Back to top

JOINT VENTURE MASTER AGREEMENT

Joint Venture JV Agreement

JOINT VENTURE MASTER AGREEMENT | Document Parties: LOCKHEED MARTIN CORP | THE BOEING COMPANY You are currently viewing:
This Joint Venture JV Agreement involves

LOCKHEED MARTIN CORP | THE BOEING COMPANY

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: JOINT VENTURE MASTER AGREEMENT
Governing Law: Delaware     Date: 7/28/2005
Industry: Aerospace and Defense     Law Firm: Lockheed Martin Corporation; King Spalding LLP; Chadbourne Parke LLP     Sector: Capital Goods

50 of the Top 250 law firms use our Products every day

Exhibit 10.2

 


 

JOINT VENTURE MASTER AGREEMENT

 

Dated as of May 2, 2005

 

By and Among

 

LOCKHEED MARTIN CORPORATION,

 

THE BOEING COMPANY

 

and

 

A DELAWARE LIMITED LIABILITY COMPANY TO BE FORMED

 



TABLE OF CONTENTS

 

 

 

 

 

 

 

  

 

  

PAGE


 

ARTICLE I

  

DEFINITIONS

  

1

 

 

 

        S ECTION  1.01

  

        D EFINITIONS .

  

1

 

 

 

ARTICLE II

  

THE JOINT VENTURE

  

1

 

 

 

        S ECTION  2.01

  

        O RGANIZATION OF THE C OMPANY .

  

1

        S ECTION 2.02

  

        O PERATING A GREEMENT .

  

1

        S ECTION 2.03

  

        N AME .

  

2

        S ECTION 2.04

  

        P RINCIPAL P LACE OF B USINESS .

  

2

        S ECTION 2.05

  

        O THER F ACILITIES .

  

2

        S ECTION 2.06

  

        M EMBERS

  

2

        S ECTION 2.07

  

        B OARD OF D IRECTORS AND O FFICERS .

  

2

        S ECTION 2.08

  

        P URPOSE OF THE C OMPANY

  

2

        S ECTION 2.09

  

        T ERM .

  

3

        S ECTION 2.10

  

        T AX T REATMENT .

  

3

        S ECTION 2.11

  

        I NDEPENDENT O PERATION OF C OMPANY .

  

4

        S ECTION 2.12

  

        C OMPLIANCE WITH A PPLICABLE L AW .

  

4

 

 

 

ARTICLE III

  

TRANSACTIONS AND CLOSING

  

4

 

 

 

        S ECTION 3.01

  

        C LOSING T RANSACTIONS .

  

4

        S ECTION  3.02

  

        C LOSING .

  

6

        S ECTION 3.03

  

        O PENING S TATEMENT .

  

6

        S ECTION 3.04

  

        A DJUSTMENT OF C ONTRIBUTIONS .

  

6

        S ECTION 3.05

  

        A SSIGNMENT OF C ONTRACTS AND R IGHTS .

  

9

 

 

 

ARTICLE IV

  

REPRESENTATIONS AND WARRANTIES

  

9

 

 

 

        S ECTION 4.01

  

        R EPRESENTATIONS AND W ARRANTIES OF L OCKHEED M ARTIN .

  

9

        S ECTION 4.02

  

        R EPRESENTATIONS AND W ARRANTIES OF B OEING .

  

9

        S ECTION 4.03

  

        R EPRESENTATIONS AND W ARRANTIES OF THE C OMPANY .

  

10

 

 

 

ARTICLE V

  

COVENANTS AND AGREEMENTS OF THE PARTIES

  

10

 

 

 

        S ECTION 5.01

  

        C ONDUCT OF ELV B USINESSES .

  

10

        S ECTION 5.02

  

        C ONDUCT OF B USINESS OF THE C OMPANY .

  

10

        S ECTION 5.03

  

        A CCESS TO I NFORMATION ; C ONFIDENTIALITY .

  

10

        S ECTION 5.04

  

        P ROVISION AND P RESERVATION OF AND A CCESS TO C ERTAIN I NFORMATION ; C OOPERATION A FTER C LOSING .

  

12

        S ECTION 5.05

  

        I NSURANCE .

  

14

        S ECTION 5.06

  

        N ON -H IRE AND N ONSOLICITATION OF C ERTAIN E MPLOYEES .

  

15

        S ECTION 5.07

  

        F INANCIAL S UPPORT A RRANGEMENTS .

  

17

        S ECTION 5.08

  

        C ERTAIN I NTELLECTUAL P ROPERTY M ATTERS .

  

17

        S ECTION 5.09

  

        N OVATION OF G OVERNMENT C ONTRACTS .

  

20

        S ECTION 5.10

  

        C OMPANY F INANCING

  

21

        S ECTION 5.11

  

        C OMPETITIVE B USINESSES .

  

21

        S ECTION 5.12

  

        S TAY OF C IVIL P ROCEEDING .

  

21

        S ECTION 5.13

  

        N ON -C OMPETITION A GREEMENT .

  

23

        S ECTION 5.14

  

        S PACEPORT L EASE .

  

25

        S ECTION 5.15

  

        C OMPLIANCE WITH A DMINISTRATIVE A GREEMENT .

  

26

 

 

 

ARTICLE VI

  

FURTHER COVENANTS AND AGREEMENTS OF THE PARTIES

  

27

 

 

 

        S ECTION  6.01

  

        F URTHER A SSURANCES .

  

27

        S ECTION 6.02

  

        C ERTAIN F ILINGS ; C ONSENTS .

  

27


 

 

 

 

 

        S ECTION  6.03

  

        P UBLIC A NNOUNCEMENTS .

  

27

        S ECTION 6.04

  

        A NTITRUST L AWS .

  

27

        S ECTION 6.05

  

        A GREEMENTS R EGARDING T AX M ATTERS .

  

28

        S ECTION 6.06

  

        A DMINISTRATION OF A CCOUNTS .

  

30

        S ECTION 6.07

  

        C LEARANCES ; U NDISCLOSED C ONTRACTS .

  

30

        S ECTION 6.08

  

        A UDITS .

  

30

        S ECTION 6.09

  

        C ERTAIN E NVIRONMENTAL M ATTERS .

  

30

        S ECTION 6.10

  

        P AYMENTS R ELATING TO C ERTAIN P RE -C LOSING A CTIVITIES .

  

34

 

 

 

ARTICLE VII

  

TRANSACTION DOCUMENTS

  

34

 

 

 

        S ECTION 7.01

  

        T RANSACTION D OCUMENTS

  

34

 

 

 

ARTICLE VIII

  

EMPLOYEE AND EMPLOYEE BENEFIT MATTERS

  

34

 

 

 

        S ECTION 8.01

  

        E MPLOYEE AND E MPLOYEE B ENEFIT M ATTERS .

  

34

 

 

 

ARTICLE IX

  

REAL PROPERTY AND RELATED MATTERS

  

34

 

 

 

        S ECTION 9.01

  

        C ERTAIN R EAL P ROPERTY AND R ELATED M ATTERS .

  

34

 

 

 

ARTICLE X

  

CONDITIONS TO CLOSING

  

35

 

 

 

        S ECTION 10.01

  

        C ONDITIONS TO O BLIGATIONS OF E ACH M EMBER .

  

35

        S ECTION 10.02

  

        C ONDITIONS TO O BLIGATIONS OF L OCKHEED M ARTIN .

  

36

        S ECTION 10.03

  

        C ONDITIONS TO O BLIGATIONS OF B OEING .

  

37

        S ECTION 10.04

  

        U PDATED D ISCLOSURE S CHEDULES .

  

37

        S ECTION 10.05

  

        MAE E XCEPTIONS .

  

38

 

 

 

ARTICLE XI

  

SURVIVAL; INDEMNIFICATION

  

38

 

 

 

        S ECTION 11.01

  

        S URVIVAL .

  

38

        S ECTION 11.02

  

        I NDEMNIFICATION .

  

39

        S ECTION 11.03

  

        P ROCEDURES .

  

40

        S ECTION 11.04

  

        L IMITATIONS .

  

42

        S ECTION 11.05

  

        R ECOVERY UNDER C ONTRACTS .

  

43

 

 

 

ARTICLE XII

  

TERMINATION

  

45

 

 

 

        S ECTION 12.01

  

        T ERMINATION .

  

45

        S ECTION 12.02

  

        E FFECT OF T ERMINATION .

  

45

        S ECTION 12.03

  

        N ON -E XCLUSIVE R EMEDIES .

  

46

 

 

 

ARTICLE XIII

  

MISCELLANEOUS

  

46

 

 

 

        S ECTION 13.01

  

        N OTICES .

  

46

        S ECTION 13.02

  

        A MENDMENTS ; W AIVERS .

  

48

        S ECTION 13.03

  

        E XPENSES ; T AXES .

  

48

        S ECTION 13.04

  

        S UCCESSORS AND A SSIGNS .

  

48

        S ECTION 13.05

  

        D ISCLOSURE .

  

49

        S ECTION 13.06

  

        C ONSTRUCTION .

  

49

        S ECTION 13.07

  

        E NTIRE A GREEMENT .

  

49

        S ECTION 13.08

  

        G OVERNING L AW .

  

50

        S ECTION 13.09

  

        C OUNTERPARTS ; E FFECTIVENESS .

  

50

        S ECTION 13.10

  

        S EVERABILITY .

  

50

        S ECTION 13.11

  

        C APTIONS .

  

50

        S ECTION 13.12

  

        B ULK S ALES .

  

51

        S ECTION 13.13

  

        D ISCLAIMER OF A GENCY .

  

51

        S ECTION 13.14

  

        D ISPUTE R ESOLUTION .

  

51

        S ECTION 13.15

  

        J URISDICTION .

  

53

        S ECTION 13.16

  

        C ONSEQUENTIAL D AMAGES .

  

53

        S ECTION 13.17

  

        P ERFORMANCE .

  

53

 

-ii-


 

 

 

LIST OF EXHIBITS

 

 

Exhibit A

    

                                     Definitions

Exhibit B

    

                                    Representations and Warranties of Lockheed Martin

Exhibit C

    

                                    Representations and Warranties of Boeing

Exhibit D

    

                                    Representations and Warranties of the Company

Exhibit E

    

                                    Employee and Employee Benefit Matters

 

LIST OF ATTACHMENTS

 

 

Attachment I-A

    

                                    Lockheed Martin Opening Statement

Attachment I-B

    

                                    Boeing Opening Statement

Attachment II

    

                                    Form of Certificate of Formation

Attachment III

    

                                    Form of Joinder to Joint Venture Master Agreement

Attachment IV

    

                                    Form of Operating Agreement

Attachment V-A

    

                                    Form of Lockheed Martin Contribution and Assumption Agreement

Attachment V-B

    

                                    Form of Boeing Contribution and Assumption Agreement

Attachment VI

    

                                    Form of Interim Operating Agreement

Attachment VII

    

                                    Form of Atlas Commercial Sales and Marketing Agreement with Term Sheet

Attachment VIII

    

                                    Form of Delta Commercial Sales and Marketing Agreement with Term Sheet

Attachment IX

    

                                    Denver Lease Agreement Term Sheet

Attachment X

    

                                    Form of Joint Signing Press Release

Attachment XI

    

                                    Material Consents

Attachment XII

    

                                    Form of Settlement Agreement

Attachment XIII

    

                                    Delta Inventory Supply Agreement Term Sheet

 

LIST OF SCHEDULES

 

Transaction Agreement Schedules

 

 

Schedule 3.04(c)

    

                                    Lockheed Martin Threshold Amount

Schedule 3.04(d)

    

                                    Boeing Threshold Amount

Schedule 5.01

    

                                    Conduct of ELV Businesses

Schedule 5.06(a)

    

                                    Initial Lockheed Martin Business Employees

Schedule 5.06(b)

    

                                    Initial Boeing Business Employees

Schedule 11.02(a)

    

                                    Lockheed Martin Special Indemnity Items

Schedule 11.02(b)

    

                                    Boeing Special Indemnity Items

Schedule A-1

    

                                    Contributed Leased Real Property

Schedule A-2

    

                                    Contributed Owned Real Property

 

-iii-


 

 

 

Schedule A-3

    

                                    Knowledge Groups

Schedule A-4

    

                                    Excluded Inventory

Schedule E.01

    

                                    Excluded Employees; Inactive Employees

Schedule E.05(e)

    

                                    Form of Amendment and Continuation of Pension Plan Agreement

Schedule E.05(f)

    

                                    Form of Pension Asset Transfer

Schedule E.05(g)

    

                                    Form of Amendment and Continuation of Pension Plan Agreement

Schedule E.14-1

    

                                    Certain Collective Bargaining Agreements

Schedule E.14-2

    

                                    Certain Collective Bargaining Agreements

Schedule E.14-3

    

                                    Certain Collective Bargaining Agreements

 

Lockheed Martin Disclosure Schedules

 

 

Schedule B.03

    

                                    Governmental Authorization

Schedule B.04

    

                                     Non-Contravention

Schedule B.05

    

                                    Opening Statement

Schedule B.06

    

                                    Absence of Certain Changes

Schedule B.07

    

                                    Sufficiency of and Title to Contributed Assets

Schedule B.08

    

                                    No Undisclosed Liabilities

Schedule B.09

    

                                     Litigation

Schedule B.10

    

                                    Material Contracts

Schedule B.11

    

                                    Licenses and Permits

Schedule B.13

    

                                    Environmental Compliance

Schedule B.14

    

                                    Compliance with Laws

Schedule B.15

    

                                    Intellectual Property

Schedule B.16

    

                                    Taxes

Schedule B.17

    

                                    Employee Benefit Matters

Schedule B.18

    

                                    Government Contracts and Government Bids

Schedule B.19

    

                                    Government-Furnished Property or Equipment

Schedule B.20

    

                                    Backlog

Schedule B.21

    

                                    Labor and Employment Matters

Schedule B.22

    

                                    Product Warranties

Schedule B.23

    

                                     Insurance

Schedule B.24

    

                                     Clearances

Schedule B.25

    

                                    Foreign Corrupt Practices Act

Schedule B.26

    

                                    Export Control Laws

Schedule B.29

    

                                    Undisclosed Contracts

 

Boeing Disclosure Schedules

 

 

Schedule C.03

    

                                    Governmental Authorization

Schedule C.04

    

                                     Non-Contravention

Schedule C.05

    

                                    Opening Statement

Schedule C.06

    

                                    Absence of Certain Changes

Schedule C.07

    

                                    Sufficiency of and Title to Contributed Assets

 

-iv-


 

 

 

Schedule C.08

    

                                    No Undisclosed Liabilities

Schedule C.09

    

                                     Litigation

Schedule C.10

    

                                    Material Contracts

Schedule C.11

    

                                    Licenses and Permits

Schedule C.13

    

                                    Environmental Compliance

Schedule C.14

    

                                    Compliance with Laws

Schedule C.15

    

                                    Intellectual Property

Schedule C.16

    

                                    Taxes

Schedule C.17

    

                                    Employee Benefit Matters

Schedule C.18

    

                                    Government Contracts and Government Bids

Schedule C.19

    

                                    Government-Furnished Property or Equipment

Schedule C.20

    

                                    Backlog

Schedule C.21

    

                                    Labor and Employment Matters

Schedule C.22

    

                                    Product Warranties

Schedule C.23

    

                                     Insurance

Schedule C.24

    

                                     Clearances

Schedule C.25

    

                                    Foreign Corrupt Practices Act

Schedule C.26

    

                                    Export Control Laws

Schedule C.28

    

                                    Undisclosed Contracts

 

Company Disclosure Schedules

 

 

Schedule D.03

    

                                    Governmental Authorization

Schedule D.04

    

                                     Non-Contravention

 

-v-


JOINT VENTURE MASTER AGREEMENT

 

This Joint Venture Master Agreement (together with the Exhibits, Schedules and Attachments hereto, this “ Agreement ”) is made as of the 2 nd day of May 2005, by and among Lockheed Martin Corporation, a Maryland corporation (“ Lockheed Martin ”), The Boeing Company, a Delaware corporation (“ Boeing ”), and, subject to Section 2.01 hereof, a Delaware limited liability company to be formed (the “ Company ”). Lockheed Martin and Boeing are sometimes referred to herein as a “ Member ” or collectively as the “ Members .” The Members and the Company are sometimes referred to herein as a “ Party ” or collectively as the “ Parties .”

 

W I T N E S S E T H :

 

WHEREAS, each of the Members, among other things, is a developer and manufacturer of certain expendable launch vehicle systems and a supplier of related Launch Services to the U.S. Government;

 

WHEREAS, the Members desire to form a joint venture to develop and manufacture integrated ELV Systems and supply related Launch Services to the U.S. Government;

 

WHEREAS, the Members intend for the joint venture to maintain each of the Members’ independent ELV System platforms and thereby support assured access to space while operating as a combined entity to enhance operating efficiencies and reduce costs; and

 

WHEREAS, in furtherance of the objectives set forth above, the Parties desire to enter into this Agreement and the other Transaction Documents;

 

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

 

ARTICLE I

DEFINITIONS

 

Section 1.01 Definitions . Capitalized terms used in this Agreement shall have the meanings specified in Exhibit A or elsewhere in this Agreement.

 

ARTICLE II

THE JOINT VENTURE

 

Section 2.01 Organization of the Company . Prior to the Closing, the Members shall cause the Company to be formed as a Delaware limited liability company by filing a certificate of formation with the Secretary of State of the State of Delaware substantially in the form attached hereto as Attachment II (the “ Certificate of Formation ”). On or before the Closing Date, the Members shall cause the Company to execute a joinder to this Agreement as a Party hereto in the form attached hereto as Attachment III (the “ Joinder ”).

 

Section 2.02 Operating Agreement . From the date of its formation until the Closing Date, the affairs of the Company shall be governed by an interim Operating Agreement


substantially in the form attached hereto as Attachment VI (the “ Interim Operating Agreement ”). On the Closing Date, each of the Members shall execute and deliver an Amended and Restated Operating Agreement governing the affairs of the Company and the conduct of the Company’s business substantially in the form attached hereto as Attachment IV (the “ Operating Agreement ”), which Operating Agreement shall amend and replace in its entirety the Interim Operating Agreement.

 

Section 2.03 Name . The name of the Company shall be as mutually agreed by the Members prior to the Closing.

 

Section 2.04 Principal Place of Business . The principal place of business of the Company shall be located at 12257 S. Wadsworth Blvd., Littleton, Colorado 80125. The headquarters, engineering and administrative functions of the Company shall be performed at the Company’s principal place of business. The principal place of business of the Company may be transferred from time to time to such other place as may be designated by the Board in accordance with the terms and conditions of the Operating Agreement.

 

Section 2.05 Other Facilities . The Company’s principal manufacturing operations shall be performed at 100 Decatur Way, Trinity, Alabama 35673. In addition, the Company shall maintain ancillary manufacturing operations at, among other places, 2717 Airport Drive, West Warehouse and 2800 Airport Drive, Harlingen, Texas 78550. The Company’s east coast launch operations shall be performed at Cape Canaveral Air Force Station, Florida, and the Company’s west coast launch operations shall be performed at Vandenberg Air Force Base, California. The location of each of the facilities may be changed from time to time as such places may be designated by the Board in accordance with the terms and conditions of the Operating Agreement.

 

Section 2.06 Members . Upon the formation of the Company, at all times prior to the Closing and immediately prior to the Closing, each of Lockheed Martin and Boeing shall have a 50% membership interest in the Company. As of the Closing, each of Lockheed Martin and Boeing shall transfer either (i) a portion of its membership interest in the Company to one or more of its direct or indirect wholly owned domestic Subsidiaries, or (ii) its entire membership interest in the Company to two or more of its direct or indirect wholly owned domestic Subsidiaries, which transfers shall in each case be made in accordance with and subject to the provisions of the Operating Agreement.

 

Section 2.07 Board of Directors and Officers . From and after the Closing, the Company shall be managed by the Board and by officers as provided in the Operating Agreement. Prior to the Closing, the Company shall be managed by the Members and may act only upon the unanimous written consent of the Members.

 

Section 2.08 Purpose of the Company . Each of the Parties hereby acknowledges and agrees that the exclusive purposes for which the Company will be formed shall be:

 

(a) to design, develop, manufacture, sell, repair, service and support ELV Systems, and to supply related Launch Services using such ELV Systems, (i) to the U.S. Government pursuant to one or more Contracts between the Company and the U.S. Government

 

- 2 -


or to any Person in furtherance of a DIO Contract, (ii) subject to the limitations set forth in Section 10.06 of the Operating Agreement, to commercial launch services providers (including the Members or their respective Affiliates) for marketing and sale to Commercial Customers, (iii) to a Member or an Affiliate of a Member where the Member or such Affiliate employs the Launch Services in connection with a DIO Contract, (iv) to Lockheed Martin or any of its Affiliates in connection with the development of, or the sale to the U.S. Government of, any component of an Atlas III or Atlas V, (v) to Boeing or any of its Affiliates in connection with the development of, or the sale to the U.S. Government of, any component of a Delta II or Delta IV, and (vi) pursuant to and in accordance with the terms and conditions of the Galex Contract and any follow on Contracts to the Galex Contract;

 

(b) to enter into agreements with the Members or their respective Affiliates for the purpose of designing and developing unique capabilities of expendable launch vehicles where the ultimate customer would be the U.S. Government, including under a DIO Contract, which agreements shall contain appropriate firewall and confidentiality provisions to protect the proprietary interests of the parties to the agreements (including proprietary trade secrets of the parties) and provisions relating to the ownership of any intellectual property created in connection with the work to be done under such agreements; and

 

(c) to enter into and perform its obligations under the Transaction Documents to which it is a party.

 

Notwithstanding the foregoing, it is acknowledged and agreed that the Company shall not at any time market or sell any ELV System or related Launch Service to any Commercial Customer except indirectly pursuant to a Contract between the Company and a commercial launch services provider. The Company may engage in any activity and perform any and all acts necessary, appropriate, proper, advisable, incidental or convenient to or in furtherance of the foregoing purposes.

 

Section 2.09 Term . The term of the Company shall be perpetual unless earlier terminated in accordance with the provisions of the Operating Agreement.

 

Section 2.10 Tax Treatment .

 

(a) It is the intent of the Members that the Company shall at all times be classified as a partnership for Income Tax purposes. The Company shall not elect to be treated as a corporation for Income Tax purposes unless each of the Members shall consent in writing. Neither Member shall recognize or report any income, deduction, gain, or loss for federal Income Tax purposes on the contribution and transfer of assets to the Company at the Closing or any other transaction under section 3.01 of this Agreement. Lockheed Martin agrees to continue prosecuting the change in accounting method for service contracts that it filed with the Internal Revenue Service on December 9, 2004. Each Member agrees not to take any position on any Tax Return or any Tax filing, or in any Tax audit or proceeding, that is inconsistent with this Section 2.10 (provided, however, that each Member shall have the right at any time to seek the opinion of independent tax counsel of national reputation reasonably acceptable to the other Member (“ Tax Counsel ”) that there is no reasonable basis for a position consistent with this Section 2.10, and upon providing such opinion of Tax Counsel to the other Member shall be

 

- 3 -


entitled to take such an inconsistent position), and each Member agrees to provide the other Member with advance notice of any public filing or documentation that is inconsistent with this Section 2.10.

 

(b) Each Member acknowledges that reporting for financial accounting purposes may differ from federal Income Tax treatment, and that Section 2.10(a) shall not prevent either Member from appropriately reporting the transactions contemplated by this Agreement for financial accounting purposes as required under GAAP.

 

Section 2.11 Independent Operation of Company . Subject to the provisions of the Operating Agreement, the Company shall operate as an independent entity separate and apart from the Members. From and after the Closing, the Company shall take such actions as are consistent with the operation of an independent business, including hiring and maintaining its own workforce, entering into and fully performing its own Contracts and maintaining its own property, facilities and equipment. From and after the Closing, the Company shall assume complete ownership of and control over the Contributed Assets and shall assume complete responsibility for the Assumed Liabilities, including the assumption of performance of all Contracts constituting Contributed Assets, subject to the terms hereof.

 

Section 2.12 Compliance with Applicable Law . The Company shall, and the Members shall at all times cause the Company to, conduct all of its activities in full compliance with Applicable Laws and all ethics and compliance policies adopted from time to time by the Company.

 

ARTICLE III

TRANSACTIONS AND CLOSING

 

Section 3.01 Closing Transactions . Upon the terms and conditions set forth in this Agreement and the other Transaction Documents, the Parties agree that at the Closing, among other things:

 

(a) Lockheed Martin shall contribute, or shall cause its Affiliated Transferors to contribute, the Lockheed Martin Contributed Assets to the Company in exchange for a 50% membership interest in the Company;

 

(b) Boeing shall contribute, or shall cause its Affiliated Transferors to contribute, the Boeing Contributed Assets to the Company in exchange for a 50% membership interest in the Company;

 

(c) the Company shall assume and agree to pay, satisfy and discharge the Lockheed Martin Assumed Liabilities;

 

(d) the Company shall assume and agree to pay, satisfy and discharge the Boeing Assumed Liabilities;

 

(e) to effect the contribution of the Lockheed Martin Contributed Assets and the assumption of the Lockheed Martin Assumed Liabilities, Lockheed Martin or its Affiliated Transferors, as the case may be, and the Company shall execute and deliver the Lockheed Martin Contribution and Assumption Agreement;

 

- 4 -


(f) to effect the contribution of the Boeing Contributed Assets and the assumption of the Boeing Assumed Liabilities, Boeing or its Affiliated Transferors, as the case may be, and the Company shall execute and deliver the Boeing Contribution and Assumption Agreement;

 

(g) the Parties shall execute and deliver, and shall cause their respective Subsidiaries to execute and deliver, as applicable, the Transition Services Agreements, the Commercial Sales and Marketing Agreements, the Settlement Agreement and each of the other Transaction Documents contemplated to be executed and delivered at the Closing;

 

(h) each Member or its applicable Affiliated Transferor, as the case may be, and the Company shall execute and deliver assignment agreements for the assignment to the Company of the leases governing the Contributed Leased Real Property on terms and conditions to be mutually agreed between the Members; provided , however , that if any landlord of any Contributed Leased Real Property is unwilling either to release the applicable Member or its Affiliated Transferor from all liabilities and obligations under the lease relating to such Contributed Leased Real Property or to include in the consent to any such assignment a recapture provision that would allow such Member or its Affiliated Transferor to take back the lease in the event of a default by the Company under the lease, at the option of such Member, in lieu thereof, such Member or its applicable Affiliated Transferor, as the case may be, and the Company shall execute and deliver a sublease agreement for the sublease by the Company of such Contributed Leased Real Property on terms and conditions to be mutually agreed between the Members;

 

(i) to effect the lease of the Denver Facility and related matters, Lockheed Martin (or its Affiliated Transferors, as the case may be) and the Company shall execute and deliver one or more lease agreements on terms and conditions consistent with the terms and conditions summarized in Attachment IX (as the same may be amended, supplemented or otherwise modified from time to time, the “ Denver Lease Agreement ”);

 

(j) to ensure an adequate supply of certain components used in Delta II and Delta IV launch vehicles, Boeing (or its Affiliated Transferors, as the case may be) and the Company shall execute and deliver a supply agreement on terms and conditions consistent with the terms and conditions summarized in Attachment XIII , as the same may be amended, supplemented or otherwise modified from time to time (the “ Delta Inventory Supply Agreement ”); and

 

(k) to ensure continuation of existing business relationships between Lockheed Martin’s ELV Business and other businesses of Lockheed Martin (including Lockheed Martin’s business unit in Fort Worth, Texas) and Boeing’s ELV Business and other businesses of Boeing (including Boeing’s business unit in Huntington Beach, California), the Company and Lockheed Martin and the Company and Boeing, as the case may be, shall enter into such supply, purchase and other arrangements as may be agreed upon by the Parties, on terms and conditions consistent with existing intercompany agreements or arrangements or on such other terms and conditions as may be agreed to by the Parties.

 

- 5 -


Section 3.02 Closing . The closing (the “ Closing ”) of the Contemplated Transactions shall take place at the offices of King & Spalding LLP, 1700 Pennsylvania Avenue, N.W., Washington, D.C. 20006, at 10:00 a.m. on the third Business Day following the satisfaction or waiver (by the Member entitled to waive the condition) of all conditions to the Closing set forth in Article X, or at such other time and place as the Parties may agree. The Closing will become effective at 12:01 a.m., Eastern time, on the Closing Date.

 

Section 3.03 Opening Statement . Attached hereto as Attachment I-A and Attachment I-B , respectively, is an Unaudited Statement of Net Assets of each of Lockheed Martin’s and Boeing’s respective ELV Business at December 31, 2004, together with the Notes thereto (each, an “ Opening Statement ”).

 

Section 3.04 Adjustment of Contributions .

 

(a) Promptly following the Closing Date, but in no event later than 90 days after the Closing Date, each Member shall, at its expense and with the assistance of the Company, prepare and submit to the Company and the other Member a statement setting forth, in reasonable detail, such Member’s calculation of the Net Working Capital of its ELV Business as of the close of business on the day prior to the Closing Date (as to each Member, its “ Proposed Adjusted Net Working Capital Amount ”). In the event a Member disputes the correctness of the other Member’s Proposed Adjusted Net Working Capital Amount, such Member shall notify the other Member in writing of its objections within 60 days after receipt of the other Member’s calculation of its Proposed Adjusted Net Working Capital Amount and shall set forth, in writing and in reasonable detail, the reasons for its objections. To be assertable, an objection by a Member with respect to any individual item in respect of the other Member’s Proposed Adjusted Net Working Capital Amount must be in an amount equal to or greater than $25,000 (it being understood that, for purposes of clarification and not by way of limitation, a method of valuation or the application of an accounting principle used in the preparation of a Member’s Proposed Adjusted Net Working Capital Amount each shall be deemed a separate “item” for purposes of this Section 3.04(a)) and assert that the item was not prepared in accordance with Section 3.04(b). To the extent a Member does not so object, in writing and in reasonable detail as required and within the time period contemplated by this Section 3.04(a), each of the Members shall be deemed to have accepted the other Member’s calculation and presentation in respect of the matters not subject to objection and such matters shall not be considered to be in dispute. The Members shall endeavor in good faith to resolve any disputed matters within 60 days after the date on which the last notice of objections was delivered to a Member. If the Members are unable to resolve the disputed matters, the Members shall engage a nationally known independent accounting firm (the “ Unaffiliated Firm ”), other than Ernst & Young LLP or Deloitte & Touche LLP, to resolve the matters in dispute (in accordance with Section 3.04(b) and consistent, to the extent possible, with any matters not in dispute). The Members shall jointly engage the Unaffiliated Firm. Promptly after such engagement of the Unaffiliated Firm, the Members will provide the Unaffiliated Firm with a copy of this Agreement, the Opening Statements, the statements of Proposed Adjusted Net Working Capital Amounts and any written notices of objections related thereto. Each Member shall deliver to the Unaffiliated Firm a written submission of its position with respect to the matters in dispute, which submissions shall be delivered by each Member to the Unaffiliated Firm and to the other Member simultaneously within 15 days of the engagement of such Unaffiliated Firm. Each Member shall thereafter be

 

- 6 -


entitled to submit a rebuttal to the other Member’s submission, which rebuttals shall be delivered to the Unaffiliated Firm and to the other Member simultaneously within 30 days of the delivery of the Members’ initial submissions. The Unaffiliated Firm may request additional information from either Member, but absent such a request neither Member may make (nor permit any of its Affiliates or Representatives to make) any additional submission to the Unaffiliated Firm or otherwise communicate with the Unaffiliated Firm, and in no event will either Member (i) communicate (or permit any of its Affiliates or Representatives to communicate) with the Unaffiliated Firm without providing the other Member a reasonable opportunity to participate in such communication or (ii) make (or permit any of its Affiliates or Representatives to make) a written submission to the Unaffiliated Firm unless a copy of such submission is simultaneously provided to the other Member. Either Member may make a written request for a hearing with the Unaffiliated Firm by delivering notice to the other Member and the Unaffiliated Firm within 15 days after the submission of rebuttals by the Members. Within 30 days of such written request, the Unaffiliated Firm shall hold a joint hearing, in person or by teleconference, at which each Member shall be entitled to make an oral presentation and rebuttal. The Unaffiliated Firm shall have 30 days from the date of such hearing (or, if no such hearing is requested, from the date of submission of written rebuttals) to review the documents provided to it pursuant to this Section 3.04(a) and deliver its written determination with respect to each of the adjustments in dispute submitted to it for resolution. The Unaffiliated Firm shall resolve the differences regarding the statements of Proposed Adjusted Net Working Capital Amounts based solely on the information provided to the Unaffiliated Firm by the Members pursuant to the terms of this Agreement (and not by independent review). The Unaffiliated Firm’s authority will be limited to resolving disputes with respect to whether the statements of Proposed Adjusted Net Working Capital Amounts were prepared in accordance with the terms of Section 3.04(b) with respect to the individual items on the statements of Proposed Adjusted Net Working Capital Amounts in dispute (it being understood that the Unaffiliated Firm will have no authority to make any adjustments to any financial statements or amounts other than the statements of Proposed Adjusted Net Working Capital Amounts and amounts set forth therein that are in dispute). In resolving any disputed item, the Unaffiliated Firm may not assign a value to such item greater than the greatest value for such item asserted by either Member or less than the smallest value for such item asserted by either Member. The determination of the Unaffiliated Firm in respect of the correctness of each matter remaining in dispute in accordance with this Section 3.04(a) shall be conclusive and binding on the Members and judgment may be entered thereon as an arbitration award pursuant to 9 U.S.C. § 9 in any court of competent jurisdiction. The Net Working Capital of each Member’s ELV Business as of the close of business on the day prior to the Closing Date, as finally determined pursuant to this Section 3.04(a), is referred to herein as the “ Adjusted Net Working Capital Amount ” of such Member’s ELV Business.

 

(b) The Proposed Adjusted Net Working Capital Amount and the Adjusted Net Working Capital Amount of each Member’s ELV Business shall be determined in accordance with the accounting principles, policies, practices, methods and procedures, applied on a consistent basis in accordance with past practice, utilized in the preparation of such Member’s Opening Statement as disclosed in the Notes to such Opening Statement, in each case except as otherwise set forth in the Notes to such Opening Statement.

 

(c) If Lockheed Martin’s Adjusted Net Working Capital Amount is less than the amount set forth on Schedule 3.04(c) (the “ Lockheed Martin Threshold Amount ”), then

 

- 7 -


Lockheed Martin shall pay the difference to the Company, and if Lockheed Martin’s Adjusted Net Working Capital Amount is greater than the Lockheed Martin Threshold Amount, then the Company shall pay the difference to Lockheed Martin, in each case with simple interest thereon from the Closing Date to the date of payment at a rate per annum equal to the per annum interest rate announced from time to time by JPMorgan Chase Bank as its prime rate in effect; provided , that neither Lockheed Martin nor the Company shall have any obligation to make a payment to the other under this Section 3.04(c) unless the amount of the difference (whether positive or negative) between Lockheed Martin’s Adjusted Net Working Capital Amount and the Lockheed Martin Threshold Amount shall be equal to or greater than $5,000,000 (it being understood that in the event any such adjustment shall be equal to or greater than $5,000,000, the Company or Lockheed Martin, as the case may be, shall pay to the other the entire amount of such difference). Any such payment shall be made in immediately available funds not later than five Business Days after the determination of Lockheed Martin’s Adjusted Net Working Capital Amount by wire transfer to a bank account designated in writing by the payee to the payor within two Business Days of the date of the determination of such Adjusted Net Working Capital Amount. The obligations of Lockheed Martin and the Company under this Section 3.04(c) are independent of the obligations of Boeing and the Company under Section 3.04(d).

 

(d) If Boeing’s Adjusted Net Working Capital Amount is less than the amount set forth on Schedule 3.04(d) (the “ Boeing Threshold Amount ”), then Boeing shall pay the difference to the Company, and if Boeing’s Adjusted Net Working Capital Amount is greater than the Boeing Threshold Amount, then the Company shall pay the difference to Boeing, in each case with simple interest thereon from the Closing Date to the date of payment at a rate per annum equal to the per annum interest rate announced from time to time by JPMorgan Chase Bank as its prime rate in effect; provided , that neither Boeing nor the Company shall have any obligation to make a payment to the other under this Section 3.04(d) unless the amount of the difference (whether positive or negative) between Boeing’s Adjusted Net Working Capital Amount and the Boeing Threshold Amount shall be equal to or greater than $5,000,000 (it being understood that in the event any such adjustment shall be equal to or greater than $5,000,000, the Company or Boeing, as the case may be, shall pay to the other the entire amount of such difference). Any such payment shall be made in immediately available funds not later than five Business Days after the determination of Boeing’s Adjusted Net Working Capital Amount by wire transfer to a bank account designated in writing by the payee to the payor within two Business Days of the date of the determination of such Adjusted Net Working Capital Amount. The obligations of Boeing and the Company under this Section 3.04(d) are independent of the obligations of Lockheed Martin and the Company under Section 3.04(c).

 

(e) Subject to any applicable privileges (including the attorney-client privilege), each Member shall make available to the other and, upon reasonable request, to the Unaffiliated Firm, the books, records, documents and work papers underlying the preparation of such Member’s Opening Statement and the calculation of such Member’s Proposed Adjusted Net Working Capital Amount and the relevant personnel of such Member.

 

(f) The fees and expenses, if any, of the Unaffiliated Firm shall be shared equally by the Members.

 

- 8 -


Section 3.05 Assignment of Contracts and Rights . Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to contribute or otherwise sell, convey, transfer, assign or sublicense any Contract, license or permit constituting a Contributed Asset, or any claim, right or benefit arising thereunder or resulting therefrom, or to enter into any other agreement or arrangement with respect thereto, if an attempted assignment, sale, conveyance, sublicense or transfer thereof, or entering into any such agreement or arrangement, without the consent of a third party, would constitute a breach of, or other contravention under, any agreement to which either Member is a party, be ineffective with respect to any party thereto or in any way adversely affect the rights of either Member or the Company thereunder. With respect to any such Contract, license or permit or any claim, right or benefit arising thereunder or resulting therefrom, promptly after the date hereof, the Parties will use reasonable commercial efforts (but without any payment of money or other transfer of value by either Member or the Company or any of their respective Affiliates to any third party) to obtain any required consent for the assignment, transfer or sublicense of any such Contract, license or permit to the Company, or written confirmation reasonably satisfactory in form and substance to the Parties confirming that such consent is not required. If a required consent is not obtained with respect to any such Contract, license or permit, or if an attempted assignment, transfer or sublicense thereof would be ineffective or would adversely affect the right of either Member or the Company thereunder (a “ Consent Failure ”), the applicable Member and the Company will cooperate in a mutually agreeable arrangement under which the Company would obtain the benefits thereunder in accordance with this Agreement, including subcontracting or subleasing to the Company, subject to Applicable Law and the terms of any such Contract, license or permit, with the Company obtaining the claims, rights and benefits of the applicable Member and assuming the obligations under such Contract, license or permit in accordance with this Agreement, and the Members will enforce at the request of and for the benefit of the Company, with the Company assuming the Members’ obligations, any and all claims, rights and benefits of the Members against any third party thereto arising from any such Contract, license or permit (including the right to elect to terminate such Contract in accordance with the terms thereof upon the request of the Company). If any Consent Failure occurs and the applicable Member and the Company have failed to have entered into an arrangement to provide to the Company the benefits under the relevant Contract, license or permit, such Member and the Company shall cooperate following the Closing to obtain such consent or enter into an agreement with respect thereto as soon as reasonably practicable thereafter. Notwithstanding the foregoing provisions of this Section 3.05, in the case of commercial off-the-shelf (“ COTS ”) software having an initial purchase price of $10,000 or less per copy, the Company shall have the sole responsibility for obtaining license rights to use such software at the Company’s cost and expense.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

Section 4.01 Representations and Warranties of Lockheed Martin . Lockheed Martin represents and warrants to Boeing and to the Company as set forth in Exhibit B .

 

Section 4.02 Representations and Warranties of Boeing . Boeing represents and warrants to Lockheed Martin and to the Company as set forth in Exhibit C .

 

- 9 -


Section 4.03 Representations and Warranties of the Company . The Company represents and warrants to the Members as set forth in Exhibit D .

 

ARTICLE V

COVENANTS AND AGREEMENTS OF THE PARTIES

 

Section 5.01 Conduct of ELV Businesses . Except as set forth in Schedule 5.01 , as otherwise contemplated by this Agreement or as required by Applicable Law, from the date of this Agreement until the Closing Date, each of the Members shall conduct, and shall cause its respective Subsidiaries to conduct, its ELV Business in all material respects in accordance with the historical and customary operating practices relating to the conduct of such ELV Business and shall use reasonable commercial efforts to preserve intact its ELV Business and its relationships with employees and other third parties in connection with the operation of its ELV Business. In addition to and without limiting the generality of the foregoing, except (i) with the written consent of the other Member (which consent shall not be unreasonably withheld or delayed), (ii) as set forth in Schedule 5.01 , or (iii) as required by Applicable Law or in accordance with the terms and conditions of Contracts (including any collective bargaining agreements) in existence on the date of this Agreement, neither Member shall, and each Member shall cause its Subsidiaries not to, (a) rebadge or otherwise transfer any Business Employee such that he or she no longer would be a Business Employee, or (b) engage in any transaction that, if engaged in since December 31, 2004, but on or before the date of this Agreement, and not listed in Schedule B.06 or Schedule C.06 , respectively, would constitute a breach of the representations and warranties of the Member contained in clauses (c) through (g) of Section B.06 of Exhibit B or Section C.06 of Exhibit C , respectively.

 

Section 5.02 Conduct of Business of the Company . From and after the formation of the Company in accordance with Section 2.01 and until the Closing Date, the Members (i) shall not conduct any business with or through the Company, and the Company shall not conduct any business, take any action or incur any liability, except as expressly provided in this Agreement or as otherwise expressly agreed in writing by the Members, and (ii) shall take such actions as may be necessary to cause the Company to satisfy its obligations under this Agreement in connection with the Contemplated Transactions. In addition to and notwithstanding the foregoing, any action of the Company prior to the Closing Date shall require the unanimous written consent of the Members.

 

Section 5.03 Access to Information; Confidentiality .

 

(a) Except as may be necessary to comply with any Applicable Laws (including Antitrust Laws and similar laws), subject to any applicable privileges (including the attorney-client privilege), subject to the terms and conditions of the Confidentiality Agreement and this Section 5.03, subject to the provisions of Section 5.11 and subject to the terms and conditions of any confidentiality or similar agreements between either of the Members and a third party, including customers, vendors and subcontractors, from the date of this Agreement until the Closing Date, each Member shall (i) during normal business hours and upon reasonable prior notice, give the other Member and its Representatives reasonable access to the records of such Member and its Subsidiaries relating to its ELV Business, (ii) during normal business hours and upon reasonable prior notice, give the other Member and its Representatives reasonable

 

- 10 -


access to any facilities the possession of which shall be transferred to the Company at Closing, (iii) furnish to the other Member and its Representatives such financial and operating data and other information relating to its ELV Business as the other Member may reasonably request, (iv) instruct its employees and Representatives to provide reasonable cooperation to the other Member in the other Member’s investigation of its ELV Business and (v) use reasonable commercial efforts to obtain the consent or waiver of any third parties with whom such Member has entered into a confidentiality or similar arrangement in connection with such Member’s ELV Business to the disclosure of contracts or other information with respect to the Member’s relationship with such third parties. Without limiting the generality of the foregoing, and subject to the limitations set forth in the first sentence of this Section 5.03(a), from the date of this Agreement until the Closing Date, each Member shall use reasonable commercial efforts to enable the other Member and its Representatives to conduct, at such other Member’s expense, business and financial reviews, investigations and studies as to the operation of such Member’s ELV Business, including with respect to any tax, operating or other efficiencies that may be achieved through the Company. Notwithstanding the foregoing, neither Member nor any of their respective Representatives shall have access to personnel records of the other Member relating to individual performance or evaluation records, medical histories or records or other information that in such other Member’s good faith opinion is sensitive or the disclosure of which could subject such Member or its Subsidiaries to risk of liability. Each Member shall make available to the Company personnel files of its respective Business Employees only after the Closing Date and only if and when the respective Member provides the Company with notice that the applicable Business Employee has provided the Member with a written release permitting transfer of those files; provided , however , that the Company shall hold the respective Member harmless from any and all Damages arising out of or relating to the transfer of the personnel files.

 

(b) Each Member agrees that all information provided or otherwise made available to it or any of its Representatives in connection with the Contemplated Transactions shall be governed by the provisions of, and treated as if provided or otherwise made available under, the Confidentiality Agreement (regardless of whether or not the Confidentiality Agreement is in effect or has been terminated or superseded); provided , that nothing in this Section 5.03 shall limit or otherwise restrict the applicability of any other confidentiality or similar provisions included in any of the Transaction Documents or any other agreement between the Members. Notwithstanding the provisions of this Section 5.03 or any other provision of this Agreement, the Members acknowledge and agree that all information disclosed or otherwise discovered by the Parties pursuant to this Section 5.03 shall be used solely for the purpose of evaluating the Contemplated Transactions and the satisfaction of the conditions to Closing set forth in this Agreement and that no such information shall be used for any other purpose, including in connection with the Civil Proceeding or any other Proceedings involving the Members and arising out of any matters other than the Contemplated Transactions.

 

(c) For a period commencing on the Closing Date and ending on the fifth anniversary of the Closing Date, each Member shall treat and hold as confidential (A) all confidential or proprietary information related to, in the case of Boeing, the Boeing Assumed Liabilities or the Boeing Contributed Assets and, in the case of Lockheed Martin, the Lockheed Martin Assumed Liabilities or the Lockheed Martin Contributed Assets, or related to the operations or affairs of the other Member’s ELV Business, and (B) all confidential or proprietary

 

- 11 -


information of the other Member disclosed by such other Member under Section 5.03(a) or otherwise made available by the other Member in connection with the Contemplated Transactions. In addition, each Member shall continue to comply with all non-disclosure and confidentiality provisions of all Contracts in effect on the Closing Date that are contributed to the Company as Contributed Assets for the maximum period of time required under such Contracts. In the event any Member is requested or required (by oral or written request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand or similar process or by Applicable Law) to disclose any such confidential or proprietary information, then such Member shall notify the other Member or the Company, as the case may be, promptly of the request or requirement so that the other Member or the Company, at its expense, may seek an appropriate protective order or waive compliance with this Section 5.03. If, in the absence of a protective order or receipt of a waiver hereunder, a Member is, on the advice of counsel, compelled to disclose such confidential information, such Member may so disclose the confidential or proprietary information; provided that such Member shall use reasonable commercial efforts to obtain reliable assurance that confidential treatment shall be accorded to such confidential or proprietary information. The provisions of this Section 5.03(c) shall not be deemed to prohibit the disclosure by either Member of confidential or proprietary information relating to the operations or affairs of its ELV Business to the extent reasonably required (i) to prepare or complete any required Tax Returns or financial statements, (ii) in connection with audits or other proceedings by or on behalf of a Governmental Authority, (iii) in connection with any insurance or benefits claims, (iv) to the extent necessary to comply with any Applicable Laws, (v) to provide services to the Company in accordance with the terms and conditions of any of the Transaction Documents, (vi) in connection with asserting any rights or remedies or performing any obligations under any of the Transaction Documents, or (vii) in connection with any other similar administrative functions in the ordinary course of business; provided that in each such case such Member shall use reasonable commercial efforts to obtain reliable assurance that confidential treatment shall be accorded to such confidential or proprietary information. Notwithstanding the foregoing, the provisions of this Section 5.03 shall not apply to information that (x) is or becomes publicly available other than as a result of a disclosure by the Member required to keep the information confidential, (y) is or becomes available to a Member on a non-confidential basis from a source that, to such Member’s knowledge, is not prohibited from disclosing such information by a legal, contractual or fiduciary obligation, or (z) is or has been independently developed by the Member required to keep the information confidential (other than in connection with, in the case of Boeing, the Boeing Assumed Liabilities or the Boeing Contributed Assets or, in the case of Lockheed Martin, the Lockheed Martin Assumed Liabilities or the Lockheed Martin Contributed Assets) as evidenced by written documentation.

 

Section 5.04 Provision and Preservation of and Access to Certain Information; Cooperation After Closing .

 

(a) On and after the Closing Date, the Company shall preserve all books and records of the Members’ respective ELV Businesses for a period of six years commencing on the Closing Date (or (i) in the case of books and records relating to Tax, employment, environmental and employee benefits matters until such time as all statutes of limitations to which such records relate have expired, (ii) in the case of books and records relating to any Government Contract, until the date that is 12 months after the date on which Lockheed Martin, Boeing or the

 

- 12 -


Company, as the case may be, reaches final agreement with the U.S. Government in respect of any open issues applicable to such Government Contract, including the resolution of the incurred costs applicable to such Government Contract, and (iii) in the case of books and records as to which Applicable Law requires a longer period, for such longer period), and thereafter the Company shall not destroy or dispose of such records without giving notice to the Members of such pending disposal and offering the applicable Member such records. In the event the applicable Member has not requested such materials or directed the Company to retain such materials for a longer period of time within 90 days following the receipt of such notice from the Company, the Company may proceed to destroy or dispose of such materials.

 

(b) Except as may be necessary to comply with any Applicable Laws (including Antitrust Laws and similar laws), subject to any applicable privileges (including the attorney-client privilege), subject to the terms and conditions of the Operating Agreement and this Section 5.04 and subject to the terms and conditions of any confidentiality or similar agreements between the Company and a third party, including customers, vendors and subcontractors, from and after the Closing Date, the Company shall (i) afford the Members and their respective Representatives reasonable access upon reasonable prior notice during normal business hours, to all employees, offices, properties, agreements, records, books and affairs of the Company and, at the applicable Member’s expense, provide copies of such information concerning the Company, as the Members may reasonably request for any proper purpose, (ii) use reasonable commercial efforts to cooperate with the Members for any of the purposes contemplated by the preceding clause (i), and (iii) use reasonable commercial efforts to cooperate with the Members in the defense of or pursuit of any Excluded Liability, Excluded Asset or Indemnified Claim between the Members, or any claim or action that relates to an Excluded Liability, Excluded Asset or Indemnified Claim between the Members; provided that the applicable Member shall reimburse the Company for any reasonable out-of-pocket expenses incurred by the Company in connection with any such defense, claim or action. Each Member agrees to treat and hold as confidential all information provided or otherwise made available to it or any of its Representatives under this Section 5.04(b) in accordance with the provisions of Section 5.04(d) and the confidentiality provisions of the Operating Agreement.

 

(c) Except as may be necessary to comply with any Applicable Laws (including Antitrust Laws and similar laws), subject to any applicable privileges (including the attorney-client privilege), subject to the terms and conditions of the Operating Agreement and this Section 5.04 and subject to the terms and conditions of any confidentiality or similar agreements between either of the Members and a third party, including customers, vendors and subcontractors, from and after the Closing Date, each Member shall, and shall cause each of its Subsidiaries to, at the Company’s expense (i) afford the Company and its Representatives reasonable access, upon reasonable prior notice during normal business hours, to all employees, offices, properties, agreements, records, books and affairs of such Member and its Subsidiaries to the extent relating to the conduct of such Member’s ELV Business prior to the Closing, as the Company may reasonably request for any proper purpose and (ii) use reasonable commercial efforts to cooperate with the Company with respect to matters relating to the conduct of such Member’s ELV Business prior to the Closing, including in the defense or pursuit of any Contributed Asset or Assumed Liability or any claim or action that relates to occurrences involving the Members’ respective ELV Businesses prior to the Closing Date; provided that the Company shall reimburse the Members for any reasonable out-of-pocket expenses incurred by

 

- 13 -


the Members or their Subsidiaries in connection with any such defense, claim or action. The Company agrees to treat and hold as confidential all information provided or otherwise made available to it or any of its Representatives under this Section 5.04(c) in accordance with the provisions of Section 5.04(d) and the confidentiality provisions of the Operating Agreement.

 

(d) In the event a Member or the Company is requested or required (by oral or written request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand or similar process or by Applicable Law) to disclose any confidential or proprietary information provided to such Party under this Section 5.04, then such Member or the Company, as the case may be, shall notify the disclosing Party promptly of the request or requirement so that the disclosing Party, at its expense, may seek an appropriate protective order or waive compliance with Section 5.04(b) or Section 5.04(c), as the case may be. If, in the absence of a protective order or receipt of a waiver hereunder, such Party is, on the advice of counsel, compelled to disclose such confidential or proprietary information, such Party may so disclose the confidential or proprietary information; provided that such Party shall use reasonable commercial efforts to obtain reliable assurance that confidential treatment shall be accorded to such confidential or proprietary information. The provisions of this Section 5.04(d) shall not be deemed to prohibit the disclosure by any Party of confidential or proprietary information to the extent reasonably required (i) to prepare or complete any required Tax Returns or financial statements, (ii) in connection with audits or other proceedings by or on behalf of a Governmental Authority, (iii) in connection with any insurance or benefits claims, (iv) to the extent necessary to comply with any Applicable Laws, (v) to provide services to the disclosing Party or the Company in accordance with the terms and conditions of any of the Transaction Documents, (vi) in connection with asserting any rights or remedies or performing any obligations under any of the Transaction Documents, or (vii) in connection with any other similar administrative functions in the ordinary course of business; provided that in each such case such Party shall use reasonable commercial efforts to obtain reliable assurance that confidential treatment shall be accorded to such confidential or proprietary information. Notwithstanding the foregoing, the confidentiality restrictions of this Section 5.04 shall not apply to information that (x) is or becomes publicly available other than as a result of a disclosure by the receiving Party, (y) is or becomes available to a Party on a non-confidential basis from a source that, to such Party’s knowledge, is not prohibited from disclosing such information by a legal, contractual or fiduciary obligation, or (z) is or has been independently developed by the receiving Party as evidenced by written documentation.

 

Section 5.05 Insurance .

 

(a) Except as otherwise provided in Exhibit E and except for the replacement of existing insurance policies with substantially similar policies upon expiration of existing policies, on and after the date of this Agreement and until the Closing Date, the Members shall not take or fail to take any action if such action or inaction, as the case may be, would adversely affect the applicability of any insurance (including reinsurance) maintained by the Members and in effect on the date of this Agreement that covers all or any part of the assets that would constitute Contributed Assets (if owned, held or used by a Member or its Subsidiaries on the Closing Date), the Members’ ELV Businesses or the Business Employees. Except as otherwise provided in Exhibit E , on and after the Closing Date, neither Member shall intentionally take or intentionally fail to take any action if such action or inaction, as the case may be, would

 

- 14 -


adversely affect any insurance proceeds constituting Contributed Assets to the extent such action relates to an event or occurrence prior to the Closing Date. Except as otherwise provided in Exhibit E , as required by any Contracts constituting Contributed Assets or as may otherwise be agreed in writing by the Members, neither Member shall have any obligation to maintain the effectiveness of any such insurance policy, or to make any monetary payment in connection with any such policy, after the Closing Date.

 

(b) Notwithstanding the provisions of Section 5.05(a), the Parties hereby acknowledge and agree that as of the Closing Date, neither the Company, the ELV Business, any property owned or leased by any of the foregoing, any directors, officers, employees (including the Transferred Employees) or agents of any of the foregoing nor the Contributed Assets, shall be insured under any insurance policies maintained by either of the Members or any of their Affiliates, except (i) in the case of certain claims made policies, to the extent that a claim has been reported as of the Closing Date, (ii) in the case of a policy that is an occurrence policy, to the extent the accident, event or occurrence that results in an insurable loss occurs prior to the Closing Date and has been, is or shall be reported or noticed to the respective carrier by the Company or the applicable Member in accordance with the requirements of such policies (which claims the applicable Member shall, at the Company’s cost and expense, use reasonable commercial efforts to pursue on the Company’s behalf, and the net proceeds of which claims (except to the extent they relate to Excluded Liabilities) shall be remitted promptly to the Company upon receipt thereof), and (iii) as otherwise provided in Exhibit E or otherwise agreed to in writing by the Parties. Except as otherwise provided in Exhibit E or as otherwise may be agreed to in writing by the Parties, from and after the Closing Date, neither Member shall have any obligation of any kind to maintain any form of insurance covering all or any part of the Contributed Assets, the ELV Business or the Transferred Employees.

 

(c) On and after the Closing Date, the Company shall reimburse the Members within 30 days of receipt of an invoice for any self insurance, retention, deductible, retrospective premium, cash payment for reserves calculated or charged on an incurred loss basis and similar items, including associated administrative expenses and allocated loss adjustment or similar expenses (collectively, “ Insurance Liabilities ”) allocated by either Member to its ELV Business on a basis consistent with past practices resulting from or arising under any and all current or former insurance policies maintained by such Member or its Affiliates to the extent that such Insurance Liabilities relate to or arise out of Assumed Liabilities or any activities of the Company. The Company agrees that, to the extent any of the insurers under the insurance polices, in accordance with the terms of the insurance policies, requests or requires collateral, deposits or other security to be provided with respect to claims made against such insurance polices relating to or arising from the ELV Business, the Company shall provide the collateral, deposits or other security or, upon request of the applicable Member, shall replace any collateral, deposits or other security provided by such Member or any of its Affiliates to the extent related to or arising out of Assumed Liabilities or any activities of the Company.

 

Section 5.06 Non-Hire and Nonsolicitation of Certain Employees .

 

(a) From and after the date of this Agreement until the Closing Date, neither Lockheed Martin nor Boeing, nor any of their Subsidiaries, shall, without the prior written approval of the other Member, directly or indirectly solicit any individual who is a Business

 

- 15 -


Employee of the other Member to terminate his or her employment relationship with the other Member or its respective Subsidiaries; provided , however , that the foregoing shall not apply to any Business Employee hired as a result of the use of an independent employment agency (so long as the agency was not directed to solicit a particular individual or a class of individuals that could only be satisfied by employees of the other Member) or as a result of the use of advertisements and other general solicitation (such as an advertisement in newspapers, on Lockheed Martin or Boeing websites or internet job sites, or on radio or television) not specifically directed to Business Employees of the other Member. For purposes of this Section 5.06(a) only, the Members agree that the Business Employees of Lockheed Martin and its Subsidiaries shall consist of those employees listed on Schedule 5.06(a) and the Business Employees of Boeing and its Subsidiaries shall consist of those employees listed on Schedule 5.06(b) , which schedules are accurate as of April 29, 2005.

 

(b) From and after the Closing Date until the third anniversary of the Closing Date, neither Lockheed Martin nor Boeing, nor any of their Subsidiaries, shall, without the prior written approval of the Company, directly or indirectly solicit any individual who is a Transferred Employee to terminate his or her employment relationship with the Company; provided , however , that the foregoing shall not apply to (x) any Transferred Employee hired as a result of the use of an independent employment agency (so long as the agency was not directed to solicit a particular individual or a class of individuals that could only be satisfied by employees of the Company) or as a result of the use of advertisements and other general solicitation (such as an advertisement in newspapers, on Lockheed Martin or Boeing websites or internet job sites, or on radio or television) not specifically directed to Transferred Employees, or (y) any Transferred Employee whose employment is involuntarily terminated by the Company (other than for cause) after the Closing Date.

 

(c) Except as provided in Section E.01(b) or with respect to excluded Business Employees described on Schedule E.01 , or as otherwise may be required to comply with recall rights, if any, under any applicable collective bargaining agreement, from and after the Closing Date until the second anniversary of the Closing Date, neither Lockheed Martin nor Boeing (nor any of their Subsidiaries), shall (i) rehire or continue the employment following the Closing Date of any individual who was one of its or its Subsidiaries’ Business Employees at any time between the date of this Agreement and the Closing Date, or (ii) rehire any Transferred Employee who was one of its or its Subsidiaries’ Business Employees at any time between the date of this Agreement and the Closing Date; provided , however , that the foregoing shall not apply to (x) any Business Employee that the Members mutually agree to exclude from this Section 5.06(c) prior to the Closing Date, (y) any Transferred Employee whose employment is involuntarily terminated by the Company (other than for cause) after the Closing Date, or (z) any Transferred Employee whom the Company consents to release from his or her assignment with the Company earlier than two years following the Closing Date.

 

(d) Except as provided in Section E.01(b) or with respect to excluded Business Employees described on Schedule E.01 , from and after the Closing Date until the third anniversary of the Closing Date, the Company shall not, without the prior written approval of the applicable Member, directly or indirectly solicit any individual who (i) is not a Transferred Employee, and (ii) is employed by either Lockheed Martin or Boeing or any of their Subsidiaries, to terminate his or her employment relationship with Lockheed Martin or Boeing or

 

- 16 -


their Subsidiaries, as the case may be; provided , however , that the foregoing shall not apply to (x) individuals hired as a result of the use of an independent employment agency (so long as the agency was not directed to solicit a particular individual or a class of individuals that could only be satisfied by employees of either Lockheed Martin or Boeing or any of their Subsidiaries) or as a result of the use of advertisements and other general solicitation (such as an advertisement in newspapers, on Company websites or internet job sites, or on radio or television) not specifically directed to employees of either Lockheed Martin or Boeing or any Subsidiary of Lockheed Martin or Boeing, or (y) individuals whose employment is terminated by Lockheed Martin or Boeing after the Closing.

 

Section 5.07 Financial Support Arrangements .

 

(a) The Parties shall seek in good faith to have the Members and their respective Affiliates released from all obligations under any Financial Support Arrangements maintained by the Members or any of their respective Affiliates in connection with the Members’ respective ELV Businesses effective as of the Closing Date. In furtherance of the foregoing, the Parties agree (i) to use reasonable commercial efforts to arrange for the provision by the Company of substitute Financial Support Arrangements on terms and conditions reasonably satisfactory to the beneficiaries thereof on the Closing Date, and (ii) to provide financial information concerning the Company and each Member’s ELV Business reasonably requested by those Persons for whose benefit the Financial Support Arrangements were made.

 

(b) If, at any time after the Closing Date, (i) any amount is drawn on or paid under any Financial Support Arrangement maintained by the Members or any of their respective Affiliates in connection with the Members’ respective ELV Businesses pursuant to which either of the Members or any of their respective Affiliates is obligated to reimburse the Person making such payment, or (ii) either of the Members or any of their respective Affiliates pays any amounts under, or any fees, costs or expenses relating to, any such Financial Support Arrangement, the Company shall reimburse the applicable Member such amounts promptly after receipt from such Member of written notice thereof accompanied by written evidence of the underlying payment obligation.

 

Section 5.08 Certain Intellectual Property Matters .

 

(a) Effective as of the Closing and subject to (x) any rights of the U.S. Government in all Intellectual Property licensed to the Company pursuant to this Section 5.08 and (y) any licenses of such Intellectual Property granted prior to the Closing (for purposes of this Section 5.08(a), the term “ Field of Use ” means any activity within the scope of the purpose of the Company as set forth in Section 2.08):

 

(i) License Grant by Boeing to the Company . Boeing hereby grants to the Company, solely for its use within the Field of Use, a worldwide, perpetual, irrevocable, non-transferable, no-cost, royalty-free nonexclusive license, with the right to grant sublicenses within the Field of Use and with written notice to Boeing, in the Intellectual Property owned or controlled by Boeing or any of its Subsidiaries and used by Boeing or any of its Subsidiaries as of the Closing in Boeing’s ELV Business (the “ Licensed Boeing Intellectual Property ”). This license includes the right of the Company to use the Licensed Boeing Intellectual Property for

 

- 17 -


any purpose within the Field of Use, including the right to create derivative works and modifications, to manufacture products that incorporate Licensed Boeing Intellectual Property and to perform or have performed services which incorporate or otherwise use the Licensed Boeing Intellectual Property. Effective as of the Closing and until the expiration of the Non-Compete Term, subject to any rights of the U.S. Government in the Licensed Boeing Intellectual Property and any licenses thereof granted prior to the Closing, Boeing shall not (x) license or sublicense any of the Licensed Boeing Intellectual Property to any other Person within the Field of Use, or (y) transfer, assign, convey or sell any of the Licensed Boeing Intellectual Property to any Person without obtaining a covenant of such Person for the express benefit of the Company that such Person (together with its successors, assignees, licensees and sublicensees) will not use such Licensed Boeing Intellectual Property within the Field of Use; provided , however , that notwithstanding the foregoing, (A) Boeing may license or sublicense a Person to use Licensed Boeing Intellectual Property within the Field of Use: (1) to the extent necessary to allow such Person to make products or sell services for use by Boeing in Boeing’s ordinary course of business; or (2) as part of the sale to such Person of products or services in the ordinary course of Boeing’s business, to the extent the applicable Licensed Boeing Intellectual Property is used in such products or services, and (B) Boeing may, in connection with the sale of a portion of a business or product line of Boeing to a Person, license, sublicense, transfer, assign, convey or sell Licensed Boeing Intellectual Property used in such business or product line to such Person under terms permitting its use within the Field of Use, but not in a manner that would violate the provisions of Section 5.13 if used by Boeing in that manner.

 

(ii) License Grant by Lockheed Martin to the Company . Lockheed Martin hereby grants to the Company, solely for its use within the Field of Use, a worldwide, perpetual, irrevocable, non-transferable, no-cost, royalty-free nonexclusive license, with the right to grant sublicenses within the Field of Use and with written notice to Lockheed Martin, in the Intellectual Property owned or controlled by Lockheed Martin or any of its Subsidiaries and used by Lockheed Martin or any of its Subsidiaries as of the Closing in Lockheed Martin’s ELV Business (the “ Licensed Lockheed Martin Intellectual Property ”). This license includes the right of the Company to use the Licensed Lockheed Martin Intellectual Property for any purpose within the Field of Use, including the right to create derivative works and modifications, to manufacture products that incorporate Licensed Lockheed Martin Intellectual Property and to perform or have performed services which incorporate or otherwise use the Licensed Lockheed Martin Intellectual Property. Effective as of the Closing and until the expiration of the Non-Compete Term, subject to any rights of the U.S. Government in the Licensed Lockheed Martin Intellectual Property and any licenses thereof granted prior to the Closing, Lockheed Martin shall not (x) license or sublicense any of the Licensed Lockheed Martin Intellectual Property to any other Person within the Field of Use, or (y) transfer, assign, convey or sell any of the Licensed Lockheed Martin Intellectual Property to any Person without obtaining a covenant of such Person for the express benefit of the Company that such Person (together with its successors, assignees, licensees and sublicensees) will not use such Licensed Lockheed Martin Intellectual Property within the Field of Use; provided , however , that notwithstanding the foregoing, (A) Lockheed Martin may license or sublicense a Person to use Licensed Lockheed Martin Intellectual Property within the Field of Use: (1) to the extent necessary to allow such Person to make products or sell services for use by Lockheed Martin in Lockheed Martin’s ordinary course of business; or (2) as part of the sale to such Person of products or services in the ordinary course of Lockheed Martin’s business, to the extent the applicable Licensed Lockheed Martin

 

- 18 -


Intellectual Property is used in such products or services, and (B) Lockheed Martin may, in connection with the sale of a portion of a business or product line of Lockheed Martin to a Person, license, sublicense, transfer, assign, convey or sell Licensed Lockheed Martin Intellectual Property used in such business or product line to such Person under terms permitting its use within the Field of Use, but not in a manner that would violate the provisions of Section 5.13 if used by Lockheed Martin in that manner.

 

(b) Covenant Not to Sue . Each Member, on behalf of itself and its Subsidiaries, hereby covenants not to sue or enforce against the Company or the Company’s customers any rights that a Member or its Subsidiaries may have in such Member’s Intellectual Property licensed under Section 5.08(a), except to the extent the Company or the Company’s customers breach the terms and conditions of Section 5.08(a)(i) or Section 5.08(a)(ii) of this Agreement.

 

(c) Future Licenses in Technology . The Company and the Members shall enter into such commercially reasonable written licensing or other agreements, if any, regarding rights in other Intellectual Property of the Company or of either Member relating to the business or operations of the Company at such times and upon such terms as shall be deemed necessary or appropriate by mutual agreement of the Members.

 

(d) Transferability . The licenses granted pursuant to this Section 5.08 shall be transferable by the Company only with the prior written consent of the Member that licensed the Intellectual Property, which consent may be granted or withheld in the sole discretion of such Member, except that such licenses may be transferred upon prior written notice to both Members in connection with a merger of the Company with and into another Person or the sale of all or substantially all of the Company’s assets, and provided that the Company may disclose Intellectual Property licensed hereunder that is Proprietary Information as permitted by (and defined in) Section 10.01 of the Operating Agreement.

 

(e) Noncompetition . A Member’s use of, or license to third parties to use, its Intellectual Property licensed under Section 5.08(a) to the Company shall be consistent with Section 5.13, and nothing in this Section 5.08 shall limit or otherwise modify the application of Section 5.13.

 

(f) Limitations . The Parties acknowledge and agree that except as otherwise specifically contemplated by the Transaction Documents, the Company is not obtaining any rights in, or to use, any Intellectual Property of the Members, and that, except as specified below, the Company is not obtaining any rights in or licenses to use any trademarks or trade names owned by Lockheed Martin or Boeing or any of their respective Subsidiaries, including the names “Lockheed Martin,” “Boeing,” “Martin Marietta,” “McDonnell Douglas” or any derivatives thereof. The Company further acknowledges and agrees that, except as specified below and notwithstanding any provision to the contrary in the Transaction Documents, the Company shall not use any trademark, logo or trade name owned or licensed by either Member or any of their respective Affiliates (other than any such trademark, logo or trade name that is used or planned for use exclusively in either Member’s ELV Business as of the Closing, which trademarks, logos or trade names shall be included in Intellectual Property licensed to the Company hereunder) or any trademarks, logos or trade names that are confusingly similar thereto

 

- 19 -


or that are a translation or transliteration thereof into any language or alphabet. As soon as practicable following the Closing Date, but not later than 90 days after the Closing Date, the Company shall remove and change signage, change and substitute promotional or advertising material in whatever medium, change stationery and packaging and take all such other steps as may be required or appropriate to cease use of all such Intellectual Property not owned by or licensed to the Company; provided , however , that the Company shall not be deemed to have violated this Section 5.08(f) by reason of (i) its use after the Closing of any inventory constituting Contributed Assets, (ii) the appearance of any trademarks, logos or trade names of the Members or their Affiliates in or on any tools, dies, equipment, engineering/manufacturing drawings, manuals, work sheets, operating procedures, other written materials or other Contributed Assets that are used for internal purposes only in connection with the ELV Business; provided that the Company endeavors to remove such trademarks, logos or trade names in the ordinary course of the operation of the ELV Business where such removal is commercially practicable, and provided further , that all trademarks, logos and trade names of the Members and their Affiliates appearing on written materials shall be removed therefrom, covered over or otherwise obliterated prior to the one year anniversary of the Closing Date or (iii) its use of the names “Lockheed Martin” and “Boeing” as a historical reference to the ELV Business for the purpose of identifying the Company as the successor-in-interest thereof. The Company acknowledges and agrees that to the extent it shall use any trademark, logo or trade name of the Members or their respective Affiliates, the applicable Member shall retain exclusive ownership rights in such trademarks, logos or trade names, as the case may be, and all such uses shall inure to the benefit of the Member that owns such trademark, logo or trade name and shall be in accordance with the applicable Member’s quality control standards.

 

Section 5.09 Novation of Government Contracts . Immediately following the Closing, the Company shall, in accordance with, and to the extent required by the Federal Acquisition Regulation Part 42, Subpart 42.12, submit in writing to its Defense Contract Executive and each responsible contracting officer a request for the U.S. Government to recognize the Company as the successor in interest to all of the Government Contracts being sold, assigned, transferred and conveyed to the Company in accordance with the Transaction Documents. Each of the Members shall (i) provide the Company, its Defense Contract Executive and each responsible contracting officer all information necessary to obtain, to the extent required by the Federal Acquisition Regulation Part 42, Subpart 42.12, the consent of the U.S. Government to recognize the Company as the successor in interest to all of its Government Contracts being sold, assigned, transferred and conveyed to the Company in accordance with this Agreement and (ii) enter into novation agreements (the “ Novation Agreements ”) substantially in the form contemplated by such regulations. Each of the Members and the Company shall use reasonable commercial efforts to obtain all consents, approvals and waivers required for the purpose of processing, entering into and completing the Novation Agreements with regard to the Government Contracts, including responding to any reasonable requests for information by the U.S. Government with regard to such Novation Agreements. In the event of any delay in entering into such Novation Agreements or any inability to enter into such Novation Agreements, the Parties will treat the applicable Government Contracts in accordance with Section 3.05.

 

- 20 -


Section 5.10 Company Financing .

 

(a) In order to fund the initial working capital needs of the Company, each of Lockheed Martin and Boeing shall make available to the Company an amount to be mutually agreed by the Members (each, a “ Working Capital Fund ”), in cash or immediately available funds and the Company shall have the right to draw against such Working Capital Funds from time to time upon written notice to the Members together with reasonable documentation of the Company’s requirement therefor and a statement of its then current working capital needs; provided , that any such draw by the Company shall be made from each Member’s Working Capital Fund in an equal amount. Any amounts drawn by the Company against the Member’s Working Capital Funds shall constitute a capital contribution by the Members to the Company and the Company shall have no obligation to repay any such amounts to the Members.

 

(b) The Company shall use reasonable commercial efforts (and each of the Members shall use reasonable commercial efforts to assist the Company) to enter into a revolving credit agreement or similar financing arrangement (the “ Initial Company Financing Arrangement ”) to support the Company’s working capital and other financing needs, the terms of which shall be mutually acceptable to the Members, at or as soon as possible following the formation of the Company and in any event prior to the Closing. To the extent necessary to obtain the Initial Company Financing Arrangement, each of the Members shall guarantee the obligations of the Company on a basis proportionate to their respective percentage ownership interest in the Company and on other terms and conditions reasonably acceptable to the Members.

 

Section 5.11 Competitive Businesses . Unless and until the Closing of the Contemplated Transactions is consummated, the Members will continue to operate as competitive businesses and will not collaborate in any manner, including with respect to Bids, or take any other action in violation of Applicable Law.

 

Section 5.12 Stay of Civil Proceeding .

 

(a) The Members agree that all proceedings and activities (including all dates established by any order of court, including discovery, appeal or objection deadlines, dates for filing of motions, hearing deadlines, and the date for trial) in the Civil Proceeding should be stayed until the Closing occurs. On or promptly (but in no event later than three Business Days) after the date of execution of this Agreement, the Members shall jointly advise the District Court before which the Civil Proceeding is pending that the Members have entered into this Agreement which, upon the occurrence of the Closing, will result in dismissal with prejudice of the Civil Proceeding. The Members shall also jointly request, and thereafter use reasonable efforts to cause, the entry by the District Court of a stipulated order staying all activities and proceedings in the Civil Proceeding until the Closing. The Members further agree that their jointly requested stipulated order shall include a provision that on the earlier of April 1, 2006 (if the Closing has not occurred before such date) or the date this Agreement is terminated pursuant to Section 12.01, either Member may apply to the District Court for an order lifting the stay and, upon such application, the Court shall enter an order lifting the stay and directing that all of said activities and proceedings that have been stayed may be recommenced, with all pretrial and trial dates, including all discovery obligations and deadlines, adjusted by the length of the stay. If pursuant to such application of either Member the stay is lifted prior to the termination of this Agreement, then either Member may terminate this Agreement upon written notice to the other Member.

 

- 21 -


The Members further agree that neither shall file any other action or proceeding asserting any of the claims or counterclaims that are alleged in the Civil Proceeding unless and until the District Court lifts the stay.

 

(b) In the event the District Court does not stay all activities and proceedings in the Civil Proceeding or sua sponte lifts the stay prior to April 1, 2006 or the date of termination of this Agreement pursuant to Section 12.01, promptly (but in no event later than three Business Days) thereafter, the Members shall jointly request the dismissal without prejudice of the Civil Proceeding. To bring about said dismissal of the Civil Proceeding, Lockheed Martin shall dismiss without prejudice the Amended and Supplemental Complaint filed in the Civil Proceeding and Boeing shall dismiss without prejudice its Counterclaim filed in the Civil Proceeding. The Members further agree that if the Closing shall not have been consummated before April 1, 2006, or upon termination of this Agreement pursuant to Section 12.01, within 60 days thereafter but not sooner than 30 days thereafter, Lockheed Martin may re-commence the Civil Proceeding by filing a new complaint (the “ Replead Complaint ”) and in its response to such Replead Complaint, Boeing may re-file a new counterclaim (the “ Replead Counterclaim ”), provided , however , that neither Member may allege any claim that (i) is not presently alleged in the Member’s presently pending pleading or (ii) has been dismissed by the Court as of the date of the dismissal of the Civil Proceeding pursuant to this Section 5.12(b). The Members agree that any and all statutes of limitations applicable to the claims alleged in the Amended and Supplemental Complaint are tolled as to such claims during the period of time between the date of the dismissal of Lockheed Martin’s Amended and Supplemental Complaint pursuant to this Section 5.12(b) and the date upon which the Replead Complaint is filed. The Members agree that any and all statutes of limitations applicable to the claims alleged in the Counterclaim are tolled as to such claims during the period of time between the date of the dismissal of Boeing’s Counterclaim pursuant to this Section 5.12(b) and the date upon which the Replead Counterclaim is filed. The Members further agree that in the recommenced Civil Proceeding each will not plead or assert any statute of limitations, laches or other defense based upon the passage of time to the causes of action alleged in the Replead Complaint or in the Replead Counterclaim, except to the extent that such defenses were available to the Member under Applicable Law, including Fed. R. Civ. Proc. 15(c), as of the date any given cause of action was first filed. The Members further agree that all discovery obtained or produced in connection with the Civil Proceeding may be used by the Members in the recommenced Civil Proceeding, subject to the terms and conditions of the Amended Protective Order for Confidentiality dated January 26, 2005, until entry of a new protective order or the execution of a confidentiality agreement by the Members applicable to that discovery.

 

(c) Each of the Members agrees (for itself and for and on behalf of each of its divisions, Affiliates, Subsidiaries, predecessors, successors and assigns), from and after the execution of this Agreement, that it will not urge, recommend, advocate or request that any component of the U.S. Government initiate or pursue criminal proceedings against Boeing or Lockheed Martin (or any of their respective divisions, Affiliates or Subsidiaries) or administrative proceedings with respect to the present responsibility as a U.S. Government contractor of Boeing or Lockheed Martin (or of any of their respective divisions, Affiliates or Subsidiaries), including investigation, indictment, prosecution, suspension or debarment, based upon or arising out of any actual or alleged past act or omission of any of them in connection with: (i) any U.S. Government or commercial program (including any related competition,

 

- 22 -


procurement, award or sale) relating to Delta II, Delta IV, Titan, Proton, Atlas III or Atlas V or any derivative of any of them; (ii) any event, fact or circumstance alleged in the Civil Proceeding or in the complaint or any amended complaint, counterclaim or other filing made in connection with the Civil Proceeding; (iii) any alleged or actual act or omission by Darleen Druyun; and/or (iv) any alleged or actual act or omission of either Member relating to Darleen Druyun; provided , however , that nothing herein is intended to interfere with either Member’s right or obligation to provide evidence and otherwise cooperate fully in connection with any U.S. Government investigation or other U.S. Government proceeding; and provided further that nothing herein is intended to interfere with Boeing’s right to submit evidence and argument in connection with or defense of any pending or future U.S. Government investigation or other U.S. Government proceeding with respect to Boeing relating to the above-referenced matters; and provided further that nothing herein is intended to interfere with Boeing’s reporting obligations under the Administrative Agreement. Upon execution of this Agreement, Lockheed Martin agrees not to file any lawsuit in Federal, state or local court naming Boeing as a party in which it alleges any claim relating to the conduct of Darleen Druyun, or of Boeing relating to Darleen Druyun unless and until this Agreement is terminated pursuant to Section 12.01.

 

Section 5.13 Non-Competition Agreement .

 

(a) Each Member agrees, on behalf of itself and each of its Subsidiaries, that (i) during the period beginning as of the Closing Date and ending seven and one-half years thereafter, or such earlier date as provided for in the Operating Agreement (the “ Non-Compete Term ”), it will not, and it will cause its Subsidiaries not to, directly or indirectly, either for itself or for any other Person, enter into, engage in, provide managerial, supervisory, administrative or consulting services or assistance to, represent or own any beneficial interest in, any business with operations engaged directly or indirectly in (A) the manufacture, sale, repair, service or support of Competitive Launch Vehicles for the U.S. Government or (B) providing to the U.S. Government the service of launching payloads into Earth orbit or beyond Earth orbit using Competitive Launch Vehicles, and (ii) during the period beginning as of the Closing Date and ending five years thereafter, it will not, and it will cause its Subsidiaries not to, directly or indirectly, either for itself or for any other Person, enter into, engage in, provide managerial, supervisory, administrative or consulting services or assistance to, represent, or own any beneficial interest in, any business with operations engaged directly or indirectly in the design or development of Competitive Launch Vehicles for the U.S. Government (all such operations described in the foregoing clauses (i) and (ii), for the respective periods set forth therein, collectively, the “ Competing Operations ”). For purposes of this Section 5.13, “ Competitive Launch Vehicle ” means any expendable launch vehicle capable of lifting payloads of up to a maximum of 70 metric tons into low Earth orbit (but excluding expendable launch vehicles capable of lifting no more than two metric tons into low Earth orbit) and any expendable launch vehicle capable of performance equivalent to such capacity beyond low Earth orbit (with a comparable exclusion).

 

- 23 -


(b) The provisions of Section 5.13(a) shall not prohibit either Member or any of its Subsidiaries from:

 

(i) continuing anywhere in the world any type of business conducted by such Member or any of its Subsidiaries on the date hereof, which is not part of such Member’s ELV Business as conducted on the date hereof;

 

(ii) entering into any relationship with a Person not owned, managed, operated or controlled by such Member or any of its Subsidiaries for purposes primarily unrelated to Competing Operations;

 

(iii) acquiring or holding for investment purposes 10% or less of any class or series of equity securities of any Person, which class or series of equity securities is registered under Section 12 of the Securities Exchange Act of 1934, as amended, even if that Person is engaged in Competing Operations;

 

(iv) acquiring control of a business or Person (whether through the acquisition of assets, securities or other ownership interests, the effecting of a merger, consolidation, share exchange, business combination, reorganization, recapitalization or other similar transaction) (an “ Acquired Business ”) that is engaged in Competing Operations where the revenues of the Competing Operations of the Acquired Business in its most recently completed fiscal year were less than the lowest of (A) 10% of the total revenues of the Acquired Business for such fiscal year, (B) 20% of the total revenues of the Company for its most recently completed fiscal year (provided that this clause (B) will not apply prior to the end of the Company’s first full completed fiscal year) and (C) $400,000,000;

 

(v) acquiring control of an Acquired Business that is engaged in Competing Operations where the revenues of the Competing Operations of the Acquired Business in its most recently completed fiscal year were (x) higher than the lowest of (A) 10% of the total revenues of the Acquired Business for such fiscal year, (B) 20% of the total revenues of the Company for its most recently completed fiscal year (provided that this clause (B) will not apply prior to the end of the Company’s first full completed fiscal year) and (C) $400,000,000, but (y) lower than 50% of the total revenues of the Acquired Business for its most recently completed fiscal year; provided that such Member shall use commercially reasonable efforts to divest or discontinue the Competing Operations of the Acquired Business as promptly as practicable and in any event shall complete such divestiture or, subject to the last sentence of this Section 5.13(b)(v), discontinuance not later than 18 months following such acquisition. It is understood and agreed that, in connection with any such divestiture, the Company will be afforded an opportunity to participate in the Member’s divestiture process and to bid for the Competing Operations of the Acquired Business on a basis comparable to that afforded by the Member to other potential purchasers (but not on a preferred basis). Notwithstanding the foregoing, nothing in this Section 5.13(b)(v) shall prohibit a Member and its Subsidiaries from performing their obligations under binding agreements of the Acquired Business with customers, suppliers, employees and other Persons that either (A) were in effect prior to the consummation of the acquisition of the Acquired Business or (B) are entered into after the acquisition of the Acquired Business for so long as the Member is in good faith attempting to effect a divestiture of the Competing Operations in accordance with this Section 5.13(b)(v);

 

- 24 -


(vi) the design, development, manufacture, sale, repair, service or support of reusable launch vehicles (including expendable components of reusable launch vehicles) or the supply of related services to the U.S. Government or any other Person;

 

(vii) the design, development, manufacture, sale, repair, service or support of components used in expendable launch vehicles;

 

(viii) entering into any business engaged in, engaging in, continuing to engage in or providing managerial, supervisory, administrative or consulting services or assistance to or representing any business engaged in (x) the design, development, manufacture, sale, repair, service or support of expendable launch vehicles for launches of payloads into Earth orbit and beyond Earth orbit for Commercial Customers, or (y) providing to Commercial Customers the service of launching payloads into Earth orbit or beyond Earth orbit using such expendable launch vehicles;

 

(ix) providing any services under a contract with the U.S. Government where the contract does not include as part of the goods or services provided thereunder an expendable launch vehicle;

 

(x) the design, development, manufacture, sale, repair, service or support of satellites and/or related payloads (whether manned or unmanned), for launch into Earth orbit or beyond Earth orbit or the integration of such satellites or payloads (whether manned or unmanned) with expendable launch vehicles, including pursuant to a DIO Contract;

 

(xi) holding any interest in the Company or taking any action, exercising any right or performing any obligation under the Transaction Documents; or

 

(xii) the design, development, manufacture, sale, repair, service or support of missiles that deliver warheads or that act as kinetic or ballistic weapons.

 

(c) If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 5.13 is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability will have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.

 

(d) Nothing in this Section 5.13 shall be deemed to prohibit, limit or restrict in any way any activities of (i) Boeing or its Subsidiaries related to Sea Launch vehicles or any expendable launch vehicles derived from the Space Shuttle or (ii) Lockheed Martin or its Subsidiaries related to the Titan (but only to the extent required to perform under Contracts existing on the date hereof), Proton, Angara, Falcon, Trident or Athena vehicles, or any expendable launch vehicles derived from the Space Shuttle.

 

Section 5.14 Spaceport Lease . The Company covenants and agrees that it shall at all times conduct its business in compliance with the terms and conditions of the Lease dated as of February 14, 2000 by and between Lockheed Martin, as Lessee and Mortgagor, and Spaceport

 

- 25 -


Florida Authority, as Lessor and Mortgagee (the “ Spaceport Lease ”), as if the Company were the original direct Lessee thereunder. Lockheed Martin covenants and agrees that, in the event the Lease Balance (as defined in the Spaceport Lease) becomes due and payable under the terms of the Spaceport Lease as a result of the occurrence of a Lease Event of Default (as defined in the Spaceport Lease) under Section 16.1(e) of the Spaceport Lease and such Lease Event of Default is not cured or waived within the applicable grace period, Lockheed Martin will exercise its Early Prepayment Option (as defined in the Spaceport Lease) and prepay the Lease Balance (as defined in the Spaceport Lease) pursuant to and in accordance with Section 18.1 of the Spaceport Lease. For the remainder of the Term (as defined in the Spaceport Lease) the Company shall pay to Lockheed Martin the Basic Rent (as defined in the Spaceport Lease) at the times and in the amounts as would have been owed to the Lessor under the Spaceport Lease had Lockheed Martin not exercised the Early Prepayment Option in accordance with the terms of the lease assignment for the Spaceport Lease to be entered into pursuant to Section 3.01(h). Lockheed Martin further covenants and agrees that it will not take any action to amend the terms of the Spaceport Lease in a manner that is adverse to the interests of the Company as assignee of the Spaceport Lease without the prior written consent of the Company. Lockheed Martin agrees to cooperate reasonably with the Company in any efforts by the Company to obtain refinancing of the outstanding Lease Balance under the Spaceport Lease and the related Lessor financing so that the term of the Spaceport Lease may be renewed for a five year term, provided that Lockheed Martin shall not be obligated to remain liable under the Spaceport Lease beyond February 15, 2010.

 

Section 5.15 Compliance with Administrative Agreement . In accordance with the terms and provisions of the Interim Administrative Agreement dated March 4, 2005 (the “ Administrative Agreement ”) between Boeing and the United States Department of the Air Force (the “ Air Force ”), the Company and each of the Members agree that the Company shall, from and after the Closing, (i) maintain throughout the ELV Business, including Boeing’s former ELV Business, an ethics/compliance program generally comparable to the ethics/compliance program currently in existence at Boeing’s ELV Business and sufficient to establish the continued present responsibility of the Company, including Boeing’s former ELV Business, to the satisfaction of the Air Force and (ii) be accountable to the Air Force for compliance by the Company with respect to activities following the Closing, including Boeing’s former ELV Business, with other applicable terms of the Administrative Agreement. Without limiting the foregoing, the Company will appoint and maintain a special compliance officer to oversee the implementation of the applicable measures outlined in the Administrative Agreement, which compliance officer shall, at Boeing’s request and if permissible under the terms of the Administrative Agreement, be the same person serving as Boeing’s special compliance officer. The costs of compliance with the Administrative Agreement will be paid by the Company except to the extent any such cost is an Excluded Liability or is not allocable and allowable pursuant to Section 11.05. For the avoidance of doubt, such costs incurred by the Company that are unallowable under the terms of the Administrative Agreement shall be reimbursed to the Company by Boeing or paid by Boeing.

 

- 26 -


ARTICLE VI

FURTHER COVENANTS AND AGREEMENTS OF THE PARTIES

 

Section 6.01 Further Assurances . Subject to the terms and conditions of this Agreement, each Party shall use reasonable commercial efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under Applicable Law, to consummate or implement the Contemplated Transactions, including providing information reasonably requested by other Persons necessary for such Persons to evaluate whether to consent to the assignment of any Contracts, licenses or permits or related rights or obligations. The Parties shall execute and deliver, and shall cause their respective Subsidiaries, as appropriate or required as the case may be, to execute and deliver, such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable to consummate or implement the Contemplated Transactions. Except as otherwise expressly set forth in the Transaction Documents, nothing in this Section 6.01 or elsewhere in the Transaction Documents shall require any Party or any of their respective Affiliates to make any payments or issue any guarantee or other Financial Support Arrangements in order to obtain any consents or approvals necessary or desirable in connection with the consummation of the Contemplated Transactions.

 

Section 6.02 Certain Filings; Consents . The Parties shall cooperate with each other (a) in determining whether any action by or in respect of, or filing with, any Governmental Authority is required, or any actions, consents, approvals or waivers are required to be obtained in respect of any Contracts, licenses or permits constituting Contributed Assets, in connection with the consummation of the Contemplated Transactions and (b) subject to the terms and conditions of this Agreement, in taking any such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers.

 

Section 6.03 Public Announcements . On the date of execution and delivery of this Agreement, the Members shall issue a joint press release substantially in the form attached hereto as Attachment X . Prior to the Closing, the Parties shall not (and shall not permit any Affiliate to) issue any press release or make any public statement with respect to this Agreement or any of the Contemplated Transactions, except as may be required by Applicable Law or any listing agreement with any national securities exchange, in which case no Party shall issue any such press release or make any such public statement without prior discussion with the other Parties (to the extent reasonably practicable) and without complying with Applicable Law. Notwithstanding the foregoing, no provision of this Agreement shall (a) relieve either Member from any of its obligations under the Confidentiality Agreement or (b) terminate any of the restrictions imposed upon the Parties by Section 5.03.

 

Section 6.04 Antitrust Laws .

 

(a) The Members shall make the filings required under the HSR Act and any other Antitrust Laws. The Members shall also comply at the earliest practicable date with any request for additional information, documents or other materials received from the Federal Trade Commission or the Department of Justice or any other Governmental Authority, including the European Union Competition Commission and other international competition authorities. The Members shall use all reasonable commercial efforts to resolve objections, if any, that may be asserted by any Governmental Authority with respect to the Contemplated Transactions under any Antitrust Laws, including the HSR Act, the Sherman Act, as amended, the Clayton Act, as

 

- 27 -


amended, and the Federal Trade Commission Act, as amended. If any judicial or administrative action or proceeding is initiated (or threatened to be initiated) by a Governmental Authority challenging the Contemplated Transactions as violative of any Antitrust Law or any other Applicable Law, for so long as both Members desire to oppose any such action or proceeding, the Members shall each cooperate to contest and resist any such action or proceeding, and to have vacated, lifted, reversed or overturned any decree, judgment, injunction, ruling, decision, finding or other order (whether temporary, preliminary, or permanent) until such time as a final, non-appealable order has been entered.

 

(b) Each Member covenants and agrees that, to the extent practicable, prior to engaging in any substantive discussions with any representatives of a Governmental Authority concerning the Contemplated Transactions, the Member will advise the other Member of the anticipated substance of the discussions, provide the other Member with copies of any written materials it intends to provide to or review with such representatives and afford the other Member a reasonable opportunity to comment upon the anticipated substance of the discussions or such written materials or to join the Member and participate in such discussions. In the event it is impracticable for a Member to comply with its obligations in the preceding sentence because the Member is contacted directly by a representative of a Governmental Authority without advance notice, or in any event such a discussion occurs without the presence of Representatives of both Members, as soon as practicable following any such discussions the Member shall advise the other Member of the discussions, the identity of the parties participating in the discussions and the substance of the discussions, and shall provide the other Member with copies of any written materials provided to, reviewed with or received from representatives of the Governmental Authority.

 

Section 6.05 Agreements Regarding Tax Matters .

 

(a) Each Member shall (i) provide the Company with such assistance as may be reasonably requested in connection with the preparation of any Tax Return or any audit or other examination by any Tax Authority or proceeding involving any Governmental Authority relating to liability for Taxes, (ii) retain for a period of six years following the end of the calendar year in which the Closing occurs and provide to the Company all records and other information that may be relevant to any such Tax Return, audit or examination, proceeding or determination, and (iii) provide the Company with a copy of any final determination of any such audit or examination, proceeding or determination that affects any amount required to be shown on any Tax Return of the Company for any period. Without limiting the generality of the foregoing, each Member shall retain, until the expiration of the applicable statutes of limitation (including any extensions thereof), copies of all Tax Returns, supporting work schedules and other records relating to Tax periods or portions thereof ending on or prior to the Closing Date that concern the Contributed Assets or the Assumed Liabilities.

 

(b) The Members agree that the transactions contemplated by this Agreement constitute a disposition of a trade or business within the meaning of Section 41(f)(3) of the Code. The Members will provide to the Company upon request all information necessary to permit the Company to apply the provisions of Section 41(f)(3)(A) of the Code.

 

- 28 -


(c) If either Member receives any refund of Taxes relating to its ELV Business for periods prior to the Closing Date and the Tax liability to which such refund relates was included as a cost in a cost-reimbursement or fixed-price incentive (cost-redeterminable) Government Contract, then such Member and the Company shall cooperate to determine the appropriate portion of such Tax refund due to any Governmental Authority pursuant to the applicable provisions of the Federal Acquisition Regulation as if the Company had pursued and obtained an identical Tax refund. Once the appropriate portion due any Governmental Authority is determined, such Member shall promptly remit such portion directly to such Governmental Authority.

 

(d) The Company shall timely prepare and, with the prior written consent of the Members (which consent shall not be unreasonably withheld or delayed), file all Tax Returns, reports and forms required by any Tax Authority to be filed by the Company. The Company shall timely prepare and, with the prior written consent of the Members (which consent shall not be unreasonably withheld or delayed), file all Non-Income Tax Returns with respect to the Contributed Assets or the ELV Business for any Tax period beginning before and ending after the Closing Date (a “ Straddle Period ”).

 

(e) The Company shall pay all Non-Income Taxes due with respect to any Straddle Period; provided , that the Members shall be liable for and, to the extent paid by the Company, shall reimburse the Company for any such Non-Income Taxes attributable to the portion of such Straddle Period beginning before and ending as of the effective time of the Closing (including Non-Income Taxes resulting from the transactions contemplated by this Agreement but, except as provided in Section 13.03, not including sales Taxes, transfer Taxes or stamp Taxes imposed with respect to the transfer of the Contributed Assets or the ELV Business pursuant to this Agreement), but only to the extent such Non-Income Taxes are not recoverable by the Company from a Governmental Authority pursuant to the Federal Acquisition Regulation. Any Non-Income Taxes arising from or with respect to the Contributed Assets or the ELV Business for a Straddle Period shall be apportioned between the Company and the Members by allocating real and personal property taxes between the Members and the Company based on the ratio of the number of days in the Straddle Period occurring before the Closing Date to the number of days in the Straddle Period occurring on or after the Closing Date and by assuming, with respect to all other Non-Income Taxes, that the ELV Business had a tax period that ended at the close of business on the day immediately prior to the Closing Date and closed its books as of that time. The Company shall reimburse the Members for any such Non-Income Taxes paid by the Members for which the Company is liable pursuant to this Section 6.05(e).

 

(f) Boeing shall be liable for and, to the extent paid by the Company shall reimburse the Company for, any Income Taxes attributable to the Boeing Contributed Assets and the portion of the ELV Business conducted by Boeing attributable to any Tax period that begins before and ends either (i) before, or (ii) as of the effective time of the Closing. Lockheed Martin shall be liable for and, to the extent paid by the Company shall reimburse the Company for, any Income Taxes attributable to the Lockheed Martin Contributed Assets and the portion of the ELV Business conducted by Lockheed Martin attributable to any Tax period that begins before and ends either (i) before, or (ii) as of the effective time of the Closing.

 

- 29 -


(g) The Company shall engage an independent accounting firm of national reputation to assist in the preparation of the Company’s Income Tax Returns.

 

(h) Lockheed Martin shall be designated as the “tax matters partner” within the meaning of Section 6231(a)(7) of the Code and in any similar capacity under Applicable Law.

 

(i) The Company and the Members shall make the election under Treasury Regulation Section 301.6231(a)(1)-1(b) to have the TEFRA unified partnership procedures of Sections 6221 through 6231 of the Code apply with respect to the Company.

 

(j) The Company shall reimburse each Member for all state and local Income Taxes paid by such Member that are properly allocable to the Company under the Federal Acquisition Regulation.

 

Section 6.06 Administration of Accounts . All payments and reimbursements that constitute a Contributed Asset or relate to an Assumed Liability received by either Member after the Closing Date shall be promptly paid over to the Company without right of set-off. All payments and reimbursements that constitute Excluded Assets or relate to an Excluded Liability received by the Company after the Closing Date shall be promptly paid over to applicable Member without right of set-off.

 

Section 6.07 Clearances; Undisclosed Contracts . Promptly after the date hereof, subject to Applicable Law, each of Lockheed Martin and Boeing shall, with respect to each of the Contracts of its ELV Business that require security clearances and/or special program accesses, or that contain confidentiality or non-disclosure provisions requiring the specific approval of customers or other Persons for disclosure of the terms thereof (the “ Undisclosed Contracts ”), subject to national security restrictions, use reasonable commercial efforts to obtain all required security clearances, special program accesses and/or the approval of customers or other Persons as necessary to enable (i) each Member and its Representatives to conduct a review of the Undisclosed Contracts of the other Member’s ELV Business to which such Member shall have been denied access prior to the date hereof, and (ii) the Company to conduct the ELV Business from and after the Closing Date. Upon receiving the security clearances, special program accesses or approvals of customers or other Persons, as the case may be, as contemplated by the preceding clause (i), each Member shall permit the other Member’s Representatives to conduct a review of such Undisclosed Contracts, subject to the terms and conditions of the clearance, accesses and/or approvals, the provisions of the Confidentiality Agreement and the provisions of Applicable Law.

 

Section 6.08 Audits . Following the Closing Date, the Parties shall cooperate reasonably with each other in connection with any audit or review by any Governmental Authority with respect to the ELV Business and the businesses of the Members and their Subsidiaries (other than their ELV Businesses), provided that any Tax audit shall be governed solely by the terms of Section 6.05.

 

- 30 -


Section 6.09 Certain Environmental Matters .

 

(a) Each of the Members covenants and agrees, to the extent necessary for continuation of the use as of the Closing Date of any real property constituting any of its Contributed Assets, or any real property leased or subleased by it to the Company pursuant to this Agreement, or as required by applicable Environmental Law, to pay (except to the extent that such obligation constitutes an Assumed Liability) or otherwise resolve, in cooperation with the Company, any Environmental Claim based on its respective Pre-Closing Environmental Conditions and to investigate, monitor, remediate, or otherwise respond to its respective Pre-Closing Environmental Conditions in accordance with applicable Environmental Laws (“ Remediation Programs ”). The Company acknowledges and agrees that neither Member shall have any obligation to (i) conduct or pay for any voluntary actions with respect to the Pre-Closing Environmental Conditions beyond that necessary for continuation of the applicable property’s use as of the Closing Date or otherwise mandated by applicable Environmental Laws or (ii) accelerate its respective Remediation Programs ahead of any legally mandated schedule. The Company acknowledges and agrees that each of the Members shall, in cooperation with the Company, have primary responsibility with regard to its respective Remediation Programs and related activities. The Company shall fully cooperate with the Members in connection with performance of the Remediation Programs and related activities and the Company shall use commercially reasonable efforts not to disturb, damage, delay, hinder or otherwise interfere with the Members’ Remediation Programs or related activities. Each of the Members will cooperate in good faith prior to the Closing to have prepared a Phase I environmental study of each of their respective Contributed Leased Real Properties and Contributed Owned Real Properties and, with respect to Lockheed Martin, the portion of the Denver Facility to be leased to the Company under the Denver Lease Agreement, and shall provide to the other Member the results of such Phase I studies prior to the Closing.

 

(b) The Company acknowledges and agrees that each of the Members shall be primarily responsible, in cooperation with the Company, for determining and developing the extent, contents, timetable and all other aspects of its respective Remediation Programs. The Members shall be responsible for all negotiations and other discussions with Governmental Authorities relating to compliance with Environmental Laws concerning the Pre-Closing Environmental Conditions, the Remediation Programs and any related matters, and the Company will not initiate or otherwise engage in any communications with any Governmental Authorities relating to compliance with Environmental Laws concerning Pre-Closing Environmental Conditions, the Remediation Programs or any related matters without the prior written consent of the applicable Member, which consent may be conditioned on such Member’s active participation in such communications. The Company shall promptly advise the applicable Member of any such communications initiated by a Governmental Authority relating to compliance with Environmental Laws and shall promptly provide such Member with copies of all documents received from a Governmental Authority relating to compliance with Environmental Laws concerning any such matters. Each of the Members shall promptly inform the Company of the substance and outcome of any negotiations between such Member and a Governmental Authority relating to compliance with Environmental Laws concerning any Pre-Closing Environmental Condition, Remediation Program or related matter. The Company acknowledges and agrees that the Members shall have primary responsibility, in cooperation with the Company, for all decisions regarding the selection and implementation of the Remediation Programs and any related matters.

 

- 31 -


(c) The Company shall provide each Member and its respective Representatives and contractors with access to any and all portions of any property that have been or may have been affected by Pre-Closing Environmental Conditions that the applicable Member reasonably determines are necessary or appropriate to enter for conducting Remediation Programs, or that such Member reasonably determines are necessary or appropriate to enter to satisfy any applicable requirement of Environmental Law. To accomplish the foregoing, the Company hereby grants each of the Members and its respective Representatives and contractors an irrevocable license and right to enter upon any such property and to engage in all activities reasonably related to such tasks, including the right to collect environmental samples, install, operate, repair, and maintain wells, piping, treatment devices and other equipment, the right to review, copy or otherwise use the Company’s documents, computer files or other information reasonably related to such Member’s Pre-Closing Environmental Conditions and associated matters and the right to interview or otherwise consult with the Company’s Representatives and contractors concerning such Pre-Closing Environmental Conditions and associated matters. Such license shall be a covenant running with the land and shall be transferable to any party succeeding to the interests of the Members with respect to the performance of any Remediation Programs. The Company further agrees to execute any documentation in recordable form evidencing such license in favor of a Member as reasonably appropriate. Upon a Member’s request, the Company shall promptly provide such Member with copies of any documents, computer files or other information that the Member reasonably determines would be relevant to its ability to carry out its Remediation Programs or any related activities. Upon the Company’s or a Member’s request, a Member shall promptly provide the Company or the other Member with an annual remediation plan summarizing the anticipated remedial activities to be taken over the course of the following year and with copies of any documents, computer files or other information that the Company or the other Member reasonably determines would be relevant to its evaluation of a Remediation Program or any related activities, to support any filings with or submissions to Governmental Authorities or to confirm that the Remediation Program is being conducted in compliance with Applicable Law. Except in emergency situations, the Members and their Representatives and contractors agree to provide advance written or telephonic notice to the Company prior to entering any property of the Company. Upon satisfaction of the notice requirement and upon presentation of their credentials to the Company, the Company covenants and agrees to provide the Members and their Representatives and contractors with all reasonably required access to the relevant property, the Company’s information, and the Company’s personnel.

 

(d) The Company shall provide the Members with all water and utilities reasonably necessary to develop, implement and complete the Remediation Programs or other requirements of applicable Environmental Laws. The Company covenants and agrees to provide appropriate parking, administrative space, storage facilities, sanitary facilities and other support services that the Members may reasonably require to accomplish the foregoing.

 

(e) To the extent the Company’s consent, signature, authorization or other cooperation is necessary to obtain a permit from or the authorization or approval of any Governmental Authority to enable the Members to develop or implement the Remediation Program or to otherwise satisfy any applicable Environmental Laws, the Company hereby covenants and agrees promptly and fully to provide the same.

 

- 32 -


(f) The Company acknowledges that the Members’ respective activities related to their Remediation Programs and/or compliance with applicable Environmental Laws may interfere with the Company’s use of some or all of the Company’s properties, may alter the properties or may limit future uses of the properties. To the extent permitted by the Remediation Programs and applicable Environmental Laws, the Members covenant and agree to make commercially reasonable efforts to minimize such interference, alteration or limitation and to consult with and seek the approval of the Company of any Remediation Programs, which approval shall not be unreasonably withheld. The Members and their Representatives and contractors shall make commercially reasonable efforts to prevent their activities from unreasonably interfering with or impeding the Company’s uses of the respective properties as of the Closing Date and to control dust, noise, vibration or other visible effects of their activities. Upon completion of the Remediation Programs, the Members shall remove their materials, equipment and debris promptly from the property and shall use reasonable efforts to restore the property to substantially its original condition. The Company shall not, without the applicable Member’s advance written consent, construct, modify, remove or install any equipment, building, paving or other item on any part of any properties previously designated by either of the Members as a Remediation Program area that could unreasonably interfere with or significantly increase the cost of the Members’ respective obligations arising under the Remediation Programs or any applicable Environmental Law.

 

(g) Each of the Members shall, in consultation with the Company if the Company so requests, have absolute discretion concerning the selection of its respective Representatives and/or contractors designated to perform the Remediation Programs and/or other obligations under applicable Environmental Laws.

 

(h) Each of the Members shall have authority, in cooperation with the Company, to resolve all issues and settle all matters relating to its respective Pre-Closing Environmental Conditions, and the Company agrees not to interfere with any such efforts by the Members and further agrees to join in and abide by any Member decisions regarding the foregoing. The Members shall keep the Company informed concerning the existence and nature of such issues and matters and any proposed decisions or settlements relating to the foregoing.

 

(i) In addition to complying with the other provisions of this Section 6.09 to the extent applicable to the Rancho Cordova Property, the Company and Boeing also will cooperate in continuing to implement the ongoing Remediation Program in respect of the Rancho Cordova Property, including by means of an agreement on mutually acceptable terms pursuant to which Boeing will administer the Remediation Program on behalf of the Company. Boeing and the Company agree that to the extent permitted by existing applicable agreements and administrative orders, they will keep each other fully informed about such Remediation Program, including allowing each other a reasonable opportunity to review and comment on all submissions to regulators prior to submission, and will cooperate with each other and take appropriate actions to ensure that there is full compliance with the existing agreements and administrative orders and other requirements of Applicable Laws. Upon the reasonable request of the Company, Boeing shall use reasonable commercial efforts to grant the Company access to the Rancho Cordova Property, it being understood that Boeing is not the current owner of the Rancho Cordova Property and therefore cannot assure such access.

 

- 33 -


(j) The Company covenants and agrees not to transfer or assign any interest in any real property, whether constituting a Contributed Asset or leased or subleased to the Company, unless the transferee or assignee agrees, for the benefit of the Members and any of their successors, transferees or assignees, to comply with the provisions of this Section 6.09, as if such transferee or assignee was the Company under this Agreement.

 

(k) Nothing in this Section 6.09 shall be deemed to limit or otherwise modify any other provision of this Agreement, including clause (vii) of each of the definitions of Boeing Assumed Liabilities and Lockheed Martin Assumed Liabilities.

 

Section 6.10 Payments Relating to Certain Pre-Closing Activities . Promptly after receipt thereof, the Company will pay (i) to Lockheed Martin any amounts received by the Company from the U.S. Government with respect to Assured Access to Space infrastructure sustainment relating to an Atlas V to the extent relating to periods ending on or before the Closing Date and (ii) to Boeing any amounts received by the Company from the U.S. Government with respect to Assured Access to Space infrastructure sustainment relating to a Delta IV to the extent relating to periods ending on or before the Closing Date.

 

ARTICLE VII

TRANSACTION DOCUMENTS

 

Section 7.01 Transaction Documents . Each Party covenants and agrees, as an inducement to the others to enter into this Agreement and to consummate the Contemplated Transactions, to execute and deliver and to cause its respective Subsidiaries to execute and deliver each Transaction Document to which each is a party.

 

ARTICLE VIII

EMPLOYEE AND EMPLOYEE BENEFIT MATTERS

 

Section 8.01 Employee and Employee Benefit Matters . The Parties agree as to employee and employee benefit matters as set forth in Exhibit E .

 

ARTICLE IX

REAL PROPERTY AND RELATED MATTERS

 

Section 9.01 Certain Real Property and Related Matters . The Parties shall cooperate with each other and use reasonable commercial efforts to obtain any consents or approvals required in connection with the assignment of the leases to the Contributed Leased Real Property to the Company and to obtain from applicable landlords or other third parties the release of the applicable Member and its Affiliates from all liabilities and obligations under the leases in respect of the Contributed Leased Real Property; provided , however , that if any landlord of any Contributed Leased Real Property is unwilling either to release the applicable Member or its Affiliated Transferor from all liabilities and obligations under the lease relating to such Contributed Leased Real Property or to include in the consent to any such assignment a recapture provision that would allow such Member or its Affiliated Transferor to take back the lease in the event of a default by the Company under the lease, at the option of such Member, in lieu thereof, such Member or its applicable Affiliated Transferor, as the case may be, and the Company shall execute and deliver a sublease agreement for the sublease by the Company of such Contributed

 

- 34 -


Leased Real Property on terms and conditions to be mutually agreed between the Members. In addition, (a) Lockheed Martin and the Company agree to enter into the Denver Lease Agreement, and (b) each of the Members and the Company agree to take such actions as necessary to transfer the Contributed Owned Real Property to the Company, in each case effective as of the Closing. Notwithstanding the foregoing, except as otherwise expressly set forth in the Transaction Documents, nothing in this Section 9.01 shall require any Party to make any payments in order to obtain such consents, approvals or releases, except for reasonable and customary costs to cover actual expenses incurred by landlords to process any requests for assignment.

 

ARTICLE X

CONDITIONS TO CLOSING

 

Section 10.01 Conditions to Obligations of Each Member . The obligations of each Member to consummate the Closing are subject to the satisfaction (or waiver by each Member) of the following conditions:

 

(a) any applicable waiting period (and any extension thereof) under any Antitrust Law (including the HSR Act) relating to the Contemplated Transactions shall have expired or been terminated and any necessary approvals under any Antitrust Law shall have been obtained, and there shall not be (i) any pending action or proceeding in which a Governmental Authority is seeking to enjoin the Contemplated Transactions, or (ii) a final, nonappealable order entered by a Governmental Authority that enjoins or otherwise prohibits the Contemplated Transactions;

 

(b) no provision of any Applicable Law and no judgment, injunction, order or decree issued by a court or other Governmental Authority of competent jurisdiction shall prohibit the Closing;

 

(c) no action or proceeding shall be pending before any court or other Governmental Authority that seeks to prohibit the Closing, or impose damages or obtain other relief in connection with the Contemplated Transactions that (i) is brought by any Governmental Authority having jurisdiction in respect thereof or (ii) is brought by any Person (other than a Governmental Authority) if in the case of this clause (ii) such action or proceeding reasonably could be expected to prohibit the Closing or result in a Material Adverse Effect on either of the Members or the ELV Business;

 

(d) all actions by or in respect of, or filings with, any Governmental Authority (other than actions or filings in connection with the Novation Agreements) required to permit the consummation of the Closing shall have been taken or made, and the Company and the Members shall have entered into one or more advance agreements, in form and substance reasonably satisfactory to the Members, with the appropriate Governmental Authority concerning matters relating to the formation of the Company and the concept of its operations;

 

(e) neither Member nor the Company shall have received any official written notification from the Office of the Secretary of Defense of the United States Department of Defense (“ DOD ”) or the Administrator of the National Aeronautics and Space Administration

 

- 35 -


(“ NASA ”) that either the DOD and/or NASA objects to or intends to seek to prevent consummation of the Contemplated Transactions or intends to oppose the novation of Government Contracts from the Members to the Company;

 

(f) clearance under the federal rules and regulations relating to the National Industrial Security Program, in the form of approvals and agreement prescribed by the DOD, shall have been obtained from the DOD for the Company to own and operate those portions of the ELV Business that are governed by such program, and the Company shall have obtained all such security clearances and/or special program accesses as are necessary in order to enable the Company to continue the ELV Businesses of each of the Members as of the Closing Date;

 

(g) the Company shall have in place the Initial Company Financing Arrangement;

 

(h) the Members shall have obtained the consents, approvals or permits contemplated by Attachment XI ; and

 

(i) the representations and warranties of the Company contained in this Agreement shall be true and correct at and as of the date of the Joinder and as of the Closing Date, as if made at and as of each such date, except that those representations and warranties that by their express terms are made as of a specific date shall be required to be true and correct only as of such date, in each case except for inaccuracies that could not reasonably be expected to have a Material Adverse Effect on the Company.

 

Section 10.02 Conditions to Obligations of Lockheed Martin . The individual obligations of Lockheed Martin to consummate the Closing are subject to the satisfaction (or waiver by Lockheed Martin) of the following further conditions:

 

(a) (i) Boeing shall have performed in all material respects all of its obligations under this Agreement required to be performed by it at or prior to the Closing, (ii) the representations and warranties of Boeing contained in this Agreement shall be true and correct at and as of the date of this Agreement and as of the Closing Date, as if made at and as of each such date, except that those representations and warranties that by their express terms are made as of a specific date shall be required to be true and correct only as of such date, in each case except for inaccuracies that could not reasonably be expected to have a Material Adverse Effect on Boeing’s ELV Business or the Company, and (iii) Lockheed Martin shall have received a certificate signed by an officer of Boeing to the foregoing effect;

 

(b) except as contemplated in Schedule C.06 , since the date of this Agreement, no event shall have occurred that has had or reasonably could be expected to have a Material Adverse Effect on Boeing’s ELV Business;

 

(c) Boeing and the Company shall have entered into an agreement pursuant to which each shall (i) agree to flow through to the other, to the extent applicable, the protections of the CSLA, and (ii) waive all claims against the other and the U.S. Government, on behalf of itself and its contractors, subcontractors, suppliers and customers, and the contractors, subcontractors and suppliers of its customers, of a nature covered under the reciprocal waiver requirements of the CSLA, including claims for death, bodily injury or property damage or loss resulting from the supply of ELV Systems and related Launch Services; and

 

- 36 -


(d) Boeing (or its applicable Subsidiaries) shall have executed and delivered, on or before the Closing Date, each of the Transaction Documents that are required to be executed by Boeing or its Subsidiaries.

 

Section 10.03 Conditions to Obligations of Boeing . The individual obligations of Boeing to consummate the Closing are subject to the satisfaction (or waiver by Boeing) of the following further conditions:

 

(a) (i) Lockheed Martin shall have performed in all material respects all of its obligations under this Agreement required to be performed by it at or prior to the Closing, (ii) the representations and warranties of Lockheed Martin contained in this Agreement shall be true and correct at and as of the date of this Agreement and as of the Closing Date, as if made at and as of each such date, except that those representations and warranties that by their express terms are made as of a specific date shall be required to be true and correct only as of such date, in each case except for inaccuracies that could not reasonably be expected to have a Material Adverse Effect on Lockheed Martin’s ELV Business or the Company, and (iii) Boeing shall have received a certificate signed by an officer of Lockheed Martin to the foregoing effect;

 

(b) except as contemplated in Schedule B.06 , since the date of this Agreement, no event shall have occurred that has had or reasonably could be expected to have a Material Adverse Effect on Lockheed Martin’s ELV Business;

 

(c) Lockheed Martin and the Company shall have entered into an agreement pursuant to which each shall (i) agree to flow through to the other, to the extent applicable, the protections of the CSLA, and (ii) waive all claims against the other and the U.S. Government, on behalf of itself and its contractors, subcontractors, suppliers and customers, and the contractors, subcontractors and suppliers of its customers, of a nature covered under the reciprocal waiver requirements of the CSLA, including claims for death, bodily injury or property damage or loss resulting from the supply of ELV Systems and related Launch Services; and

 

(d) Lockheed Martin (or its applicable Subsidiaries) shall have executed and delivered, on or before the Closing Date, each of the Transaction Documents that are required to be executed by Lockheed Martin or its Subsidiaries.

 

Section 10.04 Updated Disclosure Schedules . At any time prior to the Closing, each Member shall be entitled to deliver to the other Member updates to, or substitutions of, such Member’s Disclosure Schedules; provided , that such updates or substitutions are clearly marked as such and are addressed to the other Member at the addresses listed in Section 13.01. In the event any Member delivers updated or substitute Disclosure Schedules within three days of any date scheduled for Closing, the other Member shall be entitled to extend, by written notice to the updating Member, the scheduled date for Closing to the third day after it receives the updated or substitute Disclosure Schedules, or if such day is not a Business Day, to the next Business Day. The delivery by a Member of updated or substitute Disclosure Schedules shall not prejudice any rights of the other Member under this Agreement, including the right to claim that the

 

- 37 -


representations and warranties of the updating Member, when made on the date of this Agreement or as of the Closing Date, were untrue, or that any condition to Closing (without regard to any such updates or substitutions) was unfulfilled.

 

Section 10.05 MAE Exceptions . It is acknowledged and agreed that the occurrence of one or more of the events that arguably could constitute a Material Adverse Effect on a Member’s ELV Business but for the application of subsections (v), (x), (y) and (z) of the proviso to the definition of “Material Adverse Effect” hereunder (the “ MAE Exceptions ”) shall not give rise to the right of either Member to terminate this Agreement pursuant to Section 12.01, or otherwise to assert that the closing conditions set forth in Section 10.02 or 10.03 have not been satisfied. In the event of the occurrence of one or more events constituting a MAE Exception, the Parties shall cooperate in good faith to minimize the impact of such MAE Exception on the Company and the ELV Business to be performed by the Company after the Closing Date.

 

ARTICLE XI

SURVIVAL; INDEMNIFICATION

 

Section 11.01 Survival . None of the representations, warranties, covenants or agreements of the Parties contained in this Agreement shall survive the Closing, except that:

 

(a) solely for purposes of the indemnification provided in Sections 11.02(a)(i)(1) and 11.02(b)(i)(1) and 11.02(c)(i):

 

(i) the representations and warranties in Sections B.01, B.02, C.01, C.02, D.01, D.02 and D.07 shall survive the Closing indefinitely;

 

(ii) the representations and warranties in Sections B.16 and C.16 shall survive the Closing for a period ending upon the later of three years from the Closing Date or the date on which the applicable statute of limitations expires; and

 

(iii) the representations and warranties in Exhibit B , Exhibit C and Exhibit D (other than those Sections referenced in the preceding clauses (i) and (ii), which shall survive solely to the extent provided by such clauses (i) and (ii)) shall survive the Closing for a period of two years from the Closing Date; and

 

(b) those covenants and agreements set forth in this Agreement that, by their terms, are to have effect after the Closing Date shall survive for the period contemplated by the covenants and agreements, or if no period is so contemplated, indefinitely.

 

The representations, warranties, covenants and agreements referenced in the preceding clauses (a) and (b) as surviving the Closing are referred to herein as the “ Surviving Representations or Covenants .” It is understood and agreed that (x) after the Closing, the sole and exclusive remedy with respect to any breach of any Surviving Representation or Covenant shall be a claim for Damages (whether by contract, in tort or otherwise, and whether in law, in equity or both) made pursuant to this Article XI; provided , that notwithstanding the foregoing, nothing in this Article XI shall limit the right of any Party (A) to pursue an action for or to seek remedies with respect to claims for fraud or (B) to seek specific performance or other equitable relief; and (y) before the Closing, the Parties shall be entitled to the termination and other remedies set forth in Article

 

- 38 -


XII and indemnification under this Article XI shall not apply. Without limiting the foregoing, it is understood that except to the extent provided in this Article XI, neither Lockheed Martin nor Boeing shall have any liability to the other for any diminishment in value of the other’s ownership interest (or the ownership interest of the other’s Subsidiaries) in the Company as a result of any matters giving rise to a claim for indemnification under this Article XI.

 

Section 11.02 Indemnification .

 

(a) Effective as of the Closing and subject to the limitations set forth in Section 11.04(a), Lockheed Martin hereby indemnifies each of (x) Boeing, its Affiliates and its Representatives (together with their respective successors and permitted assigns) (the “ Boeing Indemnified Parties ”), and (y) the Company, its Affiliates and its Representatives (together with their respective successors and permitted assigns) (the “ Company Indemnified Parties ”) against, and agrees to defend and hold them harmless from, any and all Damages incurred or suffered by any of them (i) arising out of, resulting from or related to (1) any breach of any Surviving Representation or Covenant made or to be performed by Lockheed Martin or its Subsidiaries pursuant to this Agreement (for purposes of this clause (i)(1), all representations and warranties shall be read without reference to materiality, Material Adverse Effect or similar qualifications), (2) any Lockheed Martin Excluded Liabilities (including Lockheed Martin’s or any of its Subsidiaries’ failure to perform or in due course pay or discharge any Lockheed Martin Excluded Liability), or (3) any matters for which indemnification is provided by Lockheed Martin under Exhibit E (it being understood that the terms of such indemnification shall be governed by and subject to the terms of Exhibit E to the extent such terms differ from the provisions of this Article XI), and (ii) as contemplated in Schedule 11.02(a) ; provided , that Lockheed Martin shall have no obligation to indemnify the Boeing Indemnified Parties for breaches of representations and warranties under Section 11.02(a)(i)(1).

 

(b) Effective as of the Closing and subject to the limitations set forth in Section 11.04(b), Boeing hereby indemnifies each of (x) Lockheed Martin, its Affiliates and its Representatives (together with their respective successors and permitted assigns) (the “ Lockheed Martin Indemnified Parties ”), and (y) the Company Indemnified Parties, against, and agrees to defend and hold them harmless from, any and all Damages incurred or suffered by any of them (i) arising out of, resulting from or related to (1) any breach of any Surviving Representation or Covenant made or to be performed by Boeing or its Subsidiaries pursuant to this Agreement (for purposes of this clause (i)(1), all representations and warranties shall be read without reference to materiality, Material Adverse Effect or similar qualifications), (2) any Boeing Excluded Liabilities (including Boeing’s or any of its Subsidiaries’ failure to perform or in due course pay or discharge any Boeing Excluded Liability), or (3) any matters for which indemnification is provided by Boeing under Exhibit E (it being understood that the terms of such indemnification shall be governed by and subject to the terms of Exhibit E to the extent such terms differ from the provisions of this Article XI), and (ii) as contemplated in Schedule 11.02(b) ; provided , that Boeing shall have no obligation to indemnify the Lockheed Martin Indemnified Parties for breaches of representations and warranties under Section 11.02(b)(i)(1).

 

(c) Effective as of the Closing, the Company hereby indemnifies the Lockheed Martin Indemnified Parties and the Boeing Indemnified Parties against, and agrees to defend and hold them harmless from, any and all Damages incurred or suffered by any of them

 

- 39 -


arising out of, resulting from or related to (i) any breach of any Surviving Representation or Covenant made or to be performed by the Company pursuant to this Agreement, (ii) any Assumed Liabilities (including the Company’s failure to perform or in due course pay or discharge any Assumed Liability), (iii) any Financial Support Arrangement, (iv) any matters for which indemnification is provided by the Company under Exhibit E (it being understood that the terms of such indemnification shall be governed by and subject to the terms of Exhibit E to the extent such terms differ from the provisions of this Article XI) or (v) any liabilities or obligations arising in connection with, resulting from or relating to (A) the ELV Business (but only to the extent conducted on or after the Closing Date), or (B) a facility the possession of which is transferred to the Company at Closing (but only to the extent relating to a period on or after the Closing Date), or (C) the use, ownership, lease or operation by the Company, an Affiliate of the Company or a successor of the Company or such Affiliate, of any facility the possession of which is transferred to the Company at Closing, whether vested or unvested, contingent or fixed, actual or potential, liability for which arises under or relates to Environmental Laws to the extent such liabilities or obligations arise out of, relate to, are based on or result from any action taken by the Company (or a failure by the Company to take action) or any event occurring on or after the Closing Date, including liabilities or obligations related to (1) Remedial Actions, (2) personal injury, wrongful death, economic loss or property damage, (3) natural resource damages, (4) violations of Applicable Law or (5) any other Damages with respect to Environmental Laws.

 

Section 11.03 Procedures .

 

(a) If any Party or any of the Parties’ respective Affiliates or Representatives shall seek indemnification pursuant to Section 11.02, the Person seeking indemnification (the “ Indemnified Party ”) shall give written notice to the Party from whom such indemnification is sought (the “ Indemnifying Party ”) promptly (and in any event within 30 days) after the Indemnified Party (or, if the Indemnified Party is a corporation, any officer or director of the Indemnified Party) becomes aware of the facts giving rise to such claim for indemnification (an “ Indemnified Claim ”) specifying in reasonable detail the factual basis of the Indemnified Claim, stating the amount of the Damages, if known, the method of computation thereof, containing a reference to the provision of this Agreement in respect of which such Indemnified Claim arises and demanding indemnification therefor. The failure of an Indemnified Party to provide notice in accordance with this Section 11.03, or any delay in providing such notice, shall not constitute a waiver of that Party’s claims to indemnification pursuant to Section 11.02, except to the extent that (i) any such failure or delay in giving notice causes the amounts paid or to be paid by the Indemnifying Party to be greater than they otherwise would have been or otherwise results in prejudice to the Indemnifying Party or (ii) such notice is not delivered to the Indemnifying Party prior to the expiration of the applicable survival period set forth in Section 11.01. If the Indemnified Claim arises from the assertion of any claim, or the commencement of any suit, action, proceeding or Remedial Action brought by a Person that is not a Party hereto (a “ Third Party Claim ”), any such notice to the Indemnifying Party shall be accompanied by a copy of any papers theretofore served on or delivered to the Indemnified Party in connection with such Third Party Claim.

 

(b) Upon receipt of notice of a Third Party Claim from an Indemnified Party pursuant to Section 11.03(a), the Indemnifying Party shall be entitled to assume the defense and control of such Third Party Claim subject to the provisions of this Section 11.03 by providing

 

- 40 -


notice of such election to the Indemnified Party within 30 days of its receipt of notice of such Third Party Claim; provided , that any such assumption of the defense and control of a Third Party Claim shall constitute an acknowledgement and acceptance by the Indemnifying Party of its obligation to indemnify the Indemnified Party for all Damages arising out of such Third Party Claim under this Article XI. If the Indemnifying Party elects to assume the defense of a Third Party Claim, the Indemnifying Party will not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof as long as the Indemnifying Party is conducting its defense in accordance with this Section 11.03(b); provided , that if in the written opinion of counsel to any Indemnified Party a conflict of interest exists in respect of such claim, such Indemnified Party will have the right to employ separate counsel reasonably satisfactory to the Indemnifying Party to represent such Indemnified Party and in that event the reasonable fees and expenses of such separate counsel will be paid by the Indemnifying Party; provided that in the event there are multiple Indemnified Parties, the Indemnifying Party shall only have an obligation to pay the fees and expenses of one separate counsel for all Indemnified Parties. If the Indemnifying Party does not assume the defense and control of a Third Party Claim within such 30 day period, the Indemnified Party shall have the right to defend such Third Party Claim in such manner as it may deem appropriate and the Indemnifying Party shall be liable for all Damages arising out of such Third Party Claim, to the extent that such Damages are subject to indemnification by the Indemnifying Party hereunder, and shall promptly pay or reimburse the Indemnified Party for all reasonable fees and expenses incurred in the defense by the Indemnified Party of such Third Party Claim. Whether the Indemnifying Party or the Indemnified Party is defending and cont


SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Close this window