ASSET PURCHASE AGREEMENT BY AND BETWEEN VOUGHT AIRCRAFT INDUSTRIES, INC. AND BCACSC, INC. Dated as of July 6, 2009

EXHIBIT (10)(i)

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

VOUGHT AIRCRAFT INDUSTRIES, INC.

AND

BCACSC, INC.

Dated as of July 6, 2009

TABLE OF CONTENTS

 

 

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EXHIBITS

 

 

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DISCLOSURE SCHEDULES

 

 

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT, dated as of July 6, 2009 (this “ Agreement ”), is entered into by and between Vought Aircraft Industries, Inc., a Delaware corporation (“ Seller ”), and BCACSC, Inc., a Delaware corporation (“ Buyer ”).

WHEREAS, Seller is engaged in the business (the “ Business ”) of designing (including initial design, design related to build, certification, and testing), manufacturing (including procurement, fabrication, and assembly (including structures assembly, systems assembly, and integration)), and supporting aft fuselage sections 47 and 48 and the aft 48 (in each case, including spare parts) for the 787 program (the “ 787 Program ”) of The Boeing Company, a Delaware corporation and the parent corporation of Buyer (“ Boeing ”), pursuant to the General Terms Agreement, BCA-65572-0026, and Special Business Provisions, MS-65572-0030, between Seller and Boeing, dated as of July 7, 2005, as amended by Amendment No. 1 dated as of November 15, 2006, as further amended by Amendment No. 2 dated as of November 30, 2006, as further amended by Amendment No. 3 dated as of June 24, 2009, as further amended by Amendment No. 4 dated as of November 13, 2007, as further amended by Amendment No. 5 dated as of July 1, 2008, as further amended by Amendment No. 8 dated as of April 17, 2009, and as otherwise further amended from time to time in accordance with its terms (the “ 787 Supply Agreement ”); and

WHEREAS, this Agreement contemplates a transaction in which (i) Buyer will acquire all of the business, assets and operations used in the Business (other than the Excluded Assets, as specified herein), and will assume the liabilities of the Business (other than the Excluded Liabilities, as specified herein), all on the terms and subject to the conditions set forth in this Agreement, and (ii) pursuant to and on the terms set forth in the Termination and Mutual Release Agreement, each of Boeing and Seller, on behalf of themselves and each of their respective Subsidiaries, will terminate the 787 Supply Agreement and release Claims and resolve any and all rights and obligations owed to each other related to the 787 Supply Agreement as described therein.

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the value, receipt and sufficiency of which are acknowledged, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . For purposes of this Agreement, the following terms have the meanings set forth below:

“ 401(k) Plan ” is defined in Section 4.16(b) of this Agreement.

“ 747 Amendment ” is defined in Section 9.1(e)(xiii) of this Agreement.

“ 767 Amendment ” is defined in Section 9.1(e)(xiv) of this Agreement.

“ 777 Amendment ” is defined in Section 9.1(e)(xv) of this Agreement.

“ 787 Design Build Guide ” is defined in the definition of Required by Boeing in Section 1.1 of this Agreement.

“ 787 Program ” is defined in the Recitals to this Agreement.

“ 787 Supply Agreement ” is defined in the Recitals to this Agreement.

“ Absent Employees ” is defined in Section 8.2(b) of this Agreement.

“ Accounts Receivable ” is defined in Section 2.2(a)(v) of this Agreement.

“ Acquisition Proposal ” is defined in Section 6.5 of this Agreement.

“ Additional Restricted Employees ” means all Persons employed by the Business after the Closing Date (other than any Transferred Employees).

“ Adjusted Net Investment Amount ” means, as of any date, (i)(A) the aggregate amount (without duplication) of all investments made and expenses incurred or accrued by Seller and its Subsidiaries in connection with the 787 Program at any time as of such date, minus (B) the sum of, without duplication, (u) the aggregate amount of payments and advances made on or prior to such date by Buyer or its Affiliates to Seller pursuant to the 787 Supply Agreement, (v) grants made to Seller by the State of South Carolina under the Site Development and Incentive Agreement on or prior to such date, (w) the accounts payable of Seller in respect of amounts referred to above in clause (i)(A) that constitute Assumed Liabilities as of such date, (x) to the extent included in the amount in clause (i)(A) above, the Milledgeville direct labor and Milledgeville capex line items on Appendix A , (y) to the extent included in the amount in clause (i)(A) above, the Dallas IT equipment line item on Appendix A , and (z) to the extent included in the amount in clause (i)(A) above, the corporate G&A line item on Appendix A through March 29, 2009, in the case of each of the foregoing clauses, determined and calculated in accordance with the calculation of the Adjusted Net Investment Amount estimated as of March 29, 2009, set forth on Appendix A , and determined in accordance with the Agreed Methodology, plus (ii) fifty percent (50%) of the amount of the G&A Costs properly allocable to the Business; provided, that in no event shall the amount determined pursuant to the foregoing clause (ii) exceed the G&A Cost Cap.

“ Affiliate ” means with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with such Person or entity.

“ Aggregate Consideration ” is defined in Section 3.2 of this Agreement.

“ Agreed Methodology ” means the practices, policies and methodologies set forth on Annex I to Appendix A (including methodologies, consistently applied, in allocating general and administrative and other indirect costs) that were used by Seller in determining and calculating the estimated amount of the Adjusted Net Investment Amount as of March 29, 2009, which estimate is reflected on Appendix A (it being acknowledged that (i) the purpose of the

 

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adjustment to the Closing Payment Amount pursuant to Section 3.4 is to ensure an accurate calculation of the Closing Adjusted Net Investment Amount, consistent with the calculation of the estimated Adjusted Net Investment Amount as of March 29, 2009, as reflected on Appendix A , rather than to change or challenge the practices, policies or methodologies set forth on Annex I to
Appendix A , (ii) for purposes of calculating the Closing Adjusted Net Investment Amount, indirect costs of the 787 Program for the period between March 29, 2009 and the Closing will be limited to the categories of indirect costs listed in or reflected on Appendix A , which shall be allocated using the same practices, policies and methodologies set forth on Annex I to Appendix A , and (iii) for the avoidance of doubt, direct costs, expenses and investments reflected in the Adjusted Net Investment Amount shall be limited to such costs, expenses and investments made or incurred by Seller for the 787 Program).

“ Agreement ” is defined in the Preamble to this Agreement.

“ Allocation Statement ” is defined in Section 3.5(a) of this Agreement.

“ Anti-Bribery Laws ” is defined in Section 4.13(c) of this Agreement.

“ Apportioned Tax ” means any Tax relating to any Purchased Asset (including any additional Tax determined subsequent to the Closing Date) that is due or becomes due without acceleration for any Straddle Period; provided , however , that any Tax that is an Assumed Liability will not be an Apportioned Tax.

“ Apportioned Taxes Claim ” is defined in Section 7.3(c) of this Agreement.

“ Arbitrator ” is defined in Section 11.5(b) of this Agreement.

“ Assets ” means all assets, properties and rights of every kind (whether tangible or intangible), including real and personal property.

“ Assumed Liabilities ” is defined in Section 2.3(a) of this Agreement.

“ Background Invention(s) ” is defined in the 787 Supply Agreement and, with respect to Seller, includes those inventions listed on Schedule 1.1A .

“ Background Proprietary Information ” is defined in the 787 Supply Agreement and, with respect to Seller, includes that proprietary information listed on Schedule 1.1B .

“ Base Adjusted Net Investment Amount ” is Four Hundred Seventy-Six Million Dollars ($476,000,000.00).

“ BCA ” is defined in Section 6.10(c) of this Agreement.

“ Bill of Sale, Assignment and Assumption Agreement ” is defined in Section 9.1(e)(ii) of this Agreement.

“ BIS ” is defined in Section 6.3(c) of this Agreement.

 

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“ Boeing ” is defined in the Recitals to this Agreement.

“ Boeing Guaranty ” means that certain Guaranty, executed as of the date hereof, by Boeing in favor of and for the benefit of Seller.

“ Business ” is defined in the Recitals to this Agreement.

“ Business Books and Records ” is defined in Section 2.2(a)(xi) of this Agreement.

“ Business Day ” means any day that is not a Saturday, Sunday or any other day on which banks are required or authorized by Law to be closed in New York City, New York.

“ Buyer ” is defined in the Preamble to this Agreement.

“ Buyer Cure Period ” is defined in Section 10.1(b)(ii) of this Agreement.

“ Buyer 401(k) Plan ” is defined in Section 8.6(b) of this Agreement.

“ Buyer Indemnified Person ” is defined in Section 11.2(a) of this Agreement.

“ CERCLA ” is defined in the definition of Environmental Laws in Section 1.1 of this Agreement.

“ Chosen Courts ” is defined in Section 12.7 of this Agreement.

“ Claims ” means any and all claims (including any cross-claim or counterclaim), causes of action, suits, charges, complaints, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding) and disputes, whenever or however arising.

“ Closing ” is defined in Section 3.1 of this Agreement.

“ Closing Adjusted Net Investment Amount ” is defined in Section 3.4(a) of this Agreement.

“ Closing Date ” is defined in Section 3.1 of this Agreement.

“ Closing Payment Amount ” is defined in Section 3.2 of this Agreement.

“ COBRA ” is defined in Section 4.16(c) of this Agreement.

“ Code ” means the Internal Revenue Code of 1986, as amended, and all Laws promulgated pursuant thereto or in connection therewith.

“ Collective Bargaining Agreement ” means any collective bargaining agreement or labor agreement with the Union representing Transferred Employees, including any amendments, supplements, letters and memoranda of understanding.

“ Confidential Information ” is defined in Section 6.9(a) of this Agreement.

 

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“ Confidentiality and Assignment Agreements ” is defined in Section 4.10(d) of this Agreement.

“ Consent ” means any approval, consent, permission, waiver or authorization from any Person other than a Governmental Entity.

“ Contract ” means any contract, agreement, commitment or undertaking (whether written or oral).

“ Control ” (including the terms “ Controlled by ” and “ under common Control with ”) means, as used with respect to any Person, possession of power or authority (directly or indirectly or as a trustee or executor) to direct or cause the direction of management or policies of such Person (whether through ownership of voting securities, as trustee or executor, by Contract or otherwise).

“ Copyrights ” means any and all of the following, and all rights arising out of or associated therewith, in each case, in any jurisdiction in the world: original works of authorship (whether copyrightable or not); copyrights, including unregistered and common law rights therein; moral or economic rights of authors; copyright registrations; and applications to register copyrights.

“ Covered Product ” means any product that is the same type of product as a Product that was designed, manufactured or sold by Seller or a supplier of Seller pursuant to or in contemplation of the 787 Supply Agreement prior to the Closing (a “ Pre-Closing Product ”) including (y) a product that was designed by Seller or a supplier of Seller prior to the Closing pursuant to or in contemplation of the 787 Supply Agreement and manufactured or sold after the Closing, and (z) a product manufactured or sold after the Closing that uses a method or process of design or manufacture that was created prior to the Closing by Seller or a supplier of Seller pursuant to or in contemplation of the 787 Supply Agreement for the same type of product as a Pre-Closing Product, in each case regardless of whether such product or type of product had been manufactured or sold prior to the Closing; provided , however , that (i) any product designed prior to the Closing will not constitute a Covered Product following any change to the specifications or design of such product made following the Closing to the extent (A) prior to the Closing, the manufacture, sale or use of such product did not result in, or would not, if such product had been manufactured, sold or used at such time, have resulted in, the infringement or unlawful use of any Intellectual Property right and (B) the manufacture, sale or use of such product following such change results in the infringement or unlawful use of any Intellectual Property right and such infringement or unlawful use would not have occurred but for such change, and (ii) any product manufactured prior to the Closing will not, following any change made following the Closing to a method or process used in connection with the manufacture of such product prior to the Closing, constitute a Covered Product to the extent (A) prior to the Closing, the manufacture, sale or use of such product did not result in, or would not, if such product had been manufactured, sold or used at such time, have resulted in, the infringement or unlawful use of any Intellectual Property right and (B) the manufacture, sale or use of such product following such change results in the infringement or unlawful use of any Intellectual Property right and such infringement or unlawful use would not have occurred but for such change. For the purpose of the foregoing, a product is the “same type of product as a Pre-Closing Product” if

 

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such product is (i) manufactured, used and sold as, on or in connection with a Program Aircraft and (ii) such product and any Pre-Closing Product have the same specifications, design, form, fit and function; provided , however , that such product shall continue to constitute the “same type of product as a Pre-Closing Product” notwithstanding any post-Closing change to the specifications, design, form, fit or function or method or process of manufacturing such product unless (A) prior to the Closing, the manufacture, sale or use of such product did not result in, or would not, if such product had been manufactured, sold or used at such time, have resulted in, the infringement or unlawful use of any Intellectual Property right and (B) the manufacture, sale or use of such product following such change results in the infringement or unlawful use of any Intellectual Property right and such infringement or unlawful use would not have occurred but for such change.

“ DOJ ” means the United States Department of Justice.

“ Dollars ” and the symbol “ $ ” each means the lawful currency of the United States.

“ Employee Benefit Plans ” is defined in Section 4.16(a) of this Agreement.

“ Employees ” means those individuals employed by Seller in North Charleston, South Carolina (as reflected in Seller’s payroll system for the North Charleston Facility) who are employed primarily in connection with the Business as of the Closing Date and are set forth on Schedule 8.1(a)(i) (as updated pursuant to this Agreement), including individuals stationed with or assigned to subcontractors of the Business (including field service, surveillance and quality control personnel) or assigned to Buyer’s manufacturing facilities, other than the Retained Employees. Employees shall also include the employees of Seller set forth on Schedule 6.10(c)(ii) and any employees hired by Seller in the normal course of business, in compliance with this Agreement, to serve in North Charleston, South Carolina primarily in connection with the Business during the period beginning on the date hereof and ending on the Closing Date.

“ Encumbrance ” means any mortgage, lien, pledge, encumbrance (including, in the case of real property, easements, rights of way, covenants, leases, licenses, zoning and setback requirements and other variances), security interest, deed of trust, option, encroachment, order, decree, judgment lien, charge or other third-party rights of any kind, including in the case of Intellectual Property, license rights or ownership interests other than those arising pursuant to a Purchased Contract.

“ Engineering Services Agreement ” is defined in Section 9.1(e)(v) of this Agreement.

“ Environmental Claim ” means any Claim, or any written notice of violation, citation or other similar written communication alleging a violation of or Liability under any Environmental Law, any government-mandated investigative, enforcement, cleanup, removal, containment, remedial, or other governmental or regulatory action or proceeding threatened in writing, instituted or completed pursuant to any applicable Environmental Law, against Seller and/or the Business with respect to any condition, use or activity of the Purchased Assets or at the North Charleston Real Property and/or the North Charleston Facility and any Claim, or any written allegation, demand, suit, tender, recovery or contribution action threatened or made by any person against Seller or against or with respect to the Purchased Assets, including any condition,

 

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use or activity of the Purchased Assets or at the North Charleston Real Property and/or the North Charleston Facility relating to Losses resulting from or in any way arising in connection with any Hazardous Material or breach of Environmental Law during Seller’s use or occupancy of the North Charleston Real Property and/or the North Charleston Facility.

“ Environmental Insurance Policy ” is defined in Section 6.13(c) of this Agreement.

“ Environmental Laws ” means any Law or Order that pertains to pollution control or natural resource or environmental protection, including Laws and Orders relating to (i) the manufacture, processing, use, distribution, treatment, storage, disposal, generation or transportation of Hazardous Materials; (ii) air, surface, ground, water or noise pollution; (iii) any Release; (iv) the protection of wildlife, endangered species, wetlands or other natural resources; and (v) the protection of the health and safety of employees; including the following statutes and regulations adopted thereunder: (A) the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. § 9601 et seq. (“ CERCLA ”); (B) the Solid Waste Disposal Act, as amended by the Resource Conservation Recovery Act and the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. § 6901 et seq. (“ RCRA ”); (C) the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. § 1251 et seq.; (D) the Clean Air Act, as amended, 42 U.S.C. § 7401 et seq.; (E) the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq. (“ TSCA ”); (F) the Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j; (G) the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq. (“ HMTA ”); (H) the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; (I) the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.; and (J) the Occupational Safety and Health Act, 19 U.S.C. § 6251 et seq.

“ Environmental Permit ” is defined in Section 4.14(d) of this Agreement.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and all Laws promulgated pursuant thereto or in connection therewith.

“ ERISA Affiliate ” means any trade or business that is treated as a single employer with Seller under Sections 414(b), (c) or (m) of the Code or that must be aggregated with Seller under Section 414(o) of the Code.

“ Estimated Adjusted Net Investment Amount ” is defined in Section 3.3(a) of this Agreement.

“ Estimated Preliminary Statement ” is defined in Section 3.3(a) of this Agreement.

“ Excluded Assets ” is defined in Section 2.2(b) of this Agreement.

“ Excluded Contracts ” is defined in Section 2.2(b)(vi) of this Agreement.

“ Excluded Liabilities ” is defined in Section 2.3(b) of this Agreement.

“ Facilities ” means all plants, offices, manufacturing facilities, stores, warehouses, administration buildings and related facilities and fixtures owned or leased on the date hereof (and those owned or leased after the date hereof but on or before the Closing) by Seller and

 

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located on the North Charleston Real Property; provided that the term “Facilities” shall not include any plants, offices, manufacturing facilities, stores, warehouses, administration buildings and related facilities and fixtures located on the Pad Premises, as such term is defined in the GA Sublease and more particularly described in Exhibit B of the GA Sublease.

“ Facilities Bill of Sale, Assignment and Assumption Agreement ” is defined in Section 9.1(e)(ix) of this Agreement.

“ FILOT Agreement ” means that certain Fee Agreement by and among Charleston County, South Carolina, Seller, GA and Boeing, which was authorized by Ordinance of Charleston County, South Carolina passed and approved as of December 19, 2006.

“ Final Statement ” is defined in Section 3.4(c) of this Agreement.

“ Financial Information ” is defined in Section 4.4 of this Agreement.

“ Force Majeure Event ” is defined in the definition of Material Adverse Effect in Section 1.1 of this Agreement.

“ FTC ” means the United States Federal Trade Commission.

“ G&A Cost Cap ” means two million five hundred thousand Dollars ($2,500,000.00) plus an amount equal to (i) two million five hundred thousand Dollars ($2,500,000.00) multiplied by (ii) the number of days elapsed between June 28, 2009 and the Closing Date, divided by 92.

“ G&A Costs ” means the corporate general and administrative costs and costs associated with shared services incurred by Seller and/or its Subsidiaries during the period beginning on (and including) March 30, 2009 and ending on (and including) the Closing Date and allocated to the Business conducted at the North Charleston Facility, in each case in accordance with the Agreed Methodology.

“ GA ” means Global Aeronautica, LLC, a Delaware limited liability company.

“ GAAP ” means United States generally accepted accounting principles, consistently applied.

“ GA Sublease ” means that certain Pad Sublease by and between Seller and GA, effective as of August 25, 2006, pursuant to which GA subleases a portion of the North Charleston Real Property from Seller, as more specifically defined and set forth therein.

“ GA Sublease Assumption ” is defined in Section 9.1(e)(xi) of this Agreement.

“ Governmental Authorization ” means any permit, consent, license, certificate, franchise, permission, variance, clearance, registration, qualification, authorization or approval issued, granted, given or otherwise made available by or under the authority of any Governmental Entity or pursuant to any Law, including any Environmental Permit.

 

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“ Governmental Entity ” means the United States, any state or other political subdivision thereof and any other foreign or domestic Person exercising or having the authority to exercise executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, commission or instrumentality of the United States or any foreign Person, any state of the United States or any other political subdivision of any of the foregoing.

“ Ground Lease ” means that certain Charleston International Airport Ground Lease Agreement by and between the Charleston County Aviation Authority, as lessor, and SCPR, as lessee, dated as of August 25, 2006.

“ Guarantees ” is defined in Section 6.20 of this Agreement.

“ Hazardous Material ” means each and every element, compound, chemical mixture, contaminant, pollutant, material or other substance that is defined, determined or identified as hazardous or toxic under any Environmental Law or the Release of which is prohibited or regulated under any Environmental Law, including (i) any “hazardous substance,” “extremely hazardous substance” or “pollutant or contaminant” as those terms are defined in CERCLA; (ii) any “hazardous waste” as that term is defined in RCRA; (iii) any “hazardous material” as that term is defined in the HMTA; (iv) any “chemical substance or mixture” as that term is defined in TSCA; (v) petroleum and petroleum products and byproducts; (vi) asbestos; and (vii) radioactive or explosive materials.

“ Hire Date ” is defined in Section 8.2 of this Agreement.

“ HMTA ” is defined in the definition of Environmental Laws in Section 1.1 of this Agreement.

“ Inbound License Agreement ” means each Purchased Contract (other than a Material Contract) pursuant to which Seller receives a license to Intellectual Property.

“ Income Tax ” or “ Income Taxes ” means any income, alternative minimum, accumulated earnings, personal holding company, franchise, capital, single business, net worth, gross receipts or similar taxes, including any estimated tax, interest, penalties or additions to tax or additional amounts in respect to the foregoing, including any transferee or secondary liability for any such tax and any Liability assumed by agreement or arising as a result of being or ceasing to be a member of any affiliated group, or being included or required to be included in any Income Tax Return relating thereto.

“ Income Tax Return ” means, with respect to any Income Tax, any information return for such Income Tax, and any return, report, statement, declaration, claim for refund or document filed or required to be filed under the Law for such Income Tax.

“ Indebtedness ” means, with respect to a Person, all Liabilities and obligations of such Person (i) for borrowed money (including all accrued and unpaid interest and all prepayment penalties or premiums in respect thereof) or issued in substitution for or exchange of indebtedness for borrowed money; (ii) for any indebtedness evidenced by notes, debentures, bonds or other similar instruments (including all accrued and unpaid interest and all prepayment

 

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penalties or premiums in respect thereof); (iii) under any conditional sale, title retention or similar arrangement, or with respect to any deferred purchase price of any Assets or services (but excluding trade accounts payable arising in the ordinary course of business consistent with past practice); (iv) to reimburse any obligor on any letter of credit or similar credit transaction securing obligations of any Person, to the extent such letter of credit or similar obligation has been drawn; (v) to pay rent or other amounts under any lease of real or personal property that is required to be classified or accounted for as a capital lease in accordance with GAAP; (vi) constituting a guarantee of any Liabilities or obligations of any other Persons of the type described in the foregoing clauses (i) through (v); and (vii) any liability or obligation of the type described in the foregoing clauses (i) through (v) of any other Person, secured by an Encumbrance on any of such Person’s Assets.

“ Indemnified Persons ” is defined in Section 11.3(a) of this Agreement.

“ Indemnifying Person ” is defined in Section 11.4(a) of this Agreement.

“ Initial Restricted Employees ” means the Transferred Employees.

“ Intellectual Property ” means any and all of the following, and all rights arising out of or associated therewith, in each case in any jurisdiction in the world: (i) Patents; (ii) Copyrights, (iii) Trademarks; (iv) Trade Secrets; (v) Software; (vi) rights to use the names, likenesses and other personal characteristics of any individual, including rights of privacy and publicity; and (vii) all other intellectual property or industrial property rights.

“ Intellectual Property Assignments ” is defined in Section 9.1(e)(iii) of this Agreement.

“ Intellectual Property License Agreement ” is defined in Section 9.1(e)(iv) of this Agreement.

“ Interim Financial Information ” is defined in Section 6.17 of this Agreement.

“ Inventory ” is defined in Section 2.2(a)(iii) of this Agreement.

“ IRS ” means the U.S. Internal Revenue Service.

“ Joint SBP Activity Invention(s) ” is defined in the 787 Supply Agreement.

“ Joint SBP Activity Proprietary Information ” is defined in the 787 Supply Agreement.

“ Knowledge ” means, with respect to Seller, the actual knowledge of (i) Kevin McGlinchey, Keith Howe, Jeff McRae, Ron Muckley, Susie Kent, Joy Romero, Tom Mann, Casey Litaker and Ron Vuz for all purposes hereunder; (ii) for purposes of Section 4.10 only, Bryan Tutor, Seturah Foxx and Tom Stubbins; (iii) for purposes of Section 4.9(c)(iii) only, Jerry Edmondson; (iv) for purposes of Sections 4.9 and 4.11 only, Randy Smith, (v) for purposes of Section 4.11 only, Pat Russell, George Briggs, Cliff Collier and Tom Stubbins; (vi) for purposes of Section 4.12 only, Seturah Foxx; (vii) for purposes of Section 4.13 only, Jerry Edmondson, (viii) for purposes of Section 4.14 only, Joanne Romano; (ix) for purposes of Section 4.15 only, Bob Roofner; (x) for purposes of Sections 2.3(a)(ii) , 2.3(b)(ii) and 4.16 only, Cliff Collier and

 

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Seturah Foxx; and (xi) for purposes of Section 4.18 only, Doug McLean, and, with respect to Buyer, the actual knowledge of Bryan Gerard, Henry Knies, Anthony Fisher, Joseph Lower and Edward Neveril.

“ Laws ” means all foreign, federal, state, regional, county and local constitutions, statutes, laws (including common laws), ordinances, regulations, rules, resolutions, Orders, tariffs, writs, injunctions, awards (including awards of any arbitrator), judgments and decrees of any and all Governmental Entities and the terms of any Governmental Authorizations.

“ Legal Proceeding ” means any Claim commenced, brought, conducted or heard by or before, any court or other Governmental Entity or any arbitrator or arbitration panel.

“ Lender Waiver ” is defined in Section 6.21 of this Agreement.

“ Liability ” means any and all debts, liabilities, guarantees, assurances, commitments and obligations, whether asserted or unasserted, matured or unmatured, liquidated or unliquidated, known or unknown, due or to become due.

“ Licensed Intellectual Property ” means Intellectual Property licensed to Seller pursuant to a Purchased Contract.

“ LOI ” means that certain letter of intent dated as of April 17, 2009 by and between Seller and Boeing.

“ Losses ” means any and all losses, Liabilities, Claims, damages (including consequential, special, punitive, exemplary and incidental damages), penalties, fines, amounts paid in settlement, taxes, liens, costs and expenses (including interest, penalties, reasonable attorneys’ and accountants’ fees and disbursements and all amounts paid in investigation, defense or settlement of any of the foregoing) or diminution of value, of any nature whatsoever, including any of the foregoing or portion thereof that may occur after the Closing but relate to the period prior to the Closing.

“ Material Adverse Effect ” means any effect that (i) is, or is reasonably likely to be, materially adverse to the operations, properties, assets, Liabilities, financial condition or results of operations of the Business, taken as a whole, or (ii) would be reasonably expected to materially impede or delay Seller’s ability to consummate the transactions contemplated by this Agreement in accordance with its terms and applicable Laws or otherwise to perform its obligations hereunder; provided that, in the case of each of clause (i) and (ii) above, any effect to the extent resulting from any of the following shall not be taken into account in determining whether any Material Adverse Effect has occurred or whether a Material Adverse Effect would be reasonably likely to occur: (A) changes in economic, business, financial or political conditions that affect the industries in which the Business operates so long as such changes do not have a materially disproportionate effect on the Business, (B) acts of terrorism or war, (C) any adverse effect, event, occurrence, development, circumstance, change or condition to the extent relating to or arising out of (I) the design, manufacture, production, sale, operation and support of the 787 aircraft program by any Person other than Seller, (II) any actual or alleged breach of the 787 Supply Agreement or any Seller Supply Agreement (other than those arising from bad faith or willful misconduct of Seller) or (III) any customer, supplier, contractor or

 

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sub-contractor (in each case, other than Seller) or supplier contract, subcontract agreement or raw materials relating to the 787 aircraft program or (D) any Excluded Liability to the extent not impairing the Business from and after the Closing. In connection with determining whether any Material Adverse Effect has occurred or would be reasonably likely to occur as a result (in whole or in part) of Seller or the Purchased Assets suffering a Force Majeure Event, the effects resulting from such Force Majeure Event shall be taken into account notwithstanding the limitations set forth in clause (C) above. For purposes of this definition, “ Force Majeure Event ” means any act of God, flood, fire, hurricane or other casualty, earthquake, or any other events or circumstances not within the reasonable control of Seller that are substantially similar to any of the foregoing (other than any matter described in clause (A) and (B)), in each case occurring after the date of this Agreement.

“ Material Contract ” is defined in Section 4.11(a) of this Agreement.

“ Minimum Terms and Conditions of Employment ” is defined in Section 8.2(a) of this Agreement.

“ Multiemployer Plan ” is defined in Section 4.16(d) of this Agreement.

“ Neutral Auditor ” is defined in Section 3.4(c) of this Agreement.

“ New Seller Engineering Employees ” means the engineering employees who are first employed by Seller or any of its Subsidiaries in Seller’s Dallas, Texas facilities after the Closing Date (other than Seller Engineering Employees).

“ Non-Assigned Contract ” is defined in Section 6.3(b) of this Agreement.

“ Non-Disclosure Agreement ” means that certain Non-Disclosure Agreement, dated as of March 17, 2009, by and between Seller and Boeing.

“ North Charleston Facility ” means the Facilities in North Charleston, South Carolina.

“ North Charleston Real Property ” means the parcel of real property which is subject to the North Charleston Sublease.

“ North Charleston Sublease ” means that certain Ground Sublease by and between Seller and South Carolina Public Railways (“ SCPR ”), dated as of August 25, 2006, pursuant to which Seller subleases the parcel of real property on which the North Charleston Facility is located.

“ North Charleston Sublease Assumption ” is defined in Section 9.1(e)(x) of this Agreement.

“ Objection Notice ” is defined in Section 3.4(b) of this Agreement.

“ Offer ” is defined in Section 8.1(a) of this Agreement.

“ Offer Consideration Period ” is defined in Section 8.2(a) of this Agreement.

 

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“ Open Source Software ” means Software that is “open source” or “copyleft” as those terms are commonly understood in the Software industry, including any Software that is: (i) distributed pursuant to a license or other agreement that requires licensees to disclose or otherwise make available the source code for any software incorporating or using such licensed software or developed using such licensed software, or to distribute or make available such software on terms specified in such license or agreement; (ii) subject to the GNU General Public License (GPL) or the GNU Lesser General Public License (LGPL) (in each case any version thereof) or any license approved by the Open Source Initiative (as of the date hereof set forth at http://opensource.org/licenses/index.html); or (iii) listed in the Free Software Directory maintained by the Free Software Foundation (in cooperation with the United Nations Education, Scientific and Cultural Organization (UNESCO)) (as of the date hereof set forth at http://directory.fsf.org/).

“ Order ” means any award, final decision, injunction, judgment, order, decree, ruling or verdict entered, issued, made or rendered by any court, administrative agency or other Governmental Entity, or by any arbitrator or arbitration panel.

“ Outstanding Encumbrances ” means those Encumbrances identified on Schedule 1.1C .

“ Party ” means, individually, either of Buyer or Seller, and “ Parties ” means all of the foregoing collectively.

“ Patents ” means any and all of the following, and all rights arising out of or associated therewith, in each case, in any jurisdiction in the world: patents and patent applications (including reissues, re-examinations, divisions, renewals, extensions, provisionals, continuations and continuations-in-part); inventions (whether or not patentable and whether or not reduced to practice); invention disclosures; inventor’s certificates; moral or economic rights of inventors; industrial designs; and all registrations and applications thereof.

“ Pay-off Amount ” is defined in Section 9.1(d) of this Agreement.

“ Pay-off Letter ” is defined in Section 9.1(d) of this Agreement.

“ Permitted Encumbrance ” means (i) Encumbrances identified on Schedule 1.1D ; (ii) warehouse, mechanics’, materialmen’s and similar liens imposed by Law arising in the ordinary course of business, with respect to amounts not yet due and payable or amounts being contested in good faith through appropriate proceedings initiated after the date hereof in compliance with this Agreement; (iii) liens for Taxes not yet due and payable or being contested in good faith through appropriate proceedings initiated after the date hereof in compliance with this Agreement and for which adequate reserves have been established in accordance with GAAP; (iv) with respect to the North Charleston Real Property, (x) any easement, covenant, condition, restriction or Encumbrance of record, which exceptions are identified on or attached to Schedule 1.1D , (y) any conditions or defects that are shown on the survey prepared by HGBD Surveyors, LLC dated May 18, 2009, and (z) such other Encumbrances that do not impair the current use or occupancy of the assets subject thereto; and (v) orders and decrees that do not impair the current use or occupancy of the assets subject thereto.

 

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“ Person ” means an individual, corporation, partnership, limited liability company, joint venture, trust, trustee, unincorporated organization or other entity, including a Governmental Entity.

“ Post-Closing Period ” is defined in Section 7.1(a) of this Agreement.

“ Preliminary Statement ” is defined in Section 3.4(a) of this Agreement.

“ Pre-Closing Period ” is defined in Section 7.1(a) of this Agreement.

“ Pre-Closing Product ” is defined in the definition of Covered Product in Section 1.1 of this Agreement.

“ Product ” is defined in the 787 Supply Agreement.

“ Program Aircraft ” means a (i) commercial transport aircraft having a current model designation of 787 as of Closing and (ii) any derivative thereof, as such term is commonly understood in the commercial aircraft industry.

“ Purchased Assets ” is defined in Section 2.2(a) of this Agreement.

“ Purchased Contracts ” is defined in Section 2.2(a)(i) of this Agreement.

“ Purchased Intellectual Property ” means: (i) all of the Intellectual Property listed on Schedule 4.10(a) that is identified on Schedule 4.10(a) as Purchased Intellectual Property; (ii) Seller’s rights in Joint SBP Activity Invention(s); (iii) Seller’s rights in Joint SBP Activity Proprietary Information; (iv) Vought SBP Activity Invention(s); (v) Vought SBP Activity Proprietary Information; (vi) all other Intellectual Property owned by Seller, as of the date hereof or any time prior to the Closing, that was developed (or is being developed) by or for Seller primarily for the Business (including Seller’s engineering work and engineering resources, certification work, design work and data of the Business developed (or being developed) primarily for the Business); and (vii) all rights associated with any of the foregoing, including the right to sue and collect for past or future infringement, misappropriation or other unauthorized use thereof, any and all corresponding rights that, now or hereafter, may be secured throughout the world and all copies and tangible embodiments of any of the foregoing, and all goodwill associated or arising in connection with any of the foregoing, in each case, other than the Licensed Intellectual Property. Without limiting the generality of the foregoing, “Purchased Intellectual Property” shall also include all of the following due or payable at Closing or thereafter (A) any income, royalties, credits, prepaid expenses, deferred charges, advance payments, security deposits, prepaid items, deposits and claims for refunds or reimbursements, in each case, relating to any of the Purchased Intellectual Property, (B) all Claims, rights and remedies of Seller against any third parties arising out of or relating to any of the Purchased Intellectual Property, and (C) all rights under or pursuant to any warranties, representations and guarantees made by suppliers, manufacturers, contractors or other Persons under Purchased Contracts in connection with any products or services provided to Seller with respect to any Purchased Intellectual Property.

 

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“ Qualified Representations ” means those representations and warranties set forth in: the second sentence of Section 4.3(a) ; Section 4.3(b) ; Section 4.5(a) ; clause (b) of Section 4.8 ; Section 4.11(a)(vi) ; Section 4.11(e) ; the first and third sentences of Section 4.13(b) ; Section 4.13(c) ; the lead-in paragraph of Section 4.14 ; Section 4.16(h) ; Section 4.16(l) ; clause (iii) of Section 4.17 ; and the penultimate sentence of Section 4.18 .

“ RCRA ” is defined in the definition of Environmental Laws in Section 1.1 of this Agreement.

“ Referenced Definition ” is defined in Section 1.2(f) of this Agreement.

“ Release ” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, discarding, depositing, dispersing, migration, burying, abandoning or disposing into the environment of any Hazardous Materials that is prohibited under any applicable Environmental Law.

“ Representative ” means, with respect to a particular Person, any director, manager, member, officer, employee, agent, consultant, advisor, Affiliate, financing source or other representative of such Person, including legal counsel, accountants and financial advisors.

“ Required by Boeing ” means, for the purposes of Section 11.2(c) , any such specification (subject to paragraph (F) of Section 11.2(c) ), design, design or specification change or method or process of design or manufacturing (or any change thereto) that was (i) expressly set forth in (A) a written 787 loads, methods and allowables document issued by Boeing or its Affiliates or (B) a written 787 common architecture design guide (the “ 787 Design Build Guide ”) issued by Boeing or its Affiliates, in each case as revised prior to the Closing by Boeing or its Affiliates pursuant to subsequently issued written versions of any such document or design guide, (ii) expressly set forth in any written change order initiated and issued by Boeing or its Affiliates, except to the extent that (x) such change order is modified as a direct result of collaboration with Seller and (y) the misappropriation, infringement or unlawful use in question is attributable to the modification to such change order that resulted from such collaboration, or (iii) developed or adopted by a design or configuration team chaired by a Boeing employee and comprised of Boeing employees and employees of Seller and/or other 787 team members and subsequently either (x) approved by a Design Decision Board that included a Boeing employee, which approval was documented in an issued written Program Design Decision Memorandum, or (y) expressly set forth in any issued 787 Design Build Guide.

“ Resolution Period ” is defined in Section 3.4(b) of this Agreement.

“ Restricted Period ” in defined in Section 6.10(a) of this Agreement.

“ Retained Employees ” means those individuals set forth on Schedule 1.1E .

“ Retained Intellectual Property ” is defined in Section 2.2(b)(xi) of this Agreement.

“ Review Period ” is defined in Section 3.4(b) of this Agreement.

 

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“ SCPR ” is defined in the definition of North Charleston Sublease in Section 1.1 of this Agreement.

“ Seller ” is defined in the Preamble to this Agreement.

“ Seller Contract ” means any Contract to which Seller is a party.

“ Seller Cure Period ” is defined in Section 10.1(b)(i) of this Agreement.

“ Seller Engineering Employees ” means the engineering employees who are employed by Seller or any of its Subsidiaries in Seller’s Dallas, Texas facilities as of the Closing Date and set forth on Schedule 6.10(c)(i) (which Schedule will be updated at Closing to reflect new hires) excluding the engineering employees set forth on Schedule 6.10(c)(ii) .

“ Seller 401(k) Plan ” is defined in Section 8.6(b) of this Agreement.

“ Seller Indemnified Persons ” is defined in Section 11.3(a) of this Agreement.

“ Seller Senior Credit Agreement ” means that certain Credit Agreement, dated as of December 22, 2004, among Seller, as borrower, the several lenders party thereto, Lehman Commercial Paper Inc., as administrative agent, JPMorgan Chase Bank, N.A., as syndication agent and Goldman Sachs Credit Partners L.P., as documentation agent.

“ Seller Supply Agreements ” means the supplier and sub-contractor agreements entered into by Seller in connection with the Business.

“ Site Development and Incentive Agreement ” means (i) that certain Project Emerald Confidential Site Development and Incentive Agreement by and among Seller, on behalf of Project Emerald, the South Carolina Department of Commerce, SCPR, Charleston County, South Carolina and the Charleston County Airport District and (ii) that certain Confidential Initial Site Development and Incentive Agreement between Seller on behalf of itself and two other entities; the South Carolina Department of Commerce; SCPR; Charleston County, South Carolina and the Charleston County Airport District, dated November 29, 2004.

“ Software ” means any and all software of any type (including programs, applications, middleware, utilities, tools, drivers, firmware, microcode, scripts, batch files, JCL files, instruction sets and macros) and in any form (including source code, object code and executable code), databases and associated data and related documentation, and all rights arising out of or associated with any of the foregoing, in each case in any jurisdiction in the world.

“ SOW Administrative Agreement ” is defined in Section 9.1(e)(xvii) of this Agreement.

“ SOW Side Letter ” is defined in Section 9.1(e)(xii) of this Agreement.

“ SOW Supply Agreement ” is defined in Section 9.1(e)(viii) of this Agreement.

“ SOW Warranty Agreement ” is defined in Section 9.1(e)(xvi) of this Agreement.

 

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“ Special Initiatives Agreement ” means that certain special initiatives letter agreement dated as of April 17, 2009 by and between Seller and Boeing.

“ Straddle Period ” means any Tax year or period beginning on or before the Closing Date and ending after the Closing Date.

“ Subsidiary ” or “ Subsidiaries ” means, with respect to any Person, any corporation, limited liability company, partnership or other legal entity of which such Person (either alone or through or together with any other Subsidiary) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests the holder of which is generally entitled to vote for the election of the board of directors or other governing body of such corporation, limited liability company, partnership or other legal entity.

“ Supplied Product ” is defined in Section 11.2(c) of this Agreement.

“ Supplier Infringement Claim ” is defined in Section 11.2(c) of this Agreement.

“ Tangible Personal Property ” is defined in Section 2.2(a)(ii) of this Agreement.

“ Tax ” or “ Taxes ” means a tax or taxes of any kind or nature, or however denominated, including Liability for federal, state, local or foreign sales, use, transfer, registration, ad valorem, business and occupation, value added, excise, severance, natural resources, environmental, stamp, premium, windfall profit, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee, fee in-lieu of a Tax or other withholding, or other tax, of any kind whatsoever, whether disputed or not, including any interest, penalties or additions to tax or additional amounts in respect to the foregoing, including any transferee or secondary Liability for a tax and any Liability assumed by agreement or arising as a result of being or ceasing to be a member of any affiliated group, or being included or required to be included in any tax return relating thereto; provided , however , that “Tax” or “Taxes” shall not include any Income Taxes or Transfer Taxes.

“ Tax Authority ” means any Governmental Entity having the power to regulate, impose or collect Taxes, including the IRS and any state department of revenue.

“ Tax Benefit ” is defined in Section 11.5(b) of this Agreement.

“ Tax Benefit Objection Notice ” is defined in Section 11.5(b) of this Agreement.

“ Tax Returns ” means, with respect to any Tax, any information return for such Tax, and any return, report, statement, declaration, claim for refund or document filed or required to be filed under the Law for such Tax; provided , however, that “Tax Returns” shall not include any “Income Tax Returns.”

“ Terminating Buyer Breach ” is defined in Section 10.1(b)(ii) of this Agreement.

“ Terminating Seller Breach ” is defined in Section 10.1(b)(i) of this Agreement.

 

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“ Termination and Mutual Release Agreement ” is defined in Section 6.16 of this Agreement.

“ Third Party Claim ” is defined in Section 11.4(a) of this Agreement.

“ Trademarks ” means any and all of the following, and all rights arising out of or associated therewith, in each case, in any jurisdiction in the world: trademarks; service marks; certification marks; trade names; corporate names; domain names; logos; trade dress; and other protectable indicia of source or origin, including unregistered and common law rights in the foregoing; all translations, adaptations, derivations and combinations of any of the foregoing; all goodwill associated with each of the foregoing; and all registrations of and applications to register any of the foregoing.

“ Trade Secrets ” means any and all of the following, and all rights associated therewith, in each case, in any jurisdiction in the world: trade secrets; know-how; and other confidential or proprietary information; in each case in any form or medium, and which in each case may include research and development plans or results, formulas, compositions, manufacturing and production processes and techniques, manufacturing plans, setup methodologies, facilities and process flow, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, financial reports and information, and business and marketing plans and proposals.

“ Transaction Documents ” means, collectively, this Agreement, including the Schedules and Exhibits to this Agreement, the Bill of Sale, Assignment and Assumption Agreement, the Intellectual Property Assignments, the Transition Services Agreement, the Intellectual Property License Agreement, the Engineering Services Agreement, the SOW Supply Agreement, the Termination and Mutual Release Agreement, the North Charleston Sublease Assumption, the GA Sublease Assumption, the Facilities Bill of Sale, Assignment and Assumption Agreement, the Boeing Guaranty, the SOW Side Letter, the SOW Warranty Agreement, the SOW Administrative Agreement, the 747 Amendment, the 767 Amendment, the 777 Amendment and every other Contract, certificate, instrument and document executed and delivered at the Closing in accordance with Sections 9.1 and 9.2 hereof.

“ Transaction Expenses ” means, as to a Party, the fees, costs and expenses incurred by such Party and its Affiliates in connection with the investigation, diligence, negotiation, preparation, execution and delivery of this Agreement and the Transaction Documents, and performance of the transactions contemplated hereby and thereby, including accounting, legal, consulting and other professional service fees, expenses and disbursements of consultants, advisors, financing sources (including any cost, expense, fee, premium or penalty associated with the Lender Waiver) and other Representatives, but excluding any Transfer Taxes.

“ Transfer Taxes ” means all transfer, documentary, sales, use, stamp, registration and other such similar Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the transactions contemplated hereby; provided , however , that for the avoidance of doubt “Transfer Taxes” shall not include any Income Taxes payable by reason of the transactions contemplated by this Agreement.

 

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“ Transferred Employees ” is defined in Section 8.1 of this Agreement.

“ Transferred Permits ” is defined in Section 2.2(a)(vii) of this Agreement.

“ Transition Services Agreement ” is defined in Section 9.1(e)(vi) of this Agreement.

“ TSCA ” is defined in the definition of Environmental Laws in Section 1.1 of this Agreement.

“ UE Offer ” is defined in Section 8.3(c) of this Agreement.

“ Union ” means the District Lodge 96 of the International Association of Machinists and Aerospace Workers.

“ Union Employees ” is defined in Section 8.2(f) of this Agreement.

“ United States ” and “ U.S. ” each means the United States of America.

“ Vought SBP Activity Invention(s) ” is defined in the 787 Supply Agreement.

“ Vought SBP Activity Proprietary Information ” is defined in the 787 Supply Agreement.

“ WARN Act ” means the Worker Adjustment and Retraining Notification Act of 1988, as amended.

“ Wetlands Permit ” is defined in Section 6.3(d) of this Agreement.

Section 1.2 Construction . For purposes of this Agreement:

(a) Whenever the context requires, the singular number will include the plural, and vice versa, the masculine gender will include the feminine and neuter genders, the feminine gender will include the masculine and neuter genders, and the neuter gender will include masculine and feminine genders.

(b) The words “include” and “including,” and variations thereof, will not be deemed to be terms of limitation, but rather will be deemed to be followed by the words “without limitation.”

(c) Except as otherwise indicated, all references in this Agreement to “Schedules,” “Sections” and “Exhibits” are intended to refer to Schedules, Sections and Exhibits to this Agreement.

(d) The terms “hereof,” “hereunder,” “herein” and words of similar import will refer to this Agreement as a whole and not to any particular provision of this Agreement.

(e) Each Party has participated in the drafting of this Agreement, which each Party acknowledges is the result of extensive negotiations between the Parties, and consequently, this Agreement will be interpreted without reference to any rule or precept of Law to the effect that any ambiguity in a document be construed against the drafter.

 

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(f) To the extent any definition provided in Section 1.1 refers to a definition in the 787 Supply Agreement (each, a “ Referenced Definition ”) and the applicable Referenced Definition has embedded in it other definitions from the 787 Supply Agreement, then for purposes of interpreting the Referenced Definition such embedded definitions shall have the meanings ascribed to such terms in the 787 Supply Agreement.

(g) For the avoidance of doubt, “representations and warranties” will not be deemed to be “agreements” between the Parties for purposes of Sections 9.1(b) , 9.2(b) , 10.1(c) , 11.2(a)(ii) and 11.3(a)(ii) .

ARTICLE II

PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES

Section 2.1 Purchase of Assets and Assumption of Certain Liabilities . Upon the terms and subject to the conditions of this Agreement and the other Transaction Documents, on the Closing Date:

(a) Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase and acquire from Seller, the Purchased Assets, free and clear of all Encumbrances, other than Permitted Encumbrances; and

(b) Buyer shall assume, and agree to perform, pay and discharge, the Assumed Liabilities.

Section 2.2 Purchased and Excluded Assets .

(a) The “ Purchased Assets ” shall mean all of Seller’s right, title and interest in and to the Assets that are owned, leased, licensed, used or held for use by Seller in connection with the Business (other than the Excluded Assets), in each case wherever located, including the following:

(i) (A) the written Seller Contracts relating to the Business that are both (1) in effect as of the date hereof and (2) set forth on Schedule 2.2(a)(i) and (B) any written Contract primarily related to the Business entered into by Seller between the date hereof and the Closing in compliance with this Agreement (the “ Purchased Contracts ”);

(ii) all machinery, equipment, equipment subassemblies, tools, spare and replacement parts, packaging materials, storage and shipping materials, vehicles, computer hardware and other hardware (including servers, routers, desktops, laptops, peripherals and mobile computing devices), trade fixtures, furniture, furnishings, office equipment and supplies, telephone and communications equipment and any other fixed assets or tangible personal property used or held for use in connection with the Business, including in each case those items listed on Schedule 2.2(a)(ii) , and including all of the foregoing located at the North Charleston Facility (the “ Tangible Personal Property ”);

 

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(iii) all inventory, including raw materials, work-in-process and finished goods inventories, tooling and supplies used or held for use in connection with the Business and including any of the foregoing held in consignment, bailment, or other similar arrangement by any third party or Affiliates of Seller in connection with the Business (the “ Inventory ”), in each case as in existence on the Closing Date;

(iv) the North Charleston Facility (including all buildings, structures and improvements thereon and all fixtures attached thereto), but excluding the North Charleston Real Property;

(v) all rights to payments arising out of Purchased Contracts and all accounts and notes receivable of the Business (except to the extent arising under any Excluded Contract), however arising, including, in each case, all rights, Claims and remedies relating thereto and any related deposits, security and collateral therefor (“ Accounts Receivable ”), in each case as in existence on the Closing Date;

(vi) all of the Purchased Intellectual Property;

(vii) except as set forth on Schedule 2.2(b)(viii) , all Governmental Authorizations used or held for use by Seller in connection with the operation of the Business at the North Charleston Facility and all pending applications therefor or renewals thereof (the “ Transferred Permits ”);

(viii) all credits, prepaid expenses and other items, deferred charges, advance payments, security (including with respect to any wetland permit) and other deposits (including in respect of bonding obligations of the Business) and claims for refunds or reimbursements, in each case, relating to the Business or any of the Purchased Assets or Assumed Liabilities (except to the extent arising under any Excluded Contract);

(ix) all Claims, rights and remedies of Seller against any third parties arising out of or relating to any of the Purchased Assets or Assumed Liabilities;

(x) all rights under or pursuant to any warranties, representations and guarantees made by suppliers, manufacturers, contractors or other Persons in connection with any products or services provided to Seller in connection with the Business or with respect to any Purchased Asset (except to the extent arising under any Excluded Contract);

(xi) all books, records, ledgers, files, documents, correspondence, lists (including supplier lists and records), files, plats, specifications, surveys, drawings, advertising and promotional materials, reports (including manufacturing, research and development and production reports and records), testing results, certification materials, service and warranty records, quality records related to Products delivered to Boeing prior to the Closing Date, equipment logs, environmental, safety and health plans, policies and procedures, copies of all personnel records related to Transferred Employees (subject to Buyer obtaining any releases required by applicable Law from the Transferred Employees), and other materials and information (in whatever medium) in each case, to the extent relating exclusively to the Business or to any of the Assumed Liabilities, Purchased Assets or Purchased Intellectual Property (the “ Business Books and Records ”), in each case, as in existence as of the Closing Date; provided that Seller may retain, subject to Section 6.9 , copies of the foregoing; and

 

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(xii) all goodwill associated or arising in connection with the Business or any of the Purchased Assets, and to the extent assignable, IP addresses, telephone and fax numbers and listings for the (789) prefix.

(b) Excluded Assets . Notwithstanding the foregoing, except to the extent of rights expressly provided in the Transition Services Agreement, the Engineering Services Agreement, the SOW Supply Agreement and the Intellectual Property License Agreement, Seller will retain all right, title and interest in and to, and the Purchased Assets will not consist of, all of Seller’s right, title and interest in and to the following assets, rights or properties (the “ Excluded Assets ”):

(i) except as set forth in Section 6.13 , all cash or cash equivalents, including all marketable securities, certificates of deposit and other similar liquid Assets, at the time of the Closing;

(ii) all bank and other depository accounts and safe deposit boxes of Seller;

(iii) all refunds of and credits for Taxes, Income Taxes and other Tax assets and Tax loss carry forwards relating to any period or portion thereof ending on or prior to the Closing Date;

(iv) any Employee Benefit Plans (including any Multiemployer Plan) and Assets (including any related insurance proceeds) of, or any rights of Seller in, the Employee Benefit Plans and any Contracts that constitute (or provide for services under) Employee Benefit Plans;

(v) any of Seller’s corporate charters, franchises, seals, minute books, equity record books and other similar documents relating to the organization, governance and existence of Seller or any of its Subsidiaries;

(vi) any Contract that is not a Purchased Contract, including any Collective Bargaining Agreement, and all rights arising under such Contracts (collectively, the “ Excluded Contracts ”);

(vii) except as set forth on Schedule 2.2(a)(ii) and other than Purchased Intellectual Property, Seller’s business, assets and operations (including all assets, properties and other rights used or held for use in connection with engineering, design, supply management and business management activities) located or conducted at its Milledgeville, Georgia and Dallas, Texas facilities;

(viii) the Governmental Authorizations, pending applications therefor or renewals thereof, set forth on

Schedule 2.2(b)(viii) ;

(ix) all insurance policies of Seller related to the Business and, subject to Section 6.13 , any Claims or rights thereunder;

 

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(x) any intercompany Accounts Receivable between Seller and Seller’s Affiliates (other than Wesco Holdings, Inc. and its Subsidiaries);

(xi) (a) all Intellectual Property owned by Seller (including Background Proprietary Information of Seller and Background Invention(s) of Seller) other than the Purchased Intellectual Property and (b) all other Intellectual Property of Seller (including Background Proprietary Information of Seller and Background Invention(s) of Seller) other than the Purchased Intellectual Property (collectively, the “ Retained Intellectual Property ”);

(xii) all Tax and Income Tax books and records and all Income Tax Returns and Tax Returns of Seller;

(xiii) any securities, shares of capital stock or equity or other ownership interest of Seller in any other Person (including any Subsidiary);

(xiv) all books, records, ledgers, files, documents, correspondence, lists (including supplier lists and records), files, plats, specifications, surveys, drawings, advertising and promotional materials, reports (including manufacturing, research and development and production reports and records), testing results, certification materials, service and warranty records, equipment logs, copies of all personnel records related to Transferred Employees (for whom any release required by applicable Law has not been obtained), and other materials and information (in whatever medium), other than the Business Books and Records;

(xv) except as set forth on Schedule 2.2(a)(ii) and other than Purchased Intellectual Property, Business Books and Records and Purchased Contracts, all Assets, properties and other rights used or held for use in connection with the provision of services and conduct or performance of support functions (and the conduct or performance of functions and other activities relating to such services and functions) provided to the North Charleston Facility and the Business by the other facilities, businesses and operational or business units of Seller, including information technology, human resources, supply chain management, configuration management, benefits administration, payroll, accounting, treasury, legal, management, and other general and administrative services, as well as any other services to be provided pursuant to the Transition Services Agreement or the Engineering Services Agreement;

(xvi) all rights and Claims in respect of, arising out of or relating to any Excluded Liability;

(xvii) any interest in real property (other than the North Charleston Real Property and any interest set forth on Schedule 2.2(b)(xvii) );

(xviii) the Transaction Documents, the Non-Disclosure Agreement, the Special Initiatives Agreement, and all rights or Claims of Seller arising under or relating to the foregoing documents and agreements; and

(xix) the tangible property and other assets set forth in Schedule 2.2(b)(xix) .

 

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Section 2.3 Assumed and Excluded Liabilities .

(a) The “ Assumed Liabilities ” shall consist of any and all Liabilities of Seller to the extent arising out of, relating to or resulting from the Business (other than the Excluded Liabilities and any and all Liabilities of Seller arising out of or related to Seller’s provision of services or products to, or other dealings with, the Business from and after the Closing), including:

(i) any and all Liabilities of Seller arising out of, relating to, or incurred pursuant to, the Purchased Contracts (including any and all Seller Supply Agreements that are Purchased Contracts);

(ii) any obligations of Seller set forth in Schedule 2.3(a)(ii) or assumed by Buyer pursuant to Article VIII , in each case related to the employment of Employees who become Transferred Employees, including any obligations of Seller (A) for accrued salaries, wages and bonuses owed or payable to Transferred Employees (and related withholdings and payroll Taxes); (B) for accrued but unpaid or unused vacation of Transferred Employees; and (C) for reimbursable business expenses of Transferred Employees incurred in the ordinary course of business consistent with past practice (other than the Excluded Liabilities described in Section 2.3(b)(ii) ); and

(iii) South Carolina personal property Taxes.

(b) Excluded Liabilities . Notwithstanding anything to the contrary, Buyer shall not assume or otherwise be obligated to pay, perform or discharge the following Liabilities, except to the extent accrued in the categories listed in Appendix A and in the Adjusted Net Investment Amount on the Final Statement (all of such Liabilities not so assumed by Buyer being referred to herein as the “ Excluded Liabilities ”):

(i) any and all Environmental Claims (whether asserted before or after the Closing) arising out of, relating to or resulting from the conduct of the Business prior to the Closing;

(ii) subject to Article VIII , any and all Claims by or for the benefit of any current or former employee of the Business (whether asserted before or after the Closing) and not disclosed on the Disclosure Schedules arising out of, relating to or resulting from (A) any tort of which Seller has Knowledge committed by Seller against any employee of Seller, or breach or default by Seller of any Contract between Seller and any of its employees, of which Seller has Knowledge, or violation of any Law by Seller relating to the employment of the current or former employee asserting such Claim of which Seller has Knowledge or (B) any actual or alleged discrimination by the Company, any of its Subsidiaries or their respective supervisory employees against any such employee, in the case of each of clause (A) and clause (B), to the extent such Claim is asserted prior to the Closing or relates to conduct of Seller occurring before the Closing;

(iii) subject to Schedule 2.3(a)(ii) and Article VIII , any and all Claims arising out of, relating to or resulting from a Collective Bargaining Agreement between the Union and Seller other than any such Claims involving recall rights of laid-off employees after the Closing;

 

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(iv) except for Liabilities under or pursuant to any Purchased Contracts and except to the extent set forth in Schedule 2.3(a)(ii) or Article VIII or pursuant to the Transition Services Agreement, any and all Liabilities arising out of, relating to or resulting from any Employee Benefit Plan, any offer letter or any employee-related program, policy, funding vehicle or Contract with any employee of Seller maintained or implemented by Seller or any of its Affiliates, whether such Liability arises prior to, on or after the Closing Date;

(v) any and all Liabilities, whether such Liabilities arise prior to, on or after the Closing Date, arising out of, relating to or resulting from (A) any Multiemployer Plan of Seller or in which Seller participates (including any withdrawal Liability or other Liability related to unfunded or under-funded benefits), or (B) any obligation of Seller to provide or make available post-retirement welfare benefits or welfare benefit coverage to any current or former officer, director, stockholder or employee of the Business or Seller;

(vi) any and all Liabilities of Seller arising out of, relating to or resulting from Taxes and Income Taxes allocable to Seller under Section 7.1 hereof (except for Assumed Liabilities under Section 2.3(a)(ii) and Section 2.3(a)(iii) );

(vii) any Indebtedness, including any Guarantees not listed on Schedule 6.20 or otherwise permitted hereunder;

(viii) any and all Liabilities (other than Liabilities disclosed hereunder or in the Disclosure Schedules hereto and other than Liabilities to the extent arising out of, relating to or resulting from any infringement, misappropriation or unlawful use of any Intellectual Property of any Person by Seller in the operation of the Business prior to the Closing) arising out of, relating to or resulting from any violation of Law by Seller prior to the Closing to the extent that such Liabilities exceed, in the aggregate, $10,000,000;

(ix) any and all Liabilities not arising out of, relating to or resulting from the Business;

(x) except to the extent set forth in Schedule 2.3(a)(ii) or Article VII or pursuant to the Transition Services Agreement, any and all Liabilities of Seller to the extent arising out of, relating to or resulting from the Excluded Assets set forth in Sections 2.2(b)(i) , (ii) , (v) , (vi) , (vii) , (ix) , (x) , (xi)(b) , (xiii) , and (xviii)  (other than Liabilities for which Buyer is expressly liable pursuant to the Transition Services Agreement, the Engineering Services Agreement, the Intellectual Property License Agreement, and with respect to recall rights under the Collective Bargaining Agreement after the Closing); and

(xi) any and all Liabilities of Seller arising out of, relating to or resulting from the Excluded Assets described in Sections 2.2(b)(viii) , (xi)(a) , (xv)  and (xvii)  to the extent not related to the conduct of the Business prior to the Closing.

 

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ARTICLE III

AGGREGATE CONSIDERATION AND CLOSING

Section 3.1 Closing . The closing of the transactions contemplated by this Agreement (the “ Closing ”) will occur as promptly as practicable, but (subject to the proviso below) in no event more than three (3) Business Days, following the satisfaction or waiver of all conditions to the Closing set forth in Article IX (other than any of such conditions that by its nature is to be satisfied at the Closing, but subject to the satisfaction or waiver of such condition), at 10:00 a.m., local time, at the offices of Kirkland & Ellis LLP, 601 Lexington Avenue, New York, New York 10022, or at such other place on such other date as the Parties may agree in writing; provided that the Closing shall not occur prior to the thirteenth (13th) Business Day following the date hereof, unless otherwise agreed by the Parties in writing. The date on which the Closing actually occurs will be referred to as the “ Closing Date ,” and the Closing will be deemed effective as of 11:59 p.m., Eastern Daylight Time, on the Closing Date.

Section 3.2 Aggregate Consideration . Subject to the terms and conditions contained in this Agreement and the Termination and Mutual Release Agreement, at the Closing, Buyer shall pay to Seller an amount equal to Five Hundred Ninety-Eight Million Dollars ($598,000,000.00) (the “ Closing Payment Amount ”), which amount shall be subject to adjustment as provided in Section 3.3 below, by wire transfer of immediately available funds to the account designated in writing by Seller (the Closing Payment Amount, together with the aggregate amount of the Assumed Liabilities, sometimes being referred to herein as the “ Aggregate Consideration ”); provided , that, in the event that any Indebtedness remains outstanding under the Seller Senior Credit Facility as of the Closing Date, a portion of the Closing Payment Amount equal to the Pay-off Amount will be paid by Buyer for the account of Seller to the agent under the Seller Senior Credit Facility by wire transfer of immediately available funds to the account designated in the Pay-off Letter and such payment shall be deemed to constitute payment to Seller of a portion of the Closing Payment Amount equal to the Pay-off Amount.

Section 3.3 Estimated Aggregate Consideration Adjustment .

(a) No later than five (5) Business Days prior to the Closing Date, Seller shall deliver to Buyer a written statement (the “ Estimated Preliminary Statement ”), prepared in good faith and in accordance with the Agreed Methodology, setting forth an estimate of the Closing Adjusted Net Investment Amount (the “ Estimated Adjusted Net Investment Amount ”) in the same detail as reflected on Appendix A and including a reasonable explanation of any new line item categories not shown on Appendix A .

(b) If the Estimated Adjusted Net Investment Amount exceeds the Base Adjusted Net Investment Amount, the Closing Payment Amount shall be increased dollar-for-dollar by the amount of such excess, and if the Estimated Adjusted Net Investment Amount is less than the Base Adjusted Net Investment Amount, the Closing Payment Amount shall be reduced dollar-for-dollar by the amount of such shortfall.

 

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Section 3.4 Aggregate Consideration Adjustment .

(a) Buyer shall deliver, or cause to be delivered, to Seller as soon as practicable, but in no event more than ninety (90) days after the Closing Date, a preliminary written statement (the “ Preliminary Statement ”) setting forth the Adjusted Net Investment Amount as of the Closing Date (the “ Closing Adjusted Net Investment Amount ”), which amount shall be determined in accordance with the Agreed Methodology.

(b) Seller shall have sixty (60) days to review the Preliminary Statement from the date of its receipt thereof (the “ Review Period ”). During the Review Period, Seller shall have reasonable access during normal business hours to the books and records of the Business (and to the non-privileged work papers of Buyer relating to the Business or the Purchased Assets that were used in preparing the Preliminary Statement) to the extent required in connection with such review, subject to Section 6.9 . If Seller objects to any aspect of the Preliminary Statement, Seller shall deliver a written notice of objection (the “ Objection Notice ”) to Buyer at or prior to the expiration of the Review Period; provided that Seller may so object to the Preliminary Statement based only on the existence of mathematical errors therein, on the failure of the Preliminary Statement (or the calculations contained therein and determinations made in connection therewith) to be prepared or determined in accordance with the Agreed Methodology, or any other failure of Buyer to have complied with this Section 3.4 , and on no other basis. The Objection Notice shall specify any adjustment to the Preliminary Statement proposed by Seller and the basis therefor, including in each case the specific items proposed to be adjusted (to the extent determinable), the specific Dollar amount of each such adjustment and an explanation of how such proposed adjustment was calculated. If Seller delivers an Objection Notice to Buyer prior to the expiration of the Review Period as provided in this Section 3.4(b) , Buyer and Seller shall, for a period of thirty (30) days thereafter (the “ Resolution Period ”), exchange reasonably detailed explanations of any disagreement and attempt to resolve the matters properly contained therein, and any written resolution, signed by each of Buyer and Seller, as to any such matter shall be final, binding, conclusive and non-appealable for purposes of this Section 3.4 . Except to the extent properly challenged in an Objection Notice as provided in this Section 3.4(b) , or in the event Seller does not deliver an Objection Notice to Buyer as provided in this Section 3.4(b) prior to the expiration of the Review Period, Seller shall be deemed to have agreed to the Preliminary Statement in its entirety, which Preliminary Statement or undisputed portions thereof (as the case may be) shall be final, binding, conclusive and non-appealable for purposes of this Section 3.4 .

(c) If, at the conclusion of the Resolution Period, Buyer and Seller have not reached an agreement with respect to all disputed matters properly contained in the Objection Notice, then within ten (10) Business Days thereafter, Buyer and Seller shall submit for resolution those of such matters remaining in dispute to PricewaterhouseCoopers LLC, or if such firm is unavailable or unwilling to so serve, to a mutually acceptable nationally recognized independent accounting firm (the “ Neutral Auditor ”). The Neutral Auditor shall resolve (based solely on the written presentations of Buyer and Seller and not by independent review) only those matters submitted to it in accordance with the first sentence of this Section 3.4(c) . The resolution of any such disputed matter by the Neutral Auditor shall be limited (i) to whether the Preliminary Statement and the calculations contained therein and determinations made in connection therewith were prepared, calculated and determined with respect to such disputed

 

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matter in accordance with the Agreed Methodology and this Section 3.4 ; and (ii) if the Preliminary Statement has not been so prepared or if necessary to correct any mathematical error in computing the Adjusted Net Investment Amount, to modifying the Preliminary Statement and the calculations of the Closing Adjusted Net Investment only to the extent necessary to reflect the recalculation of such disputed matter in accordance with such Agreed Methodology. Buyer and Seller shall direct the Neutral Auditor to render a resolution of all such disputed matters within thirty (30) days after its engagement or such other period as is agreed upon in writing by Buyer and Seller. With respect to each disputed item, Buyer and Seller shall instruct the Neutral Auditor not to assign a value greater than the greatest value for such item assigned by Buyer, on the one hand, or Seller, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or Seller, on the other hand. The resolution of the Neutral Auditor shall be set forth in a written statement delivered to each of the Parties and shall be final, binding, conclusive and non-appealable for all purposes hereunder. The Preliminary Statement, once modified and/or agreed to in accordance with Section 3.4(b) or this Section 3.4(c) , shall become the “ Final Statement .”

(d) All fees and expenses relating to the work performed by the Neutral Auditor shall be split equally between the Parties, and each of them shall promptly advance to the Neutral Auditor such Party’s share of the expected fees and expenses (including any initial engagement fee) of the Neutral Auditor (as determined by the Neutral Auditor) upon the request of the Neutral Auditor. Except as provided in the preceding sentence, all other costs and expenses incurred by the Parties in connection with resolving any dispute hereunder before the Neutral Auditor shall be borne by the Party incurring such cost and expense.

(e) Amounts payable pursuant to the determination of the Closing Adjusted Net Investment Amount on the Final Statement will be paid as follows:

(i) If the Closing Adjusted Net Investment Amount as stated on the Final Statement is less than the Estimated Adjusted Net Investment Amount, then Seller shall pay to Buyer the amount by which such Closing Adjusted Net Investment Amount is less than the Estimated Adjusted Net Investment Amount, by wire transfer of immediately available funds to the account designated by Buyer in writing, within three (3) Business Days after the date on which the Preliminary Statement becomes the Final Statement.

(ii) If the Closing Adjusted Net Investment Amount as stated on the Final Statement is greater than the Estimated Adjusted Net Investment Amount, then Buyer shall pay to Seller the amount by which such Closing Adjusted Net Investment Amount is greater than the Estimated Adjusted Net Investment Amount, by wire transfer of immediately available funds to the account designated by Seller in writing, within three (3) Business Days after the date on which the Preliminary Statement becomes the Final Statement.

Section 3.5 Allocation of Aggregate Consideration .

(a) Within one hundred and twenty (120) days after the Closing Date, Buyer will provide to Seller its proposed allocation for tax purposes of the Aggregate Consideration (and all other capitalizable costs). The Aggregate Consideration shall be allocated among (i) the Purchased Assets, (ii) the termination of the 787 Supply Agreement and release of Claims and

 

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resolution of any and all rights and obligations owed to by each of Seller and Boeing to the other related to the 787 Supply Agreement pursuant to the Termination and Mutual Release Agreement, and (iii) the other rights granted by or agreements of Seller pursuant to the other Transaction Documents. The amount allocated to the Purchased Assets shall be set forth on IRS Form 8594 and any required exhibits thereto, prepared in accordance with Section 1060 of the Code (the “ Allocation Statement ”).

(b) Seller will review the Allocation Statement and, to the extent Seller in good faith disagrees with the content of the Allocation Statement, Seller will, within sixty (60) days after receipt of the Allocation Statement, provide written notice to Buyer of such disagreement or will be deemed to have indicated its concurrence therewith. Buyer and Seller will attempt in good faith to resolve any such disagreement. If Buyer and Seller are unable to reach a good faith agreement as to the content of the Allocation Statement within thirty (30) days after Buyer’s receipt of Seller’s written notice of disagreement, Buyer and Seller will each file its own IRS Form 8594 using its own allocation statement consistent with its own allocation of the Aggregate Consideration.

(c) If Seller and Buyer agree on the Allocation Statement or any modification thereof, Seller and Buyer will report the allocation of the total consideration among the Purchased Assets in a manner consistent with such Allocation Statement or modification and will act in accordance with such Allocation Statement in the preparation and timely filing of all Income Tax Returns (including Form 8594 with their respective federal Income Tax Returns for the taxable year that includes the Closing Date and any other forms or statements required by the Code, the IRS or any applicable Tax Authority). Seller and Buyer agree to promptly provide the other Party with any additional information and reasonable assistance required to complete Form 8594 or compute Income Taxes arising in connection with (or otherwise affected by) the transaction contemplated hereunder.

(d) Buyer and Seller will promptly inform each other in writing of any challenge by any Governmental Entity to any allocation made pursuant to this Section 3.5 and each agrees to consult with and keep the other informed with respect to the status of, and any discussion, proposal or submission with respect to, any such challenge.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer as follows:

Section 4.1 Organization and Qualification . Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Seller has the requisite corporate power and authority to own, lease, sublease or otherwise hold and operate the Purchased Assets and to carry on the Business as presently conducted. Seller is duly qualified or licensed and is in good standing to do business in each jurisdiction where Seller conducts its business or where the character of the properties owned, leased, subleased or operated by Seller or the nature of its business makes such qualification, licensing or good standing necessary, except where the failure to be so qualified, licensed or in good standing would not have and

 

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would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Seller has made available to Buyer complete and correct copies of the certificate of incorporation and bylaws of Seller.

Section 4.2 Authorization; Enforceability . Seller has the requisite corporate power and authority to enter into, execute and deliver this Agreement and each other Transaction Document to which it is a party, to perform all of the obligations to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and each other Transaction Document to which it is a party, the performance of its obligations hereunder and thereunder and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action, and no other corporate action or proceeding is necessary to authorize the execution and delivery of this Agreement and each other Transaction Document to which Seller is a party, the performance of its obligations hereunder and thereunder or the consummation of the transactions contemplated hereby and thereby. This Agreement has been, and each of the other Transaction Documents to which Seller is a party will have been at the Closing, duly authorized, executed and delivered by Seller and, assuming due authorization, execution and delivery by Buyer, this Agreement constitutes, and each of the other Transaction Documents will constitute at Closing, Seller’s valid and binding obligation, enforceable against it in accordance with its respective terms, subject only to (i) applicable bankruptcy, insolvency, reorganization and moratorium Laws and other Laws of general application affecting enforcement of creditors’ rights generally and (ii) rules or Laws governing specific performance, injunctive relief and other equitable remedies.

Section 4.3 No Conflicts .

(a) Neither the execution and delivery of this Agreement or the other Transaction Documents to which Seller is a party nor the performance by Seller hereunder and thereunder conflicts or will conflict with or result in a material breach or violation of any of the terms or provisions of its organizational documents or result in the material breach or violation of any of the terms or provisions of, or constitute a default under, or accelerate the performance required by the terms of any Seller Contract, except as would not reasonably be expected to prevent or materially delay the consummation of the transactions contemplated hereby, nor will any such action result in any material violation of the provisions of any material Law. The execution and delivery by Seller of this Agreement and the other Transaction Documents to which Seller is a party and the performance by Seller of its obligations hereunder and thereunder will not require any additional consent or approval of, or any filing or registration with, any creditor of Seller, any Governmental Entity or any party to any Material Contract, except for the Consents and Governmental Authorizations set forth on Schedule 4.3(a) , and except as would not reasonably be expected to prevent or materially delay the consummation of the transactions contemplated hereby. Neither the execution and delivery by Seller of this Agreement and the other Transaction Documents to which Seller is a party nor the performance by Seller hereunder and thereunder require the Consent (either as a matter of law, contractual obligation or otherwise) of any of Seller’s stockholders.

 

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(b) The consummation of the transactions contemplated by this Agreement and the other Transaction Documents will not (i) conflict with, violate or result in a breach of any term or provision of Seller’s organizational documents, (ii) materially conflict with or violate any Law applicable to the Business, or by which any Purchased Asset is bound or affected, (iii) result in the creation of any material Encumbrance on the Business or any material Purchased Asset, or (iv) except as provided on Schedule 4.3(b) , require any Consent or approval under, result in any material breach of or any loss of any material benefit under, or modify, accelerate or terminate any rights or obligations under, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any right of termination, vesting, amendment, acceleration or cancellation pursuant to, any Material Contract or material Transferred Permit.

Section 4.4 Financial Information . The calculation of the Adjusted Net Investment Amount as of March 29, 2009 attached hereto as Appendix A reflects numbers used to prepare Seller’s GAAP financials and was prepared in accordance with (a) the books and records of Seller and its Subsidiaries and (b) the accounting practices, policies and methodologies used by Seller in preparing its internal, unaudited financial statements. Schedule 4.4 sets forth copies of internal, unaudited balance sheets of the Business as of December 31, 2007 and 2008 and the three (3)-month period ended March 29, 2009 and the related statements of income and cash flows for the periods then ended and Seller’s estimate of the Adjusted Net Investment Amount as of December 31, 2008 and 2007 (together with the internal, unaudited balance sheets of the Business as of April 26, 2009 and May 31, 2009 and the related statements of income and cash flows for the periods then ended, the “ Financial Information ”). The Financial Information was prepared in the ordinary course of business in accordance with (A) the books and records of Seller and its Subsidiaries and (B) the accounting practices, policies and methodologies used by Seller in preparing its internal, unaudited financial statements. Buyer acknowledges that the Financial Information was not prepared in accordance with GAAP, does not include all of the information required to be provided on a balance sheet or statement of income or cash flow prepared in accordance with GAAP, includes estimates (which were based upon assumptions that management believed to be reasonable at the time made) and does not purport to present fairly the financial position, results of operations or cash flows of the Business but does represent Seller’s good faith estimate of the Adjusted Net Investment Amount as of March 29, 2009.

Section 4.5 Absence of Certain Developments . Except as set forth on Schedule 4.5 , from January 1, 2009 through the date of this Agreement:

(a) Seller has conducted the Business, in all material respects, in the ordinary course of business consistent with past practice;

(b) none of the Purchased Assets has sustained or incurred any material loss or damage (whether or not insured against) on account of fire, flood, accident or other calamity;

(c) Seller has not moved any material tangible Assets or transferred or relocated any employees of the Business or limited or transitioned any material business activities utilized in satisfying its obligations under the 787 Supply Agreement, in each case, from the North Charleston Facility to any other location, except for such Assets, employees or business activities that have been subsequently returned to the North Charleston Facility as of the date of this Agreement;

 

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(d) Seller has not adopted, materially increased, terminated, materially amended or otherwise materially modified any Employee Benefit Plan other than in the ordinary course of business consistent with past practice or as required by applicable Law;

(e) Seller has not changed any accounting methods or practices (including any change in depreciation or amortization policies or rates);

(f) Seller has not entered into any Contracts or transactions or changed, modified or amended any Contracts or transactions with any of Seller’s Affiliates that are involved in the Business or any directors, managers, officers or employees of the Business;

(g) Seller has not taken any action which, if taken after the date hereof, would be a breach of Section 6.2(b) (other than Section 6.2(b)(viii) ); and

(h) Seller has not committed to, or entered into any Contract to, do any of the foregoing.

Section 4.6 Absence of Undisclosed Liabilities . As of December 31, 2008, Seller had no material Liabilities that would be included in the Assumed Liabilities and would be required to be reflected in balance sheets (including the notes thereto) of the Business prepared in accordance with GAAP, other than such Liabilities reflected on Schedule 4.6 . Since December 31, 2008, Seller has not incurred any material Liabilities that would be included in the Assumed Liabilities and would be required to be reflected in balance sheets (including, as of the date of this Agreement, the notes thereto) prepared in accordance with GAAP, except (a) as disclosed on Schedule 4.6 or the other Schedules hereto, (b) Liabilities incurred in the ordinary course of business since December 31, 2008 (to the Knowledge of Seller, as of the date of this Agreement, none of which is a Liability for breach of warranty, tort or infringement), or (c) Liabilities under the Transaction Documents.

Section 4.7 Title; Sufficiency and Condition of Assets . Except as disclosed on Schedule 4.7 , Seller owns all right, title and interest in and to all material Assets owned, leased, licensed, used or held for use by Seller in connection with the Business (other than any Intellectual Property or any Licensed Intellectual Property, both of which are addressed in Section 4.10 , and any Excluded Assets), free and clear of all Encumbrances, except Permitted Encumbrances and Outstanding Encumbrances. Upon delivery of the Purchased Assets to Buyer and payment to Seller of the Closing Payment Amount, Buyer will acquire good and valid title to such Purchased Assets (other than any Intellectual Property or any Licensed Intellectual Property, both of which are addressed in Section 4.10 ) free and clear of all Encumbrances, except Permitted Encumbrances and Outstanding Encumbrances and Encumbrances created by Buyer. Except as disclosed on Schedule 4.7 , the Purchased Assets, together with the Assets used to provide services under the Transaction Documents, and the rights granted to Buyer under this Agreement and the other Transaction Documents, constitute all material Assets (other than any Intellectual Property or any Licensed Intellectual Property, both of which are addressed in Section 4.10 , and any Excluded Assets) necessary to conduct the Business substantially as conducted by Seller as of the date of this Agreement. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, all Tangible Personal Property included in the Purchased Assets, taken as a whole, is in reasonable operating condition and repair (after allowing for ordinary wear and tear).

 

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Section 4.8 Inventory . Except as described on Schedule 4.8 , all Inventory (a) was acquired or produced in the ordinary course of business consistent with past practice; (b) contains all appropriate forms of identification necessary to be in material compliance with applicable Laws requiring configuration records to be maintained with respect to such Inventory; and (c) is free and clear of all Encumbrances, except for Permitted Encumbrances and Outstanding Encumbrances.

Section 4.9 Real Property .

(a) Seller does not own fee simple title to, or hold any leasehold interest in, any real property used or held for use by Seller in connection with the Business, except as set forth in Schedule 4.11(a)(vii) .

(b) North Charleston Sublease .

(i) Seller has a valid subleasehold interest in and to the North Charleston Real Property free and clear of any Encumbrances, except for Permitted Encumbrances and Outstanding Encumbrances.

(ii) Other than the interest granted to GA under the GA Sublease, Seller is in full and complete possession of the North Charleston Real Property described in the North Charleston Sublease and, other than the interest granted to GA under the GA Sublease, Seller has neither assigned nor sublet any portion thereof.

(iii) Except pursuant to the Seller Senior Credit Agreement, Seller has not assigned its interest as sub ground lessee (as defined in the North Charleston Sublease) under the North Charleston Sublease to any other party.

(iv) To Seller’s Knowledge, there are no third parties with (A) rights of first refusal to lease the North Charleston Real Property that have not either waived or released such rights, or (B) other rights to lease the North Charleston Real Property, that have not either waived or released such rights.

(c) Facilities . Other than with respect to Facilities contained within the area subject to the GA Sublease:

(i) Except to the extent leased pursuant to a Material Contract, Seller owns the Facilities free and clear of any Encumbrances except for Permitted Encumbrances and Outstanding Encumbrances.

(ii) To Seller’s Knowledge, the Facilities are connected to and/or serviced by water, sewage disposal, waste disposal, gas and electric service for the Business’ operations therein.

 

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(d) GA Sublease . The GA Sublease (i) has been duly authorized, validly executed and delivered by Seller and (ii) is valid and in full force and effect in accordance with its terms against Seller. There is not any existing material default or event of default (or event that with notice or lapse of time, or both, would constitute a default) of the GA Sublease by Seller.

(e) Ground Lease .

(i) To Seller’s Knowledge, (A) the Ground Lease has been duly authorized, validly executed and delivered by the parties thereto, (B) the Ground Lease is valid and in full force and effect in accordance with its terms against the parties thereto, and (C) there is not, under such Ground Lease, any existing material default or event of default (or event that with notice or lapse of time, or both, would constitute a default) by the parties to the Ground Lease.

(ii) To Seller’s Knowledge, as of the date of this Agreement, the Ground Lease has not been modified, orally or in writing, since execution, and no modifications are requested or pending in writing.

(iii) To Seller’s Knowledge, there is no dispute in writing between the Charleston County Aviation Authority and SCPR concerning the Ground Lease.

(iv) Seller has completed, or caused the completion of, all construction obligations of “Operator” under the Ground Lease, including those set forth in Section 4.06(D) of the Ground Lease.

Section 4.10 Intellectual Property .

(a) Schedule 4.10(a) sets forth a complete and accurate list as of the date of this Agreement of all of the following Intellectual Property that is included in the Purchased Intellectual Property or the Intellectual Property licensed to Buyer under the Intellectual Property License Agreement: (i) all patented or registered Intellectual Property; (ii) all pending patent applications or other applications for registration of Intellectual Property; and (iii) all material Software (other than firmware). Schedule 4.10(a) also includes an indication of whether each listed item constitutes Purchased Intellectual Property or Retained Intellectual Property.

(b) Other than such right, title and interest that is owned or licensed by Buyer and its Affiliates, Seller owns all right, title and interest in and to all of the Purchased Intellectual Property and Intellectual Property licensed to Buyer under the Intellectual Property License Agreement, including the Intellectual Property set forth on Schedule 4.10(a) , free and clear of (i) all security interests, pledges or other consensual liens granted by Seller and (ii) to the Knowledge of Seller, all other Encumbrances, except, in the case of the foregoing clauses (i) and (ii), for Permitted Encumbrances and Outstanding Encumbrances. To the Knowledge of Seller, Seller possesses a valid and enforceable right to use the Licensed Intellectual Property. Except as set forth on Schedule 4.10(b) , each Inbound License Agreement constitutes a legal, valid, binding and enforceable obligation of Seller and, to Seller’s Knowledge, of the other party or parties thereto and is enforceable in accordance with its terms, subject only to applicable bankruptcy, insolvency, reorganization and moratorium Laws and other Laws of general

 

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application affecting enforcement of creditors’ rights generally. Except for the Intellectual Property used by Seller to provide services pursuant to the Transition Services Agreement, the Intellectual Property licensed to Buyer pursuant to the Intellectual Property License Agreement and the Purchased Intellectual Property, together with any Licensed Intellectual Property and the other rights granted to Buyer under the Transaction Documents, includes all of the material Intellectual Property necessary to the conduct of the Business as currently conducted by Seller. None of Section 4.10(b) is intended to address infringement or misappropriation of Intellectual Property of any Person because those issues are addressed exclusively in Section 4.10(c).

(c) To the Knowledge of Seller in each case (i) Seller has not, in the operation of the Business, in any material respect infringed, misappropriated or otherwise made any unlawful or unauthorized use of any Intellectual Property of any Person, (ii) the operation of the Business as currently conducted does not, in any material respect infringe, misappropriate or otherwise make any unlawful or unauthorized use of any Intellectual Property of any Person, and (iii) the products sold and services performed by Seller in connection with the Business do not, and the manufacture, use, or sale of such products or performance of such services does not, in any material respect infringe, misappropriate or otherwise make any unlawful or unauthorized use of any Intellectual Property of any Person. To the Knowledge of Seller, Seller has not, as of the date of this Agreement or in the past five (5) years immediately preceding the date of this Agreement, received any written notices or other communications claiming, alleging or suggesting infringement, misappropriation or other unlawful or unauthorized usage of any Intellectual Property of any Person with respect to the Business (including any demands or offers to license any Intellectual Property from any Person). The Parties agree that Seller shall have no liability for breaches of the two preceding sentences to the extent any infringement, misappropriation or unlawful use of any Intellectual Property of any Person would not have occurred if Seller had signed Contracts noted as unsigned on Schedule 2.2(a)(i) . To Seller’s Knowledge, no other Person is infringing, misappropriating or otherwise making any unlawful or unauthorized use of any Licensed Intellectual Property for which Seller has the right to enforce or any Purchased Intellectual Property.

(d) Seller has used commercially reasonable efforts to protect the confidentiality of any Purchased Intellectual Property of a confidential nature (including Trade Secrets and source code). Without limiting the generality of the foregoing, Seller has, and uses commercially reasonable efforts to enforce, a policy requiring, each (i) employee, individual consultant and individual contractor involved in design or development relating to the 787 Program to execute a written agreement protecting the confidentiality of any information of a confidential nature and requiring such Person to assign all Intellectual Property related to the Business to Seller (“ Confidentiality and Assignment Agreements ”) (the forms of which are set forth on Schedule 4.10(d) ), and (ii) employee, individual consultant of Seller working onsite at Seller’s facility and individual contractor of Seller working onsite at Seller’s facility that has access to material confidential information relating to the 787 Program to execute a Confidentiality and Assignment Agreement. Without limiting the generality of the foregoing, to the Knowledge of Seller, except as set forth on Schedule 4.10(d) , (A) all current and former employees, individual consultants and individual contractors of Seller involved in design or development relating to the 787 Program have executed agreements substantially the same in substance as the Confidentiality and Assignment Agreements and (B) all current and former employees of Seller, individual consultants of Seller working onsite at Seller’s facility and

 

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individual contractors of Seller working onsite at Seller’s facility that have access to material confidential information relating to the 787 Program have executed agreements substantially the same in substance as the Confidentiality and Assignment Agreements. None of the Purchased Intellectual Property has been adjudged invalid or unenforceable, and to the Knowledge of Seller, all of the Purchased Intellectual Property that is referred to in Section 4.10(a)(i) is valid, enforceable and subsisting. Seller has not, as of the date of this Agreement or during the five-year period immediately preceding the date of this Agreement, received any written notice or other written communication claiming, alleging or suggesting that any of the Purchased Intellectual Property i