EXHIBIT 10(vi)
DELTA INVENTORY SUPPLY
AGREEMENT
THIS DELTA INVENTORY SUPPLY
AGREEMENT (this “
Agreement ”) is made as of this 1st day of December,
2006 (the “ Effective Date ”), by and between
United Launch Alliance, L.L.C., a Delaware limited liability
company (“ ULA ”) and The Boeing Company, a
Delaware corporation (“ Boeing ”). ULA and
Boeing are sometimes referred to herein as a “ Party
” or collectively as the “ Parties
.”
RECITALS
WHEREAS , Boeing, Lockheed Martin Corporation, a
Maryland corporation (“ Lockheed Martin ”), and
ULA entered into a Joint Venture Master Agreement dated as of
May 2, 2005 (as amended, the “ Master Agreement
”), which provides, among other things, for the formation of
a joint venture, ULA, to develop and manufacture integrated ELV
Systems and supply related Launch Services to the U.S. Government
upon the terms and subject to the conditions of the Master
Agreement;
WHEREAS , ULA has, as part of its charter, authority to
manufacture and sell Launch Services to the U.S. Government using
the Delta II and Delta IV launch vehicles developed by
Boeing;
WHEREAS , in connection with the Closing of the
transactions contemplated by the Master Agreement, Boeing has
licensed certain Delta technology to ULA and has contributed or
caused to be contributed certain assets of its ELV Business to ULA
(other than the Excluded Inventory, as defined below);
and
WHEREAS , the Master Agreement requires that Boeing and
ULA enter into this Agreement;
NOW THEREFORE
, in consideration of the mutual
promises and undertakings contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties, intending to be legally bound,
hereby agree as follows:
AGREEMENT
ARTICLE 1 DEFINITIONS;
EXCLUDED INVENTORY
1.1 General . As used herein,
terms that are capitalized have the definitions ascribed to them by
the Master Agreement, except as those definitions may be varied by
the terms of this Agreement.
1.2 “ Tooling ”
means jigs, dies, fixtures, molds, patterns, taps, gauges, other
equipment and manufacturing aids, all components of these items,
and replacements of these items, which are of such a specialized
nature that without substantial modification or alteration their
use is limited to the development or production of particular
supplies or parts thereof or to the performance of particular
services.
1.3 Excluded Inventory . On
the Closing Date, pursuant to the terms and conditions of the
Boeing Contribution and Assumption Agreement, Boeing contributed or
caused to be contributed to ULA the Boeing Contributed Assets.
These assets included some items of inventory but excluded the
“Excluded Inventory,” as defined in the Master
Agreement. The Parties acknowledge and agree that the Excluded
Inventory subject to this Agreement shall be determined in
accordance with the following principles and procedures:
1.3.1 Excluded Inventory shall not
include any Tooling.
1.3.2 Promptly following the Closing
Date, Boeing shall prepare and submit to ULA and Lockheed Martin a
statement setting forth Boeing’s Proposed Adjusted Net
Working Capital Amount in accordance with Section 3.04 of the
Master Agreement. The amount of inventory included in
Boeing’s Proposed Adjusted Net Working Capital Amount and in
Boeing’s Adjusted Net Working Capital Amount (which may be a
positive or negative number) will equal the aggregate value of the
inventory of Boeing’s ELV Business (including the Excluded
Inventory), minus $1,860,000,000.
1.3.3 The value of the inventory of
Boeing’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 Boeing’s Opening
Statement as disclosed in the Notes to such Opening Statement,
except as otherwise set forth in the Notes to such Opening
Statement.
1.3.4 The agreed-upon value of the
Excluded Inventory subject to this Agreement shall be
$1,860,000,000.
ARTICLE 2 OWNERSHIP OF
EXCLUDED INVENTORY
2.1 Transfer and Assignment .
Boeing hereby transfers and assigns to ULA all of its right, title
and interest in and to the Excluded Inventory, including its rights
under any warranties from suppliers of items of Excluded Inventory
to the extent that such rights are assignable; provided that
Boeing shall use reasonable commercial efforts to take all actions
and execute all documents reasonably necessary to assign its rights
under any such warranties.
2.2 Acceptance . ULA hereby
accepts (i) all of Boeing’s right, title and interest in
and to the Excluded Inventory and (ii) subject to the
provisions of Section 5.1, all risk of loss with respect to
the Excluded Inventory.
ARTICLE 3 REPRESENTATIONS AND
WARRANTIES
3.1 Title; Condition . Boeing
represents and warrants that (i) it had, immediately prior to
the transfer and assignment to ULA pursuant to Article 2, good
title to items in the Excluded Inventory and (ii) the items of
Excluded Inventory, to the extent consisting of tangible property,
are in good operating condition (normal wear and tear excepted),
and normal maintenance and repair on such items has not been
deferred.
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3.2 DISCLAIMER OF WARRANTIES
. THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT NO REPRESENTATION
OR WARRANTY HAS BEEN MADE OR RELIED UPON BY ANY PARTY HERETO OTHER
THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE MASTER
AGREEMENT. WITHOUT LIMITING THE GENERALITY OF THE DISCLAIMER SET
FORTH IN THE PRECEDING SENTENCE, EACH PARTY, ON ITS OWN BEHALF AND
ON BEHALF OF ITS RESPECTIVE SUBSIDIARIES, EXPRESSLY DISCLAIMS ANY
IMPLIED WARRANTIES, INCLUDING WARRANTIES OF FITNESS FOR A
PARTICULAR PURPOSE AND WARRANTIES OF MERCHANTABILITY.
3.3 Survival . The
representations and warranties of Boeing set forth in
Section 3.1 shall survive the Closing for a period of two
years from the Closing Date.
ARTICLE 4 PURCHASE OF EXCLUDED
INVENTORY
4.1 Price and Payment
Schedule . Within 30 days after each launch or other event that
consumes one or more Delta IV common booster cores, commencing on
the earlier of (x) the consumption of the eighth such common
booster core consumed on or after January 1, 2007 or
(y) March 31, 2009, ULA will pay Boeing $60,000,000 for
each such common booster core, provided that in no event
will payments be made under this Agreement in respect of more than
31 such common booster cores.
4.2 Taxes . ULA will bear any
personal property or other taxes relating to the Excluded
Inventory. The Parties acknowledge that the purchase price does not
include any value added tax, sales tax or similar tax. ULA agrees
to either pay such taxes or reimburse Boeing for any such taxes
that Boeing must pay as a result of the sale of the items of
Excluded Inventory to ULA. Boeing shall cooperate with ULA and
provide documentation reasonably necessary to lessen taxes for
which ULA is responsible under this provision or to support a claim
of tax exemption, where applicable.
4.3 Payment . ULA will make
all payments to Boeing by unconditional wire transfer of
immediately available funds in United States Dollars to a bank
account in the United States designated by Boeing. Boeing shall not
be required to invoice ULA as a condition precedent for ULA’s
obligation to make payments.
4.4 Payment On March 31,
2021 . On March 31, 2021, ULA will pay to Boeing an amount
equal to the product of (x) $60,000,000 and (y) the
amount, if any, by which 31 exceeds the number of Delta IV
common booster cores in respect of which ULA has made payments to
Boeing pursuant to this Agreement prior thereto.
4.5 Payment Upon Full Recovery of
Excluded Inventory . If, at any time prior to March 31,
2021, all inventory constituting Boeing Contributed Assets and
Excluded Inventory has been recovered and payment in full has been
received by ULA as a result of any event other
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than normal consumption through the provision of
Launch Services, including but not limited to Delta Program
termination, sale of the Delta launch vehicle business or
reimbursement by Boeing to ULA under the provisions of
Section 6 of Schedule 11.02(b) to the Master Agreement, the
payment specified in Section 4.4 of this Agreement shall
become immediately due and payable by ULA to Boeing.
4.6 Payment From ULA Credit
Arrangements . Notwithstanding the foregoing provisions of this
Article 4, but without limiting ULA’s obligation to make any
payment otherwise required pursuant to the terms and provisions of
this Agreement as and when such payment is due, it is understood
and agreed that for a period of five years from the date of this
Agreement, without the prior written agreement of Lockheed Martin
and Boeing, ULA will not make payments pursuant to Section 4.1
of this Agreement with the proceeds of borrowings under the Member
Revolving Credit Agreement, the Initial Company Financing
Arrangement or any other revolving credit agreement or similar
financing arrangement that replaces or supplements the Member
Revolving Credit Agreement, the Initial Company Financing
Arrangement or any subsequent replacement or supplemental agreement
to support ULA’s working capital and other financing needs
(any of the foregoing, a “ ULA Financing Arrangement
”), except as follows:
(i) ULA may use the proceeds of
borrowings under one or more ULA Financing Arrangements in an
aggregate amount of $300,000,000 to make payments pursuant to
Section 4.1 of this Agreement without limitation;
and
(ii) from and after the time that
aggregate payments of $300,000,000 pursuant to Section 4.1 of
this Agreement have been made with the proceeds of borrowings under
one or more ULA Financing Arrangements as provided in the preceding
clause (i), ULA may use the proceeds of borrowings under one or
more ULA Financing Arrangements to make payments pursuant to
Section 4.1 of this Agreement, but only to the extent that the
aggregate amount of borrowings outstanding under the ULA Financing
Arrangements, after all or a portion of any payment then due
pursuant to Section 4.1 of this Agreement is made, do not
exceed $300,000,000.
It is the intention of the parties
hereto that from and after the expiration of the five-year period
covered by the foregoing provisions of this Section 4.6, ULA
will adopt, subject to approval of the Members, a financing plan
that ensures that working capital is available to fund operations
above and beyond amounts available for payments pursuant to
Section 4.1 of this Agreement; provided, however, that,
following such five-year period, until such a financing plan is
agreed to and implemented by the Company and the Members, ULA may
use the proceeds of borrowings under one or more ULA Financing
Arrangements to make payments pursuant to Section 4.1 of this
Agreement, but only to the extent that the aggregate amount of
borrowings outstanding under the ULA Financing Arrangements, after
all or a portion of any payment then due pursuant to
Section 4.1 of this Agreement is made, do not exceed 80% of
the aggregate credit capacity represented by all of the then
existing ULA Financing Arrangements. It is understood and agreed
that the foregoing provisions of this Section 4.6 shall not
detract from Boeing’s right to receive payments from ULA as
and when due pursuant to Section 4.1 of this Agreement, which
right shall rank pari passu with the rights of other
parties (including Lockheed Martin) to receive payments due from
ULA.
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ARTICLE 5 OTHER TERMS AND
CONDITIONS.
5.1 Indemnification
.
5.1.1 ULA hereby indemnifies Boeing,
its Affiliates and its Representatives (together with their
respective successors and permitted assigns) against, and agrees to
defend and hold them harmless from, any and all Damages incurred or
suffered by any of them arising out of, resulting from or related
to any Third Party Claim with respect to any defect in an Excluded
Inventory item, including claims arising from a launch
failure.
5.1.2 In addition to and without
limiting the other provisions of this Section 5.1, each Party
hereby indemnifies the other Party, and each of its Affiliates and
their Representatives (together with their respective successors
and permitted assigns) against, and agrees to defend and hold them
harmless from, any and all Damages incurred or suffered by any of
them arising out of, resulting from or related to any breach by
such indemnifying Party of any representation, warranty, covenant
or agreement made or to be performed by such indemnifying Party
pursuant to this Agreement; provided that Boeing’s
obligation to indemnify ULA for any breach of the representations
and warranties set forth in Section 3.1 shall be subject to
(i) the provisions of Section 5.16 and (ii) the
limitations set forth in Section 11.04 of the Master Agreement
as if such indemnification was provided thereunder for a breach of
a representation or warranty set forth in the Master
Agreement.
5.2 Term and Termination .
This Agreement will be effective as of the Closing Date and shall
continue until the earliest of (i) the final payment by ULA to
Boeing pursuant to Section 4.1 in respect of the launch or
other event occurring that consumes the last of the Delta IV common
booster cores constituting Excluded Inventory, (ii) March 31,
2021, (iii) the payment by ULA to Boeing pursuant to
Section 4.5 of the amount specified in Section 4.4, or
(iv) the mutual written agreement of the Parties to terminate
this Agreement; provided that the termi
