereby acknowledged, the Sublessor and Sublessee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS. For purposes of this Agreement, capitalized terms that are used but not otherwise defined in this Agreement shall have the meanings given to them in the Purchase Agreement and in the Lease Agreement.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 2.01 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SUBLESSOR.
(a) Each of Boeing and Sublessor represents, warrants and covenants to
Sublessee that it will not violate or contravene any written
representation, warranty, covenant or other agreement or obligation of
Boeing or Sublessor with respect to the IDB Obligations, and, furthermore,
that it will not, without the written consent or direction of Sublessee,
take any action or, to the extent within its control, permit there to be
taken any action the consequence of which would be that the Bonds no longer
would be outstanding under each related Indenture of Trust and the
Transferred Assets no longer would qualify for the Exemption; provided that
Boeing or Sublessor may in its sole discretion, at the time of its
choosing, and without prior notice to Sublessee, take such an action and
Boeing or Sublessor may terminate this Agreement, subject to the last
sentence of this Section 2.01(a), in the event there is a breach by
Sublessee of its agreements, as set forth in Section 2.02 hereof. Each of
Boeing and Sublessor shall also have the right, in its sole discretion and
at the time of its choosing, and without prior notice to Sublessee, to take
such an action and terminate this Agreement, subject to last sentence of
this Section 2.01(a), for any reason (except a breach of Sublessee, as
aforesaid), but only if, on or before the termination date of this
Agreement, Boeing either (i) pays to Sublessee an amount equal to the then
remaining dollar benefit of the Exemption with respect to the Transferred
Assets, as calculated by discounting such remaining dollar benefit to the
termination date using the then prime rate plus 1%; (ii) irrevocably agrees
to pay to Sublessee the dollar benefit of the Exemption with respect to the
Transferred Assets at the same times and in the same amounts as if the
Exemption remained in effect with respect to the Transferred Assets; or
(iii) takes such actions in cooperation with the Issuer and Sublessee as
shall be required directly to qualify Sublessee for the Exemption with
respect to the Transferred Assets. Boeing and Sublessee shall in good faith
exert their respective commercially reasonable best efforts to cause the
actions described in clause (iii) of the immediately preceding sentence to
have been consummated and this Sublease to have been terminated no later
than December 31, 2005 and in that connection shall jointly engage legal
counsel mutually acceptable to them to represent them both before the City
for that purpose (the fees and expenses of which engagement shall be
borne equally by Boeing and Sublessee and which engagement shall be
undertaken with such waivers of conflicts of interest as Kutak Rock LLP,
Boeing and Sublessee may reasonably require). The termination date of this
Agreement shall be the earlier of (x) the date this Agreement is terminated
pursuant to the immediately preceding sentence, or (y) the date on which
Sublessee receives legal title to the Transferred Assets in accordance with
Section 6.02 hereof.
(b) Boeing and Sublessor hereby represent that they have performed all duties and obligations of "Lessee" under the Lease Agreement including those relating to the ownership, operation, use and maintenance of the IDB Assets, including the Transferred Assets, financed with the proceeds of the Bonds and that the representations and warranties of "Lessee" under the Lease Agreement remain true and correct.
(c) Each of Boeing and Sublessor hereby represents that Sublessor is the owner and holder of all of the Bonds, free and clear of any liens, security interests or adverse claims. Sublessor covenants that Sublessor will not (and Boeing covenants that it will not cause Sublessor to) sell or otherwise transfer or grant a lien or security interest in or to the Bonds, or any of them, without Sublessee's prior written consent, except pursuant to a Permitted Assignment (as defined in the trust agreement of Sublessor). Each of Boeing and Sublessor represents and covenants that it has not granted any lien or security interest in any of its interest in or to, nor has it assigned, the Lease Agreement, or any of them (other than pursuant to the Lease Assignment), and will not assign or otherwise transfer any of its interest in the Lease Agreement, including the creation of any lien or security interest in such interest, without Sublessee's prior written consent, except pursuant to a Permitted Assignment (as defined in the trust agreement of Sublessor).
(d) Boeing covenants promptly to provide Sublessee with notice of any "event of default" under the Lease Agreement of which Boeing has actual knowledge, and to provide Sublessee with a copy of any written notice of default promptly upon receipt thereof by Boeing. Sublessor covenants promptly to provide Sublessee with notice of any "event of default" under the Lease Agreement of which Sublessor has actual knowledge, and to provide Sublessee with a copy of any written notice of default promptly upon receipt thereof by Sublessor.
(e) Boeing and Sublessor covenant not to enter into any amendment of the Lease Agreement, or any of them, or the Lease Assignment or Boeing Sublease, without Sublessee's prior written consent, which shall not be unreasonably withheld.
(f) Each of Boeing and Sublessor represents and warrants that neither the execution and delivery of this Agreement, the Boeing Sublease, the Lease Assignment, the trust agreement of Sublessor or the Pledge as defined therein, or the trust agreement of TBC Trust, a Delaware statutory trust (all as in effect on the date hereof), nor consummation of the transactions contemplated thereby and that occur in compliance with the terms thereof, violates the Lease Agreement.
(g) Boeing and Sublessee each agrees to use its commercially
reasonable efforts to take all necessary actions within its power and
control, in each of its capacities under the IRB Documents (as that term is
defined in the trust agreement of Sublessor), to make the following
statements true and correct with regard to each of TBC Trust, a Delaware
statutory trust ("TBC Trust" and together with Sublessor, the "Trusts"), at
all times following the date hereof until such time as this Agreement has
been terminated; provided that commercially reasonable efforts shall not
include any action to the extent necessary or made more burdensome or
costly as the result of (i) a breach of any IRB Document by the other in
any capacity thereunder or (ii) any action by, or claim against, the other
or any of its Affiliates in the individual capacity of the other or its
Affiliate. For purposes of this Section 2.01(g), "IRB Documents" means (i)
this Agreement; (ii) the trust agreement of Sublessor; (iii) the trust
agreement of TBC Trust; (iv) the Lease Assignment; and (v) the Pledge (as
defined in the trust agreement of Sublessor); "IRB Transactions" means the
occurrence of (a) the formation of the Trusts and the execution of the
trust agreements of each of the Trusts and the issuance of the Transferred
Assets Ownership Class (as defined in the trust agreement of Sublessor),
(b) the assignment to Sublessor, pursuant to the Lease Assignment, of the
leases, bonds and assets identified therein, (c) the valid execution and
delivery of the IRB Documents and (d) the consummation of the other
transactions contemplated by the IRB Documents; and "Boeing IRB Documents"
means collectively the Lease Agreement, the Guaranty and the Indentures
governing the Bonds.
(i) Each of the Trusts has been duly organized as a statutory trust under the Delaware Statutory Trust Act and has full power and authority and holds all requisite governmental licenses, permits and approvals to (A) enter into and perform its obligations under the IRB Documents to which it is a party and to consummate the IRB Transactions and (B) conduct the business to be conducted under the IRB Documents and as contemplated by the IRB Documents.
(ii) The execution, delivery and performance of the IRB Documents by each Trust which is a party thereto and the consummation of the IRB Transactions are within each such Trust's powers, have been duly authorized by all necessary action and do not:
(A) contravene any law, statute, rule or regulation binding on or affecting such Trust;
(B) violate or result in a default or event of default or an acceleration of any rights or benefits under any Boeing IRB Document or any indenture, agreement or other instrument binding upon such Trust; or
(C) result in, or require the creation or imposition of, any lien on any assets of any such Trust or the Transferred Assets.
(iii) The execution, delivery and performance of the IRB Documents by each Trust which is a party thereto and the consummation of the IRB Transactions do not contravene the trust agreement or certificate of trust of such Trust.
(iv) No consent, authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body or other Person is required for the due execution, delivery or performance by each Trust and Boeing of the IRB Documents and the consummation of the IRB Transactions, except such as have been obtained or made and are in full force and effect.
SECTION 2.02 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SUBLESSEE.
(a) In order that Boeing and Sublessor shall not violate their agreements with respect to the IDB Obligations and that Boeing, in its capacity as Guarantor of the Bonds, shall not be at risk to incur any greater pecuniary obligation by operation of the Guaranty, Sublessee, as the sublessee and operator of the Transferred Assets, covenants and agrees with Sublessor and Boeing that, so long as the Bonds remain outstanding under each related Indenture of Trust, Sublessee will not (i) violate or contravene any written representation, warranty, covenant or other agreement or obligation of Boeing or Sublessor with respect to the IDB Obligations and (ii) cause Boeing or Sublessor to be in violation or contravention of any term of the Lease Agreement or otherwise with respect to the IDB Obligations by taking or failing to take any action within Sublessee's control; provided that Sublessee's entering into and performance of the IRB Documents to which Sublessee is a party shall not be deemed a breach of this sentence.
(b) Sublessee further represents, warrants and covenants to Sublessor and Boeing that Sublessee (i) is a corporation organized and existing under the laws of the State of Delaware, (ii) is qualified to do business in the State of Kansas, and (iii) does hereby assume, within the meaning and for the purposes of the "Assignment and Subleasing" provisions of the Lease Agreement as recited in the preambles hereof, all of the IDB Obligations of the "Lessee" to the extent of the Transferred Assets; provided that (i) Sublessee does not assume and shall have no obligation, under this paragraph or any other provision of this Agreement, with respect to any IDB Obligations arising prior to the date of this Agreement or any, indemnity obligation with respect to any IDB Obligations occurring or existing prior to the date of this Agreement, and (ii) Sublessee's obligation to pay rent shall be as provided by Article V hereof.
(c) Sublessee covenants, upon receipt by Sublessee or Sublessor of a written request therefor from the Issuer under Section 7.6 or Section 7.06, as the case may be, of the Lease Agreement, promptly to provide to Boeing and Sublessor the annual financial statements and reports of Sublessee, which Boeing and Sublessor may then provide to the Issuer in accordance with such section of the Lease Agreement.
(d) Sublessee hereby acknowledges that it has received each Lease Agreement relating to the Bonds and has had the opportunity to review the agreements, obligations and covenants of Boeing set forth therein, including, in particular, those agreements, obligations, representations, warranties and covenants relating to the ownership, operation, use and maintenance of the Transferred Assets.
ARTICLE III
INCORPORATION OF LEASE AGREEMENT
Each Lease Agreement is hereby incorporated by reference into this
Agreement as if it appeared in this place, it being the intention of the parties
that the provisions of the Lease Agreement relating to the Lessee and the
Project from and after the date of this Agreement shall apply equally to
Sublessor and Sublessee in accordance with their respective interests in the IDB
Assets. Accordingly, as between Boeing and Sublessor, on the one hand, and
Sublessee, on the other hand, Sublessee, by virtue of its assumption under
Section 2.02(b) hereof of Sublessor's IDB Obligations to the extent of the
Transferred Assets, hereby agrees that all duties, responsibilities and
obligations of "Lessee" under the Lease Agreement shall be and become the
duties, responsibilities and obligations of Sublessee to the extent of the
Transferred Assets; provided that Sublessee's obligation to pay rent shall be as
provided by Article V hereof. Sublessee agrees to cooperate with Boeing and
Sublessor, and Boeing and Sublessor agree to cooperate with Sublessee if, as and
when necessary (i) to permit Boeing and Sublessor (at Boeing's cost) to comply
with their duties, responsibilities and obligations and to exercise their rights
under the Lease Agreement and Boeing Sublease relating to the Retained Assets,
(ii) to permit Sublessee (at Sublessee's cost) to comply with its assumed
duties, responsibilities and obligations and to exercise its assumed rights
under the Lease Agreement relating to the Transferred Assets, and (iii) in
connection with the respective applications by Boeing, Sublessor and Sublessee
for the Exemption applicable to their respective portions of the IDB Assets.
ARTICLE IV
DEMISING CLAUSE
Sublessor demises and leases to Sublessee, and Sublessee subleases from Sublessor, the Transferred Assets, subject only to Permitted Encumbrances (as defined in the Purchase Agreement), including the restriction that no existing building nor any building which is constructed or placed upon the property, either temporarily or permanently, shall be used for the purpose of housing any multi-game, casino-style gambling on the premises, in accordance with the provisions of this Agreement, to have and to hold for the term of this Agreement, which, subject to Section 2.01(a) hereof, shall be coterminous with the Lease Terms respectively relating to each Lease Agreement.
ARTICLE V
SUBLEASE OF ASSETS TO SUBLESSEE; RENTAL PROVISIONS
SECTION 5.01 QUIET ENJOYMENT. Sublessor hereby covenants and agrees that it has good and valid leasehold interest in all of the Transferred Assets, free and clear of all Encumbrances, except Permitted Encumbrances (as defined by the Purchase Agreement). Sublessor covenants and agrees that it will not take any action, other than pursuant to this Agreement, to prevent Sublessee from having quiet and peaceable possession and enjoyment of the Transferred Assets during the Lease Term and will, at the request of Sublessee, and at
Sublessee's cost, to the extent that it may lawfully do so, join in any legal action in which Sublessee asserts its right to such possession and enjoyment.
SECTION 5.02 RENTS AND OTHER AMOUNTS PAYABLE. As and for complete and entire payment of its rentals hereunder, Sublessee agrees to pay, in accordance with the terms of the Purchase Agreement and as a part of the purchase price provided therein, to or at the direction of Boeing the amount allocated to the Transferred Assets pursuant to Section 1.4 of the Purchase Agreement, which amount Sublessor acknowledges and agrees to be the complete and entire amount of rentals for the Transferred Assets due and owing or to become due and owing to Sublessor during the Lease Term. Sublessor covenants and agrees that it will continue to pay rent through the Offset Mechanism (as that term is defined in the trust agreement of Sublessor). Sublessee shall notify Boeing and Sublessor of any event relating to the Transferred Assets that would require a payment into the Bond Fund under the Lease Agreement, but Sublessee's payment of rentals as aforesaid shall be deemed to include any such payment into the Bond Fund. Upon receipt of such a notice from Sublessee, Boeing and Sublessor shall perform in accordance with the applicable requirements of the Lease Agreement. Sublessee agrees that Boeing shall be entitled to any Bond Fund balance payable to "Lessee" upon the termination of the Lease Agreement.
SECTION 5.03 INCOME TAX TREATMENT. Sublessor and Sublessee acknowledge that Boeing has treated itself as owner of the Transferred Assets subject to the Lease Agreement for United States federal and Kansas and other state income tax purposes and agree that, consistent with such treatment, for such purposes the Sublessor and Sublessee shall treat the Lease Assignment and this Agreement and the subletting and conveyance of Transferred Assets to Sublessee hereunder as a sale of such Transferred Assets by Boeing to Sublessee and the payment of rent hereunder as payment of purchase price for such Transferred Assets by Sublessee to Boeing (except as may be required otherwise pursuant to a final "determination" as defined in Section 1313(a) of the Internal Revenue Code of 1986, as amended, or corresponding final determination under state income tax law).
SECTION 5.04 BOEING INDUSTRIAL DISTRICT. Sublessee is hereby designated to act on behalf of Sublessor to exercise such rights with respect to the Transferred Assets as Sublessor may have with respect to that part of the Transferred Assets that is included within the Boeing Industrial District.
ARTICLE VI
CONVEYANCE OF TITLE
SECTION 6.01 PURCHASE OF ASSETS. The Transferred Assets include (i) assets that no longer qualify for the Exemption (the "Non-Qualifying Assets") and (ii) assets that qualify for the Exemption, in each case until the expiration of the first 10 calendar years immediately following the year during which the Issuer issued the corresponding Bonds (the "Qualifying Assets"). Boeing and Sublessor hereby agree with respect to the Non-Qualifying Assets that they shall, and Boeing shall cause Sublessor to, proceed expeditiously in accordance with Article X of each affected Lease Agreement (x) to purchase the IDB Assets that are Non-Qualifying Assets, (y) to terminate the related Lease Terms (as defined in the Lease
Agreement) and redeem the related Bonds and (z) to obtain from the Issuer such
instruments as shall be necessary to convey to Sublessor full legal title in and
to such IDB Assets, whereupon Sublessor shall convey title to Sublessee pursuant
to Section 6.02. Boeing and Sublessor further agree with respect to the
Qualifying Assets that they shall, and Boeing shall cause Sublessor to, proceed
expeditiously, in accordance with Article X of each affected Lease Agreement,
(u) to purchase the IDB Assets that from time to time become Non-Qualifying
Assets upon the expiration of the related 10 calendar year Exemptions, (v) to
terminate the related Lease Terms (as defined in the Lease Agreement) and redeem
the related Bonds and (w) to obtain from the Issuer conveyance of legal title
directly to Sublessee.
SECTION 6.02 CONVEYANCE TO SUBLESSEE. Upon receipt from time to time of
legal title to the IDB Assets that are Nonqualifying Assets as provided by
Section 6.01, or upon receipt of legal title to IDB Assets that are Transferred
Assets upon a termination pursuant to Section 2.01(a), Sublessor shall, and
Boeing shall cause Sublessor to, without delay, in exchange for Sublessee's
leasehold interest in such IDB Assets, convey full legal title (but subject to
the Permitted Encumbrances (as defined in the Purchase Agreement, other than the
Lease Agreements and IDB Obligations), any Encumbrance arising as a result of a
breach of this Agreement or any other IRB Document by Sublessee or the Special
Agent under the trust agreement of TBC Trust, and any Encumbrance arising as a
result of any action or omission by Sublessee or any Affiliate of Sublessee in
its individual capacity, as opposed to its capacity as an agent or owner of a
Trust) in and to the Transferred Assets to Sublessee by bill of sale in the same
form as Exhibit J of the Purchase Agreement (in the case of Transferred Assets
that are personal property) or by special warranty deed in the same form as the
Warranty Deed delivered at Closing under the Purchase Agreement (in the case of
Transferred Assets that are real property), with appropriate modifications to
reflect the Transferred Assets, whereupon this Agreement shall terminate and be
of no force and effect with respect to such Transferred Assets. Boeing shall
execute the special warranty deed to be delivered by Sublessor for the purpose
of covenanting that (a) the real property conveyed by such deed is free and
clear of any encumbrance done or suffered by Boeing, other than the Permitted
Encumbrances and other Encumbrances described above in this Section 6.02, and
(b) Boeing will warrant and defend title to such real property against any
lawful claims and demands of all persons claiming under Boeing (other than
Permitted Encumbrances or any Encumbrances described above in this Section
6.02). In addition, in the case of Transferred Assets that are real property,
Boeing shall execute and deliver to Sublessee a quitclaim deed conveying any
interest Boeing may have in such Transferred Assets being conveyed.
SECTION 6.03 UNDERTAKING BY BOEING. Boeing shall cause Sublessor to perform the obligations of Sublessor under this Agreement, and Boeing (in each of its capacities under the IRB Documents, as that term is defined in the trust agreement of Sublessor) shall take such actions as may be necessary and are permitted under such IRB Documents so that the obligations to Sublessee set forth in this Agreement are performed in accordance with the terms thereof (regardless of whether such obligations and the Lease Assignment are in fact enforceable), except to the extent to the extent such performance is prevented or made more burdensome or costly as the result of (i) a breach of this Agreement or any other IRB Document by Sublessee or the Special Agent under the trust agreement of TBC Trust or (ii) any action by, or claim against, Sublessee or any Affiliate of Sublessee in its individual capacity, as opposed to its capacity as an agent or owner of a Trust.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 INCORPORATION OF RECITALS. The recitals to this Agreement are by this reference incorporated herein, as some are contractual in nature.
SECTION 7.02 NO PUBLIC ANNOUNCEMENT. From the date of this Agreement, neither of the parties hereto 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 the 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 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 disclosures.
SECTION 7.03 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 Sublessor: c/o The Boeing Company Corporate Headquarters M/C 5003-1001
100 North Riverside Chicago, IL 60606-1596 Attention: General Counsel Facsimile: (312) 544-2829 If to Boeing: The Boeing Company Corporate Headquarters M/C 5003-1001 100 North Riverside Chicago, IL 60606-1596 Attention: General Counsel Facsimile: (312) 544-2829 |
If to Sublessee: Mid-Western Aircraft Systems, Inc.
Administration Building Mailroom
3801 South Oliver
Wichita, KS 67210
Attention: Chief Financial Officer
Facsimile: (316) 526-6139
with a copy to: Kaye Scholer LLP
425 Park Avenue
New York, NY 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.
SECTION 7.04 SUCCESSORS AND ASSIGNS.
(a) Sublessor shall not assign any of its rights or interest in this Agreement without Sublessee's written consent, which consent shall not be unreasonably withheld.
(b) Other than pursuant to (i) the Loan Documents (as defined in the Credit Agreement, dated as of June 16, 2005, among Mid-Western; Mid-Western Aircraft Systems Holdings, Inc., a Delaware corporation; Onex Wind Finance LP, a Delaware limited partnership; the financial institutions listed on Schedule 2.01 to such Credit Agreement; Citicorp North America, Inc., as administrative agent for the Lenders, as collateral agent, and as documentation agent; Citigroup Global Markets Inc., as sole lead arranger and bookrunner; and The Bank Of Nova Scotia and Royal Bank Of Canada, as co-arrangers and as co-syndication agents, and The Bank Of Nova Scotia, as Issuing Bank), and (ii) the Loan documents (as defined in the Credit Agreement, dated as of June 16, 2005, among Sublessee, Onex Wind Finance LP, Mid-Western Aircraft Systems Holdings, Inc. and the subsidiaries party thereto, and Boeing), Sublessee shall not assign any of its rights or interest in this Agreement, or sub-sublease all or any portion of the Transferred Assets, without Boeing's and Sublessor's prior written consent, which shall not be unreasonably withheld, except that Boeing or Sublessor may withhold its consent to an assignment to a Disqualified Person (as defined below) for any reason and at its sole discretion. Sublessee shall bear or cause its assignee or sublessee to bear all transfer taxes incurred as a result of any such assignment or sub-sublease. Sublessee shall provide Boeing and Sublessor with thirty (30) days' notice prior to any proposed assignment. Sublessee shall not delegate any of its duties or obligations under this Agreement. Sublessee may assign its right to monies due or to become due. No assignment, delegation or subcontracting by Sublessee, with or without Boeing's or Sublessor's consent, shall relieve Sublessee of any of its obligations under this Agreement or prejudice any rights of Boeing or Sublessor against Sublessee whether arising before or after the date of any assignment.
(c) The prohibition set forth in this Section 7.04 includes, without
limitation (and the following shall, subject to the immediately following
sentence, be deemed to be "assignments"): (i) a consolidation or merger of
Sublessee in which a Disqualified Person directly or indirectly holds,
immediately after consummation of the transaction more than fifty percent
(50%) of the voting power of the issued and outstanding voting stock of the
corporation resulting from or surviving such transaction; (ii) the
acquisition directly or indirectly by a Disqualified Person of voting stock
of any corporate seller having more than fifty percent (50%) of the voting
power of the issued and outstanding voting stock of Sublessee; (iii) the
sale, assignment or transfer of all or substantially all of the assets of
Sublessee to a Disqualified Person; and (iv) where Sublessee is a
partnership, acquisition of control of such partnership by a Disqualified
Person. Any consolidation, merger, acquisition of voting stock or sale,
assignment or transfer of all or substantially all of the assets of
Sublessee that is not prohibited by the immediately preceding sentence
shall not constitute an "assignment" for purposes of this Agreement and
shall not be prohibited by, or require Sublessor's consent under, this
Section 7.04.
A Disqualified Person is:
(i) a Person, a principal business of which is as an original equipment manufacturer of commercial aircraft, defense systems, satellites, space launch vehicles or space vehicles;
(ii) a Person that Boeing or Sublessor reasonably believes is unable to perform this Agreement, for reasons, including but not limited to, financial viability, export and import laws, and demonstrated past performance failures;
(iii) a Person, that after giving effect to the transaction, would be the supplier of more than forty percent (40%) by value of the major structural components of any model of Boeing aircraft then in production, unless it is mutually agreed that significant identifiable benefits will accrue to Boeing as a result of the transaction; or,
(iv) a Person who is one of the following companies or a parent, subsidiary or affiliate of one of the following companies: Lufthansa Technique; Israeli Aircraft Industries; HAECO; PEMCO Aeroplex, EADS/Airbus, or who is an airline or an operator of commercial aircraft in revenue service or a parent, subsidiary or affiliate of an airline or an operator of commercial aircraft in revenue service.
(d) Sublessee shall not permit any Person described in clause (iv) of the definition of Disqualified Person to hold any voting stock of Sublessee at any time that Sublessee is not a Public Company (as defined below). Sublessee shall not enter into any agreement under which any Person described in clause (iv) of the definition of Disqualified Person is entitled to designate one or more members of Sublessee's board of directors at any time that Sublessee is a Public Company. A Public Company is any Person (i) with equity securities registered under Section 12 of the Securities Exchange Act of 1934 or which is subject to the reporting requirements of Section 15(d) of the
Securities Exchange Act of 1934 or (ii) with equity securities traded or quoted in a domestic or foreign securities exchange or market.
(e) 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 7.04, any right, remedy or claim under or by reason of this Agreement.
SECTION 7.05 ENTIRE AGREEMENT. This Agreement, including the Lease Agreement incorporated herein by reference, the Schedules hereto, the Lease Assignment, the Boeing Sublease, and the Purchase Agreement contain the entire understanding of the parties hereto with regard to the subject matter contained herein, and supersede all other prior agreements, understandings, term sheets, heads of terms or letters of intent between or among any of the parties hereto.
SECTION 7.06 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) 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."
(c) 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.
SECTION 7.07 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 (and, in the case of a signature by Sublessor, with the prior written consent of Boeing). Any such waiver, including any waiver of this Section 7.07, 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 (and, in the case of Sublessor, Boeing has consented in writing to such waiver). 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.
SECTION 7.08 EXPENSES. 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.
SECTION 7.09 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.
SECTION 7.10 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 each of the parties hereto.
SECTION 7.11 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 Kansas.
SECTION 7.12 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 7.12, 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.
SECTION 7.13 TIME OF ESSENCE. Time is of the essence for each and every provision of this Agreement.
SECTION 7.14 DISPUTE RESOLUTION.
(a) 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 7.14; provided, however, that this Section 7.14 shall not preclude any party from seeking injunctive relief in a court of competent jurisdiction without complying with the following provisions of this Section 7.14.
(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 10 Business Days of receipt of a Dispute Notice, the issue shall be elevated to a designated panel of four individuals, two representatives from Boeing or Sublessor, on the one hand, and two representatives from Sublessee, on the other, each such representative familiar with the Business (and out of
each pair of representatives so designated, one shall be a business representative, and the other 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 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 any Dispute remains unsettled after the procedures set forth in Section 7.14(c), any party hereto may commence Proceedings hereunder in any court specified in Section 7.12
SECTION 7.15 NOTICE TO ISSUER AND TRUSTEE. Boeing and Sublessor shall, upon the execution and delivery of this Agreement, provide a copy of this Agreement, as so executed and delivered, to the Issuer and the Trustee, in satisfaction of the requirements of Section 8.1(c) or Section 8.01(c), as the case may be, of the Lease Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth hereinabove.
SUBLESSOR:
BOEING IRB ASSET TRUST,
By: The Boeing Company, not in its
individual capacity but solely as
Administrative Agent
By /s/ Bryan Gerard ------------------------------------- Name Bryan Gerard Title Director - New Business Ventures |
BOEING:
THE BOEING COMPANY
By /s/ John Borst ------------------------------------- Name John Borst Title Director - Asset Management |
SUBLESSEE:
MID-WESTERN AIRCRAFT SYSTEMS, INC.
By /s/ Nigel Wright ------------------------------------- Name Nigel Wright Title Vice President, Secretary & Treasurer |
Acknowledged and accepted by:
GUARANTOR:
THE BOEING COMPANY
By /s/ Bryan Gerard ---------------------------------- Name Bryan Gerard Title Director - New Business Ventures |
[Signature Page to Buyer Sublease]
ACKNOWLEDGMENT OF SUBLESSEE
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
I, the undersigned, a Notary Public in and for said County in said State, do hereby certify that Nigel Wright, whose name as VP, Secretary & Treasure of Mid-Western Aircraft Systems, Inc. is signed to the foregoing Sublease Agreement, and who is known to me to be such officer, acknowledged before me on this date that, being informed of the contents of said Sublease Agreement, he or she, in his or her capacity as such officers and with full authority, executed, sealed and delivered the same voluntarily for and as the act of said Company.
Given under my hand and seal of office this 15 day of June, 2005.
[SEAL] /s/ Joyce I. Francis ---------------------------------------- Notary Public |
My Commission Expires:
Joyce I. Francis
Notary Public, State of New York
No. 01FR6124292
Qualified in New York County
Commission Expires March 28, 2009
ACKNOWLEDGMENT OF SUBLESSOR
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
I, the undersigned, a Notary Public in and for said County in said State, DO HEREBY CERTIFY that Bryan Gerard, whose name as Director- New Business Ventures of The Boeing Company, solely in its capacity as Administrative Agent of BOEING IRB ASSET TRUST, is signed to the foregoing Sublease Agreement, and who is known to me to be such officers, acknowledged before me on this day that, being informed of the contents of said Sublease Agreement, he or she, in his or her capacity as such officer and with full authority, executed, sealed and delivered the same voluntarily for and as the act of said Company.
Given under my hand and seal of office this 15 day of June, 2005.
[SEAL] /s/ Joyce I. Francis ---------------------------------------- Notary Public |
My Commission Expires:
Joyce I. Francis
Notary Public, State of New York
No. 01FR6124292
Qualified in New York County
Commission Expires March 28, 2009
ACKNOWLEDGMENT OF BOEING
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
I, the undersigned, a Notary Public in and for said County in said State, DO HEREBY CERTIFY that John Borst, whose name as Director- Asset. Management of THE BOEING COMPANY is signed to the foregoing Sublease Agreement, and who is known to me to be such officer, acknowledged before me on this day that, being informed of the contents of said Sublease Agreement, he or she, in his or her capacity as such officer and with full authority, executed, sealed and delivered the same voluntarily for and as the act of said Company.
Given under my hand and seal of office this 15 day of June, 2005.
[SEAL] /s/ Joyce I. Francis ---------------------------------------- Notary Public |
My Commission Expires:
Joyce I. Francis
Notary Public, State of New York
No. 01FR6124292
Qualified in New York County
Commission Expires March 28, 2009
SCHEDULE I
BONDS
CITY OF WICHITA, KANSAS
INDUSTRIAL REVENUE BONDS
(THE BOEING COMPANY PROJECT)
Series XIX, 1981
Series XXIII, 1982
Series X, 1983
Series XI, 1983
Series VII, 1984
Series XVII, 1985
Series VIII, 1986
Series X, 1987
Series VII, 1988
Series II, 1989
Series VIII, 1990
Series IX, 1991
Series IX, 1992
Series VI, 1993
Series XIV, 1994
Series X, 1995
Series VII, 1996
Series XVI, 1997
Series XIV, 1998
Series XIII, 1999
Series VI, 2000
Series X, 2001
Series V, 2002
Series V, 2003
Series VI, 2004
SCHEDULE II
LEASE AGREEMENT AND GUARANTY
GUARANTY AGREEMENT BETWEEN THE BOEING LEASE AGREEMENT BETWEEN CITY OF WICHITA, COMPANY, AS GUARANTOR, AND THE BANK OF AS LESSOR, AND THE BOEING COMPANY, AS NEW YORK TRUST COMPANY, N.A., AS TRUSTEE LESSEE, DATED: AND AS SUCCESSOR TRUSTEE, DATED: ---------------------------------------- ---------------------------------------- December 1, 1981* December 1, 1981 December 1, 1982* December 1, 1982 December 1, 1983* December 1, 1983 December 1, 1983 (Lease Agreement No. 7) - December 1, 1983 recorded December 16, 1983 on Film 628, Page 899 (Tract XII)* December 1, 1984* December 1, 1984 December 1, 1985* December 1, 1985 December 1, 1986 - recorded December 16, December 1, 1986 1986 on Film 853, Page 895 (Tract XV)* December 1, 1987 - recorded December 15, December 1, 1987 1987 on Film 937, Page 1120 (Tracts IX and XXII)* December 1, 1988* December 1, 1988 December 1, 1989 - recorded December 12, December 1, 1989 1989 on Film 1084, Page 1358 (Tracts XXIV, XXV and XXVIII)* December 1, 1990* December 1, 1990 December 1, 1991 - recorded December 11, December 1, 1991 1991 on Film 1212, Page 580 (Tract XVIII)* December 1, 1992 - recorded December 15, December 1, 1992 1992 on Film 1300, Page 1514 (Tract XIX)* December 1, 1993* December 1, 1993 December 1, 1994* December 1, 1994 December 1, 1995* December 1, 1995 December 1, 1996* December 1, 1996 December 1, 1997* December 1, 1997 December 1, 1998* December 1, 1998 December 1, 1999* December 1, 1999 |
December 1, 2000* December 1, 2000 December 1, 2001* December 1, 2001 December 1, 2002* December 1, 2002 December 1, 2003* December 1, 2003 December 1, 2004 December 1, 2004 |
* As amended by the Master Amendment to Lease Agreement dated as of December 1, 2004.
SCHEDULE III
TRANSFERRED ASSETS
The Transferred Assets include assets that are subject to the Lease Agreement and that would be "Assets" as determined under Section 1.1 of the Purchase Agreement (other than Section 1.1(a)(xvii) therein contained) if they were not subject to the Lease Agreement, including the following:
SCHEDULE IV
LEGAL DESCRIPTION
TRACT IX:
The Northwest Quarter of the Northeast Quarter (NW/4 NE/4) of Section 14, Township 28 South, Range 1 East of the 6th P.M., Sedgwick County, Kansas, except the North 990 feet thereof, and except that part lying within an easement for railroad purposes, of record in the Office of the Register of Deeds in Ms. Book 164, at Page 249, and except that part lying within Industrial Park Complex Addition to Sedgwick County, Kansas, and more particularly described as follows:
Beginning at the Southwest corner of the Northwest Quarter of the Northeast Quarter (NW/4 NE/4) of Section 14, Township 28 South, Range 1 East of the 6th P.M., where found a 6" x 4" sandstone;
thence North 89 degrees 56' 38" East along the South line of said NW/4 of the NE/4, a distance of 936.55 feet, to the West line of Industrial Park Complex Addition to Sedgwick County, Kansas, where found a 1/2" I.P.;
thence North 0 degrees 39' 59" East along the West line of said Industrial Park Complex Addition a distance of 334.86 feet, where found a 3/4" I.P.;
thence North 90 degrees West a distance of 270.48 feet to a line 660 feet West of and parallel with the East line of said NW/4 of the NE/4 of Section 14, where found a 3/4" I.P.;
thence South 0 degrees 41' 12" West along said line 660 feet West of and parallel with the East line of said NW/4 of the NE/4 a distance of 49.77 feet to a line 1040 feet South of and parallel with the North line of said NW/4 of the NE/4, where set a 3/4" I.P., also being the Southeast corner of an easement for railroad purposes, of record in the Office of the Register of Deeds in Ms. Book 164, at Page 249;
thence North 90 degrees West along the South line of said easement, to the West line of said NW/4 of the NE/4, a distance of 666.06 feet, where set a 3/4" I.P.;
thence South 0 degrees 39' 41" West along the West line of said NW/4 of the NE/4 a distance of 286.00 feet to the point of beginning.
TRACT XII (REVISED LEGAL DESCRIPTION)
A portion of the West 1/2, of the Southeast 1/4, Section 14, Township 28 South, Range 1 East of the 6TH Principal Meridian, Sedgwick County, Kansas described as:
Commencing at the Southwest corner of the SE1/4, Section 14, Township 28 South, Range 1 East of the 6TH P.M.; thence bearing N00degrees46'08"W along the West line of said SE1/4, a distance of 84.20 feet to the Point of Beginning; thence continuing bearing N00degrees46'08"W along the West line of said SE1/4; a distance of 2570.46 feet to the Northwest corner of the SE1/4;
thence bearing N88degrees38'57"E along the North line of said SE1/4, a distance of 725.20 feet; thence bearing S00degrees05'40"E, a distance of 192.22 feet; thence bearing S23degrees05'11"E, a distance of 65.18 feet; thence bearing S00degrees05'38"E, a distance of 838.31 feet; thence bearing S89degrees59'33"W, a distance of 47.21 feet; thence bearing S00degrees07'47"W, a distance of 1560.37 feet to the South line of said SE1/4; thence bearing S88degrees13'22"W along the South line of said SE1/4, a distance of 281.84 feet; thence bearing N01degrees46'38"W, a distance of 30.00 feet; thence bearing N83degrees43'20"W, a distance of 386.70 feet to the Point of Beginning.
TRACT XV:
Lots 1, 2 and 3, Block A, Sopjes Addition, Sedgwick County, Kansas.
TRACT XVIII:
Lot 1, Block 1, Boeing Industrial Addition, Sedgwick County, Kansas
TRACT XIX:
Lot 1, Block 1, Boeing MacArthur West Addition, Sedgwick County, Kansas
TRACT XXII:
Lot 1, Turnpike Industrial 3rd Addition, Wichita, Sedgwick County, Kansas, except that part described as: Commencing at the Northeast corner of said Lot 1, thence South 00 degrees 10' 41" East 311.87 feet; thence South 89 degrees 15' 44" West 615.71 feet; thence North 34.045 feet; thence West 773.05 feet to the West line of said Lot 1; thence North along the West line of said Lot 1, to a point 80.23 feet Southeasterly of the most Westerly corner of said Lot 1; thence North 47 degrees 59' 41" West 80.23 feet to the most Westerly corner of said Lot 1; thence North 42 degrees 00' 19" East 200.05 feet; thence North 89 degrees 20' 20" East 1314.02 feet to the place of beginning, and except the South 726 feet thereof.
TRACT XXIV:
Lot 3, Turnpike Industrial 3rd Addition, Wichita, Sedgwick County, Kansas.
TRACT XXV:
Beginning at a point 2244.1 feet West of the Northeast corner of the Northeast
Quarter of Section 14, Township 28 South, Range 1 East of the Sixth Principal
Meridian, Sedgwick County, Kansas; thence South 840 feet, more or less to the
North line of Railroad right-of-way as established in Misc. Book 164, page 249;
thence West 200 feet; thence North 840 feet, more or less, to the North line of
Section 14; thence East 200 feet to the point of beginning. EXCEPT the North 66
feet thereof for road purposes.
TRACT XXVI:
Beginning at a point 1986.1 feet West of the Northeast corner of Section 14, Township 28 South, Range 1 East of the Sixth Principal Meridian, Sedgwick County, Kansas; thence South 840 feet, more or less, to the North line of Railroad right-of-way as established in Misc. Book 164, page 249; thence West 258 feet; thence North 840 feet, more or less, to the North line of said Section; thence East 258 feet to the point of beginning. EXCEPT the North 66 feet thereof for road purposes.
Exhibit 21.1
Subsidiaries of Spirit AeroSystems Holdings, Inc.
Spirit AeroSystems, Inc.
Spirit AeroSystems Finance, Inc.
Subsidiary of Spirit AeroSystems, Inc.
Spirit AeroSystems International Holdings, Inc.
Subsidiary of Spirit AeroSystems International Holdings, Inc. Spirit AeroSystems (Europe) Limited
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-1 of our report dated June 22, 2006 relating to the financial statements of Spirit AeroSystems Holdings, Inc., which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Saint Louis, Missouri June 28, 2006 |
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Registration Statement on Form S-1 of our report dated June 27, 2006 (which report express an unqualified opinion on the Division's financial statements and includes an explanatory paragraph referring to the basis of presentation) relating to the financial statements of the Wichita Division of the Boeing Commercial Airplane Group of The Boeing Company appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP Seattle, Washington June 28, 2006 |