DELTA INVENTORY SUPPLY AGREEMENTSupply Agreement |
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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






